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For My Money, USA TODAY
Let’s say you have a pile of cash that you’re ready to invest.
If you’re like me, you probably don’t want to spend all your time with your eyes glued to a screen, actively trading on Robinhood. You want your money to grow, but you don’t want to think about it all the time. Maybe the idea of interacting with an investment professional gives you anxiety, or the fees sound like a lot.
You’re not alone.
A study of 3,000 U.S. adults conducted by Vise, a technology-powered investment management platform built for advisers, that was given exclusively to USA TODAY found that the biggest barrier to working with an adviser is concern about how much it would cost (43%).
Here’s what I did: I skipped the personal investment adviser and got a robot to build my portfolio.
Roboadvisers, digital apps that use algorithms to build investment portfolios, are an increasingly popular vehicle for investing, especially for young adults who want a tool that is uncomplicated and mobile-friendly.
You can download an app and fill out a survey about yourself with questions like your age, income and risk tolerance. Based on those responses, roboadvisers generate a portfolio of stocks and bonds for you to maximize your long term returns.
These investment vehicles can scale dramatically with little marginal cost because the portfolio is generated by algorithms. Since they cut out the human element of investing, they can service millions of customers at once with just a few lines of code.
Many roboadvisers are designed with young investors in mind, specifically millennial and Gen Z clients.
Gen Zers, born between 1997 and 2012, began entering the workforce shortly before the COVID-19 pandemic hit and when unemployment rates were at historic lows. Jobless rates subsequently skyrocketed and then have leveled off. And those workers are starting to save for retirement at an unprecedented young age, according to Transamerica Center for Retirement Studies, a nonprofit organization.
Similar to millennials, born between 1981 and 1996, these young Americans are saddled with student loans and credit card debt but want to invest for retirement and build up savings.
“Millennials and Gen Z grew up digitally native, and they expect to be able to manage their money the same way they order stuff from Amazon or call a car on Uber,” says Kate Wauck, chief communications officer at Wealthfront, a roboadvising company. “These young investors don’t want to have to pick up the phone or walk into a stuffy office to manage their money.”
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Most investors want a financial adviser but don’t trust robos
Despite familiarity with digital tools among young investors, the same study by Vise showed that nearly half of Americans (48%) trust human financial advisers, compared with just 11% of Americans who trust roboadvisers.
Two percent of total respondents and 4% of 18- to 24 year-olds used roboadvisers. Three percent of respondents from 25 to 49, 1% from 50 to 64 and 0% of 65 and older had tried roboadvisers.
By contrast, 41% of people over 65 say they work with a financial adviser, compared with 26% of Gen X, 17% of millennials and 14% of Gen Z.
“People, young or old or anything, trust a human being, especially with their most personal asset, which is money,” explains Samir Vasavada, founder and CEO of Vise and a member of Gen Z himself.
Robo options to consider
Despite low adoption rates, a wide variety of roboadvising options exist depending on your investment goals.
SoFi Invest allows customers to invest with just $5 and charges no management fee, according to The RoboReport from the second quarter of 2021. On average, the roboadvisers in the report charged a 0.35% management fee.
InteractiveAdvisors is another option that provides portfolios for sustainable and socially responsible investments if you care about buying from companies that share your values. Betterment also has some options for ESG (environmental, social and corporate governance) investing, including Climate Impact, Social Impact, and Broad Impact.
Betterment is great for first-time investors with its “intuitive dashboard” and “excellent suite of educational tools,” says The RoboReport.
Wealthfront has the best financial planning tools, according to the report, including features to model one’s home purchase and future net worth.
Other roboadvisers aim to change the financial landscape for new investors, including women. Ellevest, for instance, is a roboadviserbuilt by women and tailored for female investors.
Roboadvisers: pros & cons
To be sure, roboadvisers have their fair share of benefits, as well disadvantages.
Roboadvisors tend to charge fairly low rates and employ Nobel-prize winning algorithms on your money. However, unlike traditional financial advisers, roboadvisers aren’t as personalized to your specific goals, says Vasavada. They also don’t have a long track record to prove their success.
So far, roboadvisers have mixed annual returns from 1% to 5%, according to NerdWallet.
“I would give roboadvisers about 25 years before comparing their returns to the traditional method,” says Danetha Doe, financial expert and creator of Money & Mimosas, a financial wellness platform.
Despite uncertainty around roboadvisers, Doe encourages women to invest as early as possible.
“Roboadvisers have made investing accessible to more people. As we move into a more inclusive economy, I am in full support of folks who choose to work with a roboadviser,” Doe says.
Roboadvisers are heavily regulated and are considered a safe investment vehicle. They must register with the Securities and Exchange Commission and are subject to the same securities laws and regulations as human advisers. Most roboadvisors are also members of the Financial Industry Regulatory Authority, a brokerage watchdog and Wall Street’s self-regulatory arm.
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Vasavada believes that the future of the personal investment industry lies in a hybrid approach, where technological solutions like roboadvising are paired with human investment advisers.
On one hand, advisers will have to evolve by incorporating technology and tailoring their services to younger investors. On the other hand, roboadvisers are beginning to incorporate more human services to their platforms, Vasavada points out.
“I think that the future of the space is still with financial advisers. However, I think there’s a place for roboadvisers. And I think that roboadvisers are here to stay,” Vasavada says.
Ultimately, the key draw of roboadvisers is their convenience. You could set one up on a Sunday just sitting in your bed on your phone, which is precisely what I did.
When conducting research on young investors, Wealthfront found that many of them enjoyed not having to interact with anyone.
“We’ve designed our product so everything can be done right in our app through software,” says Wauch, “Since day one, our clients have told us, ‘We pay you not to talk to me.'”
As a young investor and roboadvising client myself, I couldn’t agree more.
Michelle Shen is a Money & Tech Digital Reporter for USATODAY. You can reach her @michelle_shen10 on Twitter. She uses Wealthfront as a roboadviser.
Opinion: Caisse's investment in a cryptocurrency company at odds with its pledge to fight climate change – The Globe and Mail
The Caisse de dépôt et placement du Québec’s first-ever investment in a cryptocurrency company is providing Canadians with a reality check on its climate commitments.
With the ink barely dry on its new climate change strategy, Canada’s second-largest pension fund manager announced last week that it is taking part in a US$400-million investment in Celsius Network, a New Jersey-based cryptocurrency-lending platform.
U.S. private-equity firm WestCap Group is the lead investor in that transaction. Nonetheless, the Caisse’s involvement is raising eyebrows. That’s because Canadian pension funds, which generally have conservative risk appetites, have largely eschewed significant investments in crypto companies. But this particular investment is also curious because it is inconsistent with the Caisse’s recent environmental evangelism.
To be clear, Celsius Network is not a cryptocurrency. Rather, the company facilitates cryptocurrency lending to retail and institutional investors.
Celsius Network, though, does earn some revenue from cryptocurrency mining. That’s the process through which computers create new digital coins by solving complex mathematical equations to verify transactions and record them on a public digital ledger.
Since cryptocurrency mining requires significant computing power, the process is energy intensive, results in greenhouse gas emissions and contributes to climate change.
Although Celsius Network is not primarily a cryptocurrency miner, digital currencies are integral to its business model. That means Celsius Network (and by extension the Caisse as one of its investors) reaps benefits from other people’s mining.
For its part, the Caisse is defending its investment in Celsius Network.
“Celsius is a lending platform – not a cryptocurrency – that provides access to fair, rewarding, and transparent financial services, with mining operations that account for a small portion of revenue and are based exclusively in North America, where it can primarily rely on renewable energy sources,” Alexandre Synnett, executive vice-president and chief technology officer at the Caisse, said in an e-mailed statement.
“More importantly, it is also a carbon-neutral business and we expect this to continue going forward,” he added.
The devil, of course, is in the details. For instance, the Caisse can’t guarantee that all cryptocurrency deposited and lent out on Celsius Network’s platform was created using renewable energy.
To illustrate this point, one only needs to consider the environmental impact of bitcoin, which is the world’s most popular cryptocurrency.
Although some proponents have previously claimed that a majority of bitcoin miners use renewable energy, a 2020 study from the University of Cambridge concluded that renewables comprise only 39 per cent of the total energy consumption for mining.
It’s also worth noting that until recently, the vast majority of bitcoin mining took place in China, which generates much of its power from coal. (China banned cryptocurrency mining and trading in May, prompting miners to seek out other jurisdictions. The United States is now the world’s largest bitcoin mining centre.)
This year, a Bank of America report suggested that purchasing a single bitcoin was akin to owning 60 gas-powered cars. Former Caisse chief executive Michael Sabia has also taken a dig at bitcoin, previously comparing it to a lottery ticket – although he did distinguish the cryptocurrency from its underlying blockchain technology.
The Caisse declined to say how it will provide its stakeholders with climate-related disclosures for its Celsius Network investment from here on out.
Other institutional investors are paying close attention to the Caisse’s debut investment in this space. That’s precisely why the Task Force on Climate-related Financial Disclosures should provide detailed guidance on divulging the nitty-gritty of crypto-related investments.
The Caisse’s investment in Celsius Network, however, is just the latest indication that there are limits to its commitment to fight climate change.
Although the pension fund manager plans to sell off its remaining oil-producing assets and establish a $10-billion fund to decarbonize other high-emitting industrial sectors, it won’t divest its investments in oil and gas pipelines.
So, oil-producing assets are unacceptable, but pipelines and an investment in a cryptocurrency company are A-okay? It takes mental gymnastics to reconcile these exceptions with the Caisse’s public pledge to protect the environment.
The Caisse should just admit that it’s a casual climate crusader that has every intention of cherry-picking its goals. It should also come clean about any other caveats in its new climate change plan.
This issue doesn’t just concern Quebeckers. The Caisse has $390-billion in assets, which means its investment decisions matter to the country as a whole.
We get it. It’s not easy being green. But please spare us the spin.
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UN Sees Strong Rebound in Global Investment Outlook for 2021 – Bloomberg
Global foreign-direct investment flows showed a strong rebound in the first half of 2021 led by high demand for infrastructure projects, according to the United Nations Conference on Trade and Development.
Kelowna investment banker fined | Business | pentictonherald.ca – pentictonherald.ca
A Kelowna investment portfolio manager had inadequate compliance systems, record-keeping, and financial reporting, an investigation has found.
Kilburn Ogilvie Waymann Investment Management Ltd. has paid $55,700 to the B.C. Securities Commission in a settlement agreement for not managing business-associated risks and not providing reasonable assurance that it complied with securities legislation.
“Despite the deficiencies, there is no evidence that any clients were harmed,” the BCSC stated in Monday release.
As part of the firm’s settlement agreement with the BCSC, it must retain an independent compliance consultant for two years.
During a 2019 field investigation, BCSC staff found various problems with Kilburn Ogilvie Waymann Investment Management Ltd. These included:
– making unsubstantiated marketing claims
– not maintaining records capable of generating certain account activity reports
– inaccurately calculating its excess working capital
– producing deficient audited financial statements
The company’s chief compliance officer also failed to adequately perform his duties, the BCSC says.
The company’s website shows two employees, Trevor Kilburn, based in Kelowna, and John Waymann, based in Toronto. Between them, they have more than 75 years of combined investing experience, the website says.
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