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BMO InvestorLine President: 'The More Innovation In This Space, The Better'

BMO InvestorLine President: 'The More Innovation In This Space, The Better'

BMO InvestorLine is designing its investing products to keep investors playing the markets and is focused on innovation, Silvio Stroescu, the president of the Bank of Montreal (NYSE: BMO) division, told Benzinga in an interview. 

BMO's Products 

BMO offers tools that cater to all types of investing, from passive to active: its three main products are InvestorLine Self-Directed, SmartFolio and adviceDirect.

“We do the analogy of flying a plane and we say if you want to fly the plane and be the pilot, then the online brokerage model is for you, and that’s InvestorLine, and that’s the one that’s been around for 30 years," Stroescu told Benzinga. 

"At the other end of the spectrum, if you want to fly and get somewhere, but you don’t want to fly the plane — you just want to tell the pilot the destination and just be taken there — we have the autopilot mode and that’s what we refer to as SmartFolio."

SmartFolio falls into the robo-advisor category, he said. 

In the middle, BMO offers an actionable intelligence solution. 

“The hybrid model, in the middle, which is called adviceDirect, is like flying with a co-pilot.”

With adviceDirect, users still make the final investment decisions, but with an exception. Two aids are available: a digital optimization tool that aligns portfolio strategy to a client's goals and provides instructions on what actions to take, as well as a validation element that introduces an external, human component.

"The tool tells you when you have to take action [and] gives you specific instructions on what actions to take: what to buy, what to sell," Stroescu said. "We have a person that you’re able to speak to as well, and that acts as a human element co-pilot." 

Investor Outcomes 

BMO has a start-up approach and agile methodologies that drive the Montreal-based bank's innovation and the marketability of its new investing solutions, Stroescu said. 

"You have to think differently; you almost have to think like a startup with the benefits of having an organization that’s been around for 200 years."

BMO witnessed an inflection point last year on its solution adoption curve, he said. 

Business for adviceDirect quadrupled as a result of investors ditching other cumbersome, active investing solutions, Stroescu said. 

BMO attributes this development to the difficulties associated with trading profitably, such as information asymmetry, mastering trading psychology and money management.  

Those factors tend to fatigue investors, and clients tend to become inactive about two years after they start playing the market, Stroescu said. 

To discourage investors who quit, BMO has placed a huge emphasis on solutions like adviceDirect, he said.

Investors using adviceDirect “typically save between $5,000 and $6,000 dollars in fees per year.”

Investors under 30 have driven a 40%-plus increase in usage of BMO's SmartFolio product, Stroescu said. 

'The More Innovation ... The Better' 

Stroescu said his primary focus is to enable smarter investing with BMO’s products. Continued innovation is key in moving the space forward, he said. 

“I’d say the more innovation in this space, the better it is for investors, period.”

BMO expects that its open-minded approach to banking and investing, as well as its history of quality and trust, will increase adoption of new solutions, he said. 

“We see about 30% of assets at the end of the first year [being] replenished and consolidated from other areas where clients are investing.”

BMO knows the areas in which it can improve, Stroescu said. 

"We feel there is some element of the user experience that we need to keep evolving or making more intuitive, or actually building more components into our portfolio optimizer as well."

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Photo courtesy of BMO.


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