Next-Gen Financial Advice: Digital Innovation and Canada’s Policymakers

28 Pages Posted: 22 Apr 2019

See all articles by Chuck Grace

Chuck Grace

University of Western Ontario - Richard Ivey School of Business

Date Written: March 21, 2019


While the financial services industry wrestles with the challenges of change, our policymakers have an opportunity to take a lead role in defining Canada’s place within the global digital advice landscape. There are numerous creative and exciting solutions being discussed. What we haven’t seen a lot of are clientfacing holistic solutions – and what we don’t have is much time. This paper provides a series of steps for regulators and policymakers to follow that will improve innovation for incumbents and start-ups alike, all while providing an enhanced customer experience in financial advice. Firms are dealing with a looming perfect storm – fee compression, shifting demographics, unrelenting regulatory changes and an erosion in the number of human advisors as advisors who are part of the baby boom look to their own retirement. In this context, technology should be viewed as a savior, rather than a threat. We define a five-year aspiration for the application of digital technology to prudent and valued financial advice. There are several myths we were able to dispel as a result of our research, which we hope will form the basis for a discussion about what’s needed to facilitate a higher level of digital adoption. We nickname it “Next Generation Digital Advice.” The guiding principles and best practices encompass a holistic view of the client, objective data-driven recommendations, full transparency and ease of use. At a high level, the next generation of digital advice offers an opportunity for stronger client impact. It will see human advisors complemented by digital collaboration through technology that is not disruptive but generally proven, likely economical and widely available. Our current regulations per se are not a barrier to this next generation of advice – but our regulatory practices are. And just how much the industry will be disrupted matters because wholesale disruption of our financial services comes with wholesale economic risk. Policymakers play an important role in this transformation starting with a need to take the lead and get in front of the innovations in order to understand their full implications. We need to move swiftly towards open banking and improving on the benchmark set in Europe, break down regulatory silos to allow data mobility in furtherance of stronger client outcomes, update advisor proficiencies for a new normal where technical skills are automated and behavioural skills are required and de-risk the decision to innovate – for start-ups and incumbents alike.

Keywords: Financial Services and Regulation; Consumers' Interests and Protection; Financial Innovation And Technology

JEL Classification: G11; G28; O38

Suggested Citation

Grace, Chuck, Next-Gen Financial Advice: Digital Innovation and Canada’s Policymakers (March 21, 2019). C.D. Howe Institute Commentary 538 (2019), Available at SSRN: or

Chuck Grace (Contact Author)

University of Western Ontario - Richard Ivey School of Business ( email )

1151 Richmond Street North
London, Ontario N6A 3K7

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