‘Ottawa’ VectorVest-Questrade Partnership Brings Unemotional ‘Robo’ to Retail Investing
The term robo-adviser is well entrenched as a shorthand description of automated online investment services. Now a leader in the financial services industry has developed a new financial robo.
On Monday, VectorVest Inc. will announce RoboTrader in conjunction with a partnership with Questrade Inc., the Toronto-based discount brokerage service. Charlotte, N.C.-based VectorVest said its portfolio management software will be linked with Questrade customers’ brokerage accounts via its Trade Now button, making it easier to execute trades on both sides of the border through VectorVest’s Canadian and U.S. products.
Privately owned VectorVest, which has been around 28 years, has similar deals with two U.S. firms: Charlotte -based TradeKing and Florida-based TradeStation Group Inc. However, the partnership with Questrade is its first in Canada, VectorVest manager of research Todd Shaffer told the Financial Post.
Questrade president and CEO Edward Kholodenko confirmed that while the two firms have conducted joint marketing in the past, “now we have decided to deepen and broaden the relationship and integrate” their respective services.
VectorVest describes RoboTrader as a “powerful new trading tool that solves the biggest problem for many traders: Executing a trading plan without letting emotions cloud judgement.”
RoboTrader lets retail investors implement a trading plan that requires only client confirmation for fast, accurate execution, with results monitored in real time.
While it doesn’t mention the term artificial intelligence — increasingly the rage these days — VectorVest says RoboTrader leverages the intelligence of its fundamental and technical analysis, making it easier to manage portfolios. RoboTrader sends instant alerts to investors’ VectorVest accounts, phone and email, “letting traders know exactly which trades to make, when to make them and in what order quantity.”
In theory, RoboTrader in concert with a discount brokerage platform could let you trade while on holiday, but because people’s money is at stake, the system requires human confirmation.
It’s a bit analogous to the development of driverless cars and, for now, Shaffer wants to see a human being approving RoboTrader’s suggestions.
“This is more user focused. RoboTrader currently gives you the recommended trades, but you still have the user verifying the orders and confirming them before” executing them at the brokerage, Shaffer said.
Questrade does offer its own robo-adviser service (Portfolio IQ), which includes its own Questrade exchange-traded funds. Kholodenko prefers the term “digital advice.” RoboTrader is quite different from robo advisers, he says.
It “requires human confirmation and to do it completely ‘robo,’ as it were, would be contrary to security regulations in Canada as it stands today,” he said, adding that accounts in the U.S. also have be approved by humans.
“The only thing they can do in the U.S. that we can’t here is apply algorithms on the fly and change portfolios automatically without human interaction.”
Traders can use any VectorVest trading system, modify them or build their own systems and, if necessary can trade several plans at once: RoboTrader continuously monitors the portfolio and trading system, identifying new trades the moment they need to be made. Confirmations are sent directly to the broker.
As with robo-advisers, this appears to be a way to take much of human emotion out of investing. With robo-advisers, the technology generally involves monitoring a portfolio of low-cost ETFs. With RoboTrader, it revolves around 23,000 individual stocks (including ETFs) rated every day by VectorVest, but is similar in that it attempts to minimize emotional reactions to the market.
“My emotions often caused me to stray from my trading plan: I needed a tool to trade my plan the way it was intended, and keep me out of the way,” said VectorVest founder Bart DiLiddo in a release. “That’s what RoboTrader does.”
You can try RoboTrader for 30 days for US$29 or get more info at vectorvest.com/vvrobotrader/. A Vectorvest subscription costs US$99/month though the companies have not yet finalized Canadian pricing.
Jonathan Chevreau is the founder of the Financial Independence Hub and can be reached at email@example.com. He and Michael Drak have just published the book Victory Lap Retirement.