Wolfe explains that the competition will help novice investors understand their risk tolerance level very quickly. They’ll also have to learn how to research ETFs and securities to build a diversified portfolio. Even though the platform is exclusively limited to Canadian-listed ETFs, that amounts to over 1,400 different products from 41 different providers that these investors will have to sift through and learn about.
The Biggest Winner competition has been held for 13 years and in that time the ETF product shelf has exploded in Canada. Where in the first iteration investors may be playing with a cohort of passive index-tracking ETFs, they’re now accessing a range of sophisticated strategies. Active fixed income and equity funds, covered call funds, even single-stock ETFs are available to play with. The breadth and depth of this universe should help give investors an even better idea of just how broad the wider world of investing is and how much work it takes to navigate.
They should also expect volatility. Because of the rebrand they completed earlier this year, Global X postponed the Biggest Winner competition from May to September. September and October, however, are historically the most volatile months on the market. That may be further heightened by the US election season. This year’s competition may well drive home the value of diversification and volatility offsets.
From an advisor’s standpoint, Wolfe emphasizes the importance of acknowledging and moving with the DIY trend. She cites a national survey from the BC Securities Commission which found that while 40 per cent of respondents had only advised assets and 19 per cent had only DIY investments, 24 per cent had both DIY and advised investments. They also found that only 11 per cent of investors would consider themselves “primary DIY” with the majority of their assets in DIY accounts. 20 per cent are non-DIY, investors who have some DIY investments but use an advisor to manage the majority of their assets.
Perhaps most crucially, younger age cohorts tended to be the most likely to be DIY investors in some form or another. DIY investing is not going away, and it’s increasingly likely that advisors will engage with more clients who want to blend their own DIY accounts with advisor-managed accounts. Wolfe argues, therefore, that the benefits of having clients engage in this exercise and learn more about their own investing habits and tolerances outweighs the potential risks of opening them up to DIY investing.
