Robo-advisors are an increasingly popular way to invest because they offer portfolio management services online that do not require interactions between the client and the portfolio manager. Investing through a robo-advisor has several advantages. You don't need any investment knowledge and you'll get lower management fees compared to a traditional financial advisor. Rest assured, however, that a robo-advisor's investment decisions are not made by algorithms. In fact, there are real portfolio managers to shoulder this task.
What you can get from a robo-advisor
As mentioned earlier, a good reason to choose a robo-advisor is to save on fees. A client of a mutual fund representative can expect to pay a fee of 2% to 3% of their assets each year. With a robo-advisor, the fees will typically be less than 1%. But unlike a financial advisor, a robo-advisor does not provide human support or personalized advice. In terms of portfolio types, most Canadian robo-advisors invest in index-based Exchange Traded Funds (ETFs). That is, the portfolio managers working for the robo-advisors are not trying to beat the stock market, but rather to achieve a similar return while minimizing fees. Their portfolios therefore tend to be understood primarily of ETFs, which enable you to invest in a large number of financial products at little cost. There are, however, some robo-advisor portfolios that will include stocks or mutual funds.
There are several types of fees to consider when investing via a robo-advisor. Management fees vary in relation to the amount of money invested. Among the most popular robo-advisors, they are generally around 0.5%. For example, if you invest $10,000, you will pay approximately $50 in management fees in the first year. There are also transaction fees, which are usually included in the robo-advisors' management fees. However, some robo-advisors charge a fee for every transaction you make. Lastly, don't forget the Management Expense Ratios (MERs) of the ETFs in which the robo-advisor invests. These are not included in the management fees advertised by robo-advisors and generally vary between 0.05% and 0.50%. For example, if you invest $1,000 in an ETF through your robo-advisor, you will pay between $0.50 and $5.00 in management fees in the first year.
To find out how to choose a robo-advisor, take the time to read about investing in general and robo-advisors in particular. I also encourage you to compare the features of many robo-advisors before making a decision. To help you make your choice, we've compiled this list of the 10 best Canadian robo-advisors.
Questwealth Portfolios
Questwealth Portfolios have the lowest management fees in the industry, from 0.2% to 0.25%, depending on the amount invested. Questwealth Portfolio ETFs have management expense ratios (MERs) of 0.17% to 0.22%. Their responsible investment portfolios have management expense ratios of 0.21% to 0.35%.
Investors with taxable accounts or investing money outside of RRSPs and TFSAs can rejoice. You can harvest tax losses, which reduces your taxes on investment gains by offsetting them with investment losses. Questwealth offers actively managed portfolios. That is, a team of experts monitors the market and adjusts your portfolio if necessary. Usually, this feature comes at an additional cost, but Questwealth provides it for free. Your investments will also be automatically rebalanced. By using the ‘set and forget' function, your portfolio will be constantly monitored. If market conditions change, it will be adjusted accordingly. Lastly, all dividends you receive will be automatically reinvested.
If you want good customer service, you will be well-served. You can contact an agent by phone, chat or email. Alternatively, you can use the automatic assistance feature that provides information on various topics. When you transfer your assets to Questwealth, your institution will likely charge you a transfer fee. However, Questwealth may reimburse these costs.
Investing made easy. Expertly crafted portfolios with reduced fees to accelerate your financial success.
- Zero opening fees
- Zero annual account fees for RRSP or TFSA
- Commission-free purchase of ETFs
- Free account transfers
Questwealth Portfolios Pricing
The company offers a rate of 0.25% (plus MERs) for accounts between $1,000 and $99,999. For accounts of $100,000 and over, the fees decrease to 0.2% (plus MER). As mentioned above, the management expense ratios range from 0.17% to 0.22% for Questwealth Portfolios, and from 0.21% to 0.35% for the Questwealth SRI (Socially Responsible Investment) portfolios.
You can invest in several types of accounts via this robo-advisor, such as TFSAs, RRSPs, RESPs, RRIFs and others. The only portfolios you can invest in are Exchange Traded Funds (ETFs). The minimum deposit required to open an account is $1,000. If you care about the environment and society, rest assured that you can invest your money into socially responsible investments. The platform is also web-based.
Justwealth
With Justwealth, you have the option of opening a US currency account for non-registered accounts, Registered Education Savings Plans (RESPs), Tax-Free Savings Accounts (TFSAs), and individual or spousal Registered Retirement Savings Plans (RRSPs). You’ll be treated like royalty if you invest $1,000,000 or more, as Justwealth will prepare a personalized portfolio for you. However, even if you invest less than $1 million, you’ll get a dedicated personal portfolio manager. They will look at your finances and provide recommendations. You can also get investment or financial planning advice upon request.
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There are 60 different portfolios to choose from, but your portfolio manager will help you choose the right one. Justwealth offers portfolios that have been especially designed to invest for educational purposes. That is, you can enter the date your child is expected to start post-secondary education, and as that date approaches, the portfolio will rebalance automatically. This feature is only available for RESP accounts. Lastly, unlike others, the company is completely impartial when it comes to ETFs. That is to say, you won’t be directed solely to a fund with which the company has a partnership.
Justwealth Pricing
Justwealth offers 0.50% (plus MER) pricing for balances up to $500,000. If you invest more than $500,000, the fee will decrease to 0.40% (plus MER). The average Management Expense Ratios are around 0.20%. With Justwealth, you can invest in a TFSA, RRSP, RRIF, RESP or others. The only types of portfolios you can invest in are Exchange Traded Funds (ETFs). To open an account, the minimum deposit required is $5,000, except for the RRSP where there is no minimum. There is a minimum management fee of $4.99 per month for all accounts except the RRSP, at $2.50 per month. The platform is also web-based.
Wealthsimple Invest
With this robo-advisor, your portfolio will be reviewed for free, including your portfolios that are not with Wealthsimple. Your account’s fees, its tax efficiency, and your portfolio’s allocation will all be analyzed. There is a free, tax-loss recovery feature. This feature is useful if you have taxable accounts or if you invest money outside of your RRSP or TFSA. Harvesting tax losses reduce your taxes on investment gains by offsetting them with investment losses.
You also get access to financial advice upon request. Like most robo-advisors, Wealthsimple Invest clients have access to in-depth financial planning. Besides, a team of experts will compile a personalized financial report adapted to your goals. Wealthsimple, like other robo-advisors, builds your portfolio by choosing an asset allocation based on your risk tolerance. Therefore, a $100 portfolio can enjoy the same diversification as a $100,000 portfolio.
The socially responsible investment (SRI) option enables you to build portfolios using FBN SRI, which includes low carbon companies, clean tech innovators, companies with favourable human rights records and AAA-rated Canadian federal bonds. Transferring investments greater than $5,000 to Wealthsimple is eligible for a transfer fee reimbursement. All you have to do is complete an online application. Unlike traditional robo-advisors, Wealthsimple also has a host of other offers. For example, Wealthsimple offers Halal Investing, a new investment portfolio to comply with Islamic Law, designed by experts in religion and finance.
Wealthsimple Invest now offers investments in private credit to its clients with a portfolio of 100,000$ or more. By following the advice of their portfolio manager, they can earn a 9% annual yield, with monthly payments.
Wealthsimple Invest is a simple and affordable way to invest your RRSP, RESP or TFSA.
Wealthsimple Invest pricing
The company offers pricing of 0.5% (plus MER) for balances up to $100,000 and 0.4% (plus MER) for accounts $100,000 and over. Management Expense Ratios are around 0.2%. With Wealthsimple, you can invest in a TFSA, RRSP, RRIF, RESP or others. You can invest in Exchange-Traded Funds (ETFs) and stock portfolios. There is no minimum deposit required to open an account. Again, if you are environmentally and socially conscious, you can invest your money in socially responsible investing. There are various platforms available, either web-based or mobile for Android or iOS.
CI Direct Investing
Like other robo-advisors, CI Direct Investing advises and offers a financial planning service including a review of your financial plan by one of their advisors. As it is beneficial to do so, there is a feature that allows you to harvest tax losses when a market event occurs. All clients have access to “high-end” investments. For example, you have access to private investments that can be advantageous in terms of diversification. In terms of transfer fee refunds, if you have an investment portfolio worth more than $25,000 with another financial institution and transfer it to CI Direct Investing, they will cover the costs up to $150. Plus, you can enjoy a risk-free trial. If you change your mind, CI Direct Investing does not charge transfer fees.
For socially responsible investments (SRI), you can invest in its Impact portfolios. They focuses on clean energy innovations and social responsibility. You also get access to automatic rebalancing, which will readjust your portfolio's asset allocation if it drifts more than 5% away from the initial allocation. This rebalancing occurs each time a dividend is paid into your account, and each quarter.
- Discover your perfect investment match
- Manage your finances effortlessly with a user-friendly website and mobile app
- Control your financial future with personalized advice from a dedicated financial advisor, tailored to your needs and goals - all within your budget.
CI Direct Investing Pricing
The company offers a rate of 0.6% (plus MER) for balances up to $150,000, 0.4% (plus MER) for accounts between $350,000 and $500,000, and 0.35% (plus MER) for accounts over $500,000. Management expense ratios vary between 0.18% and 1.55% depending on your choice of a traditional portfolio, socially responsible portfolio or private and alternative assets. With CI Direct Investing, you can invest in a TFSA, RRSP, RESP and more. The types of portfolios you can invest in are Exchange Traded Funds (ETFs) and mutual funds. A minimum deposit of $1000 is required to open an account. Various platforms are available on the web or via mobile for Android or iOS.
ModernAdvisor
ModernAdvisor offers competitive fees for smaller investors. Moreover, they offer a dummy account in which you have $1000. You can then invest online for free for 30 days. If you open and fund the account at the end of the trial, you keep any earnings. If your trial account isn't earning money, you'll still get an extra month free when you open the account. Another special feature in terms of pricing is that ModernAdvisor offers the same fees for socially responsible investment accounts and regular investment accounts.
This robo-advisor is focused on quality customer service via chat, email or telephone service staffed by advisors. Like other robots, you have access to an expert to help make important financial decisions. Whether you're renewing a mortgage, choosing your group RRSP investments, or considering purchasing CPP and Old Age Security, you can access expert advice to guide your decision. Their portfolios are also designed to keep pace with the markets. These portfolios are put together by portfolio managers and adjusted according to the level of risk with which you are comfortable.
ModernAdvisor Pricing
The company offers free pricing for balances up to $10,000, 0.5% (plus MER) for accounts between $10,000 and $100,000, 0.4% (plus MER) for accounts between $100,000 and $ 500,000, and 0.35% (plus MER) for accounts over $500,000. The management expense ratios vary between 0.06% and 0.34% for ETF portfolios. With ModernAdvisor, you can invest in a TFSA, RRSP, RRIF, RESP and more. The types of portfolios you can invest in are Exchange Traded Funds (ETFs). A minimum deposit of $1000 is required to open an account. As mentioned earlier, you can invest in socially responsible investing. Lastly, there are various platforms available, either web-based or mobile for Android or iOS.
RBC InvestEase
RBC InvestEase offers over a hundred ETFs. RBC offers you socially responsible investment portfolios, which are comprised of passive ETFs. This combines traditional investments with environmental and social investments. RBC socially responsible investing ETFs exclude companies involved in tobacco, controversial weapons and civilian firearms.
RBC rebalances automatically when your portfolio is out of balance. The robo-advisor automatically buys or sells the required ETF units to readjust to the target allocation. RBC InvestEase clients can also access the services of financial advisors over the phone. Like all robo-advisors, the ETFs recommended for your portfolio depend on your answers to a short online questionnaire. For example, someone who invests for retirement in 20 years will receive a different recommendation than someone who is saving to accumulate a down payment for a purchase in 3 years. To achieve the objectives mentioned in the questionnaire, your investment portfolio will have a combination of different categories of financial assets.
RBC InvestEase Pricing
Like the previous robo-advisor, the company offers a 0.5% (plus MER) pricing. So no matter how much is in the account, the same cost applies to everyone. Management Expense Ratios vary between 0.11% and 0.13% for standard ETF portfolios and from 0.18% to 0.23% for responsible investing. With RBC InvestEase, you can invest in a TFSA, RRSP, RRIF, RESP and more. The types of portfolios you can invest in are Exchange Traded Funds (ETFs). The minimum deposit to open an account is $100. Below $1,500, your funds are invested in a minimum balance portfolio. When your balance exceeds this amount, RBC automatically transfers it to a standard or a responsible investment portfolio (which invests in four to six ETFs). You can invest through their web platform, or you can use the mobile app.
InvestCube
This National Bank solution lets you invest in ETFs and also provides automatic rebalancing. InvestCube will restore the initial target proportion of each asset class following market fluctuations. Your portfolio will keep its initial balance at all times. To do this, InvestCube automatically rebalances your portfolio at least twice a year, or up to 12 times if necessary. Rebalancing is also triggered when an asset class deviates by 20% or more from its target proportion.
You can also personalize your portfolio. The first step is to choose your portfolio’s weighting. You’ll need to select from 5 portfolios: conservative, weighted, balanced, growth or equities, and then you choose your investment strategy. You’ll have the choice between passive or active investing, or a combination of both. Lastly, you can diversify as you see fit. InvestCube also offers a refund of transfer fees up to a maximum of $150 plus tax. That is if you transfer your investments to InvestCube and your current investment company charges you a fee, you can make an online request for InvestCube to reimburse it.
Invest Cube Pricing
The company offers a rate of 0.5% (plus MER) for accounts between $10,000 and $250,000, 0.4% (plus MER) for accounts between $250,000 and $1,000,000, and 0.3% for accounts over $1 million. These are actually a rebalancing fee and InvestCube does not charge an administration fee.
With InvestCube, you can invest in a TFSA, RRSP, RRIF, RESP and more. The types of portfolios you can invest in are Exchange Traded Funds (ETFs). The minimum deposit to open an account is $10,000, which is higher than the average. Lastly, you can invest in their web platform or via the mobile app.
Steadyhand
The company has been in existence for over 10 years and manages over $1 billion for 3500 clients in Canada. Steadyhand’s services are not offered in the province of Quebec. Steadyhand has a different offer from its competitors. The company has its own collection of actively managed mutual funds, but it has reasonable fee structures. The company offers personalized portfolios using its own equity and fixed income funds. Unlike others, their goal is to make money. That is, they don't try to follow an index. Their managers, therefore, focus on a limited number of titles. The fees eventually decrease as your portfolio grows. Their fee reduction program also helps reduce your fees depending on the number of years you are a client.
Unlike conventional robo-advisors, Steadyhand works in three steps. First, managers explore your goals and your situation. With this information, they provide recommendations of what combinations of stocks and bonds are best for you. This step is called “strategic asset mix”. They build a portfolio with you using a combination of their funds that best reflects your “strategic asset mix”. They then help you manage your portfolio over time. Lastly, when the markets move, managers stay by your side.
Steadyhand pricing
The company’s pricing is based on the type of fund in your portfolio.
- For the Savings Fund, the MER is 0.65%.
- For the Income Fund, it is 1.04%.
- For the Founders Fund, it is 1.34%.
- For the Builders Fund, it is 1.63%.
- For the Equity Fund, it is 1.42%.
- For the Global Equity Fund, Small-Cap Equity Fund and Global Small-Cap Equity Fund, it is 1.78% or less.
With Steadyhand, you can invest in a TFSA, RRSP, RRIF and more. The types of portfolios you can invest in are mutual funds. The minimum deposit to open an account is higher than the average, at $10,000. Lastly, you can invest via their web platform.
BMO SmartFolio
BMO SmartFolio has slightly higher fees than most robo-advisors. However, it is attractive for investors looking to reduce their fees and get investment management, while investing through a reputable institution. BMO's robo-advisor asks you to complete a questionnaire that will give you better advice. This questionnaire collects information such as your investment objectives, your investment knowledge, your current financial situation, your risk tolerance and how long you wish to invest. Based on your answers, you will be assigned an investor profile that matches your investment goals.
Your ETF portfolio is chosen from one of the following: capital preservation, income, balanced, long-term growth or growth stocks. These portfolios are diversified through different business sectors and regions. Your portfolio will be monitored and you will be able to oversee your goals. This is to ensure that your investments are aligned with your goals. If you wish to change your financial goals, you can let the robo-advisor know and it will readjust your portfolio.
BMO SmartFolio Pricing
The company offers tiered pricing. The first $100,000 is 0.7% (plus MER), the next $150,000 is charged 0.6% (plus MER) and the next $250,000 is 0.5% (plus MER). For more than $500,000, it's 0.4% (plus MER). For example, if you invest $275,000, the total annual fee will be $1,725, calculated as follows: the first $100,000 at 0.7% ($ 700), the next $150,000 at 0.6% ($900), and the next $25,000 at 0.50% ($125). Management expense ratios vary from 0.20% to 0.35%.
With BMO SmartFolio, you can invest in a TFSA, RRSP, RRIF, RESP and more. The types of portfolios you can invest in are mutual funds. The minimum deposit required to open an account is $1,000. Lastly, you can invest via their web platform or you can use the mobile app.
Choose your robo-advisor wisely
Now that we’ve toured the gamut of Canadian robo-advisors, all you have to do is choose the one that best suits you with the help of a robo-advisor comparator. If you have money invested in mutual funds or with a brokerage firm and you don't want to manage your money yourself, you can easily save on fees by using a robo-advisor. You should understand, however, that you won't get the same service as you would from a live person, so if this is something you value highly, don't transfer to a robot.
If you usually invest by yourself through an online broker, be aware that robo-advisors’ fees will generally be higher than what you pay. However, you need to have the knowledge and interest in financial markets to match the returns of expertly compiled ETF portfolios. If you don't, robo-advisors are a better option. You can still replicate robo-advisor portfolios with an online brokerage account.
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About The Author: Émilie J.Talbot
Émilie is the Marketing Director at Hardbacon. A former financial security advisor, she is passionate about finance. She understands the importance of sound personal financial advice and aims to write about this topic to help readers make better financial decisions.
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