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Robo-Advisors

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Choosing a robo-advisor with Hardbacon

The main Canadian robo-advisors are very similar when it comes to offering services and even portfolios. The most important question is therefore the management fees. To compare the different advisors on this criterion, enter the amount you wish to invest through a robo-advisor in the left sidebar, and the estimated annual fees for each robo-advisor will appear in the comparison tool. Finally, several robo-advisors offer socially responsible portfolios that will appeal to the investor who wishes to invest in this type of investment value. To choose the ones that offer such type of investment, select this type of portfolio in the left sidebar.

Frequently Asked Questions

Robo-advisors offer portfolio management services online which do not require interaction between the client and the portfolio manager. The main advantages of robo-advisors are that they do not require any investment knowledge and they offer lower management fees if you compare to a traditional financial advisor. Contrary to popular beliefs, the investment decisions of a robo-advisor are not done by algorithms, but by portfolio managers in the flesh.

The main reason to choose a robo-advisor is mainly to save on fees. It may be that a customer can expect to pay in fees between 2 and 3% of its assets each year with a group savings representative, this fee will be less than 1% with a robo-advisor. Of course, unlike a financial advisor, a robo-advisor will not offer human support or personalized advice.

Most Canadian robo-advisors invest in index exchange-traded funds (ETFs). Concretely, this means that the portfolio managers working for the Canadian robo-advisors are not trying to beat the stock market, but to obtain a similar return while minimizing fees. Their portfolios therefore tend to be made up mainly of ETFs, which make it possible to invest in numerous financial products at little cost. However, there are some portfolios by robo-advisors that are made up of stocks or even mutual funds.

There are several types of fees attached to investments via a robo-advisor. Management fees vary in relation to the money invested. Generally, they represent around 0.50% management fees with the main robo-advisors. Therefore, if you invest $10,000, you will have to pay approximately $50 in management fees in the first year. However, management fees are not the only fees to consider. There are also the transaction fees, which are usually included in the management fees of robo-advisors. In contrast, the fees that many investors ignore when it comes time to invest through a robo-advisor are the management expense ratios (MERs) of the exchange-traded funds (ETFs) in which the robo-advisor invests. These are not included in the management fees announced by the main Canadian robo-advisors, and generally vary between 0.2% and 0.35%.

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