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 who shoulder this task.
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 comprised 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 are made up of 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. 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 0.2% and 0.35%. For example, if you invest $1,000 in an ETF through your robo-advisor, you will pay between $2 and $3.50 in management fees in the first year. You can read this article to learn more about robo-advisors.
To find out how to choose a robo-advisor, I encourage you to read this article and use this robo-advisor comparison tool to filter the choices according to your personal criteria. To help you make your choice, we’ve compiled this list of the 10 best Canadian robo-advisors.
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 0.11% to 0.23%. This means that you could end up with a portfolio with total fee of just 0.31%.
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, up to a maximum of $ 150 per account.
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 0.11% to 0.23% 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.
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 on the best portfolio for you. You can also get investment or financial planning advice upon request. There are 70 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.
The company 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). The minimum deposit required to open an account is $5,000. Again, if you are concerned about the environment and social issues, you can invest your money in socially responsible investing. The platform is also web-based.
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 Generation 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. Lastly, you get access to a wide variety of technological tips and tools to help you maximize your savings and investments. For example, “Overflow” is a feature that allows you to siphon excess money from your chequing account to your accounts. Alternatively, “Roundup” is another money siphoning tool that rounds up your debit and credit card purchases to bolster your investments.
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 Cleantech, a fund that focuses on clean energy innovations. 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.
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 0.16% and 0.25% for ETF portfolios. For private investment portfolios, MERs are between 1% and 1.55%. 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 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.
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 0.12% 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.
InvisorGPS is a feature unique to Invisor. It’s a tool with which you to set short and long term goals, see how long it will take you to reach those goals, view gaps in your plan, make adjustments accordingly, and track your progress. The company also offers free insurance needs analysis. In building their portfolios, they take into account all types of investment funds. That is, mutual funds and Exchange Traded Funds, which are managed both actively and passively. Like other robo-advisors, Invisor offers a personalized portfolio based on answers you provide to determine your risk profile. You can also adjust the risk level of your portfolio. When you select a portfolio, Invisor shows you historical data for the ETFs within that portfolio. You also get access to a performance comparison with an average global equity mutual fund.
The company only offers 0.5% pricing (plus MER). That is, regardless of the amount in the account, the same cost applies to everyone. The management expense ratios vary between 0.11% and 0.2% for ETF portfolios. With Invisor, you can invest in a TFSA, RRSP, RRIF, RESP and more. The types of portfolios you can invest in are Exchange Traded Funds (ETFs). No minimum deposit is required to open an account. Lastly, only a web-based platform is available.
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RBC InvestEase offers a total of 150 ETFs for a total of $60 billion in assets under management. RBC offers you socially responsible investment portfolios, which are comprised of passive RBC iShares ETFs. This combines traditional investments with environmental and social investments. RBC iShares 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 only offers 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 0.3% for ETF portfolios. 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 required to open an account is $1,500. Like most robo-advisors, you can invest in socially responsible investing. You can invest through their web platform, or you can use the mobile platform if you have an iOS-based device (only for Apple mobile devices).
This National Bank robo-advisor lets you invest in ETFs and also provides an automatic rebalancing solution. The robo-advisor 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 $135 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. Unlike other robo-advisors, Management Expense Ratios are already included with this level of investment. 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 platform if you use the iOS system (Apple mobile devices only).
The company has been in existence for over 10 years and manages over $800 million for 3000 clients in English 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 3 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 allocation”. They build a portfolio with you using a combination of their funds that best reflects your “strategic asset allocation”. They then help you manage your portfolio over time. Lastly, when the markets move, managers stay by your side.
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%.
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, or you can use their mobile platform if you have the iOS system (Apple mobile devices only).
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, like income taxes. 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 iOS-only mobile platform (with Apple mobile devices only).
Now that we’ve toured the gamut of Canadian robo-advisors, all you have to do is choose the one that best suits you. You can use this comparison tool to help you. If you’re still not sure whether robo-advisors are the best investment method for you, I encourage you to take this short quiz. You’ll have to answer a few questions that will help us determine if you should invest through a robo-advisor or an online broker.
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 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 so, robo-advisors are a better option. You can still replicate robo-advisor portfolios with an online brokerage account. Check out this article to find out how.
This top 10 robo advisors in Canada was compiled by Hardbacon, which has designed a robo advisor comparator listing dozens of Canadian robo advisors. Hardbacon also helps you save on savings accounts, chequing accounts, credit cards, online brokers, mortgages and personal loans. If you want to go one step further and take control of your finances, you should download Hardbacon’s mobile app, which links to your bank and investing accounts, helps you plan for your financial goals, create a budget and invest better.
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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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