In this article let’s take a look at the robo advisors scene in Canada and the top 7 robo advisors right now. Let’s get started.
With all the talk of robo advisors going on in the investment world, you’d think we were being invaded by aliens from outer space. Although, that is not the case, there are many good reasons for all the buzz behind robo advisors in Canada today.
The average “Joe” Investor can now access “customized” investment portfolios that are designed to cater to their own specific investment objectives, risk tolerance, and return expectations without having to pay “an arm and a leg” to do so.
At the end of the day, people are concerned about the fees they pay and their investment returns, and this is why robo-advisors are here to stay!
What Are Robo Advisors?
Robo-advisors are online wealth management firms that take your money and help you put it into low-cost Exchange-Traded Funds (ETFs). When you first sign-up with them, you are generally required to answer a series of questions that are designed to generate your financial profile and categorize you based on your risk tolerance. A portfolio that matches your needs is then created and your funds are invested.
Over time, automatic re-balancing i.e. investment asset re-weighting occurs in your account as assets gain or lose value and fall outside their target allocations. As an investor, you do not need to do anything other than put money in your account and it is invested on your behalf.
“So, how is this any different from when I buy mutual funds through my bank?” Hmmm…very different.
Robo Advisors and Wealth Management
First of all, robo-advisors give you access to wealth management services and financial planning at much lower fees. Traditional wealth management is expensive, and the majority of independent financial advisors have clients whose assets exceed $1 million dollars. If you are not affluent, you are out of luck.
Robo Advisors and Investment Fees
Robo-advisors are not the only way to save on investment fees. If you are comfortable buying your ETFs via a self-directed discount brokerage account, you can save even more on fees.
However, not many people are confident enough to go all-in and solely manage their investment portfolio. For one, you need to be super-disciplined and keep your behavioural biases at bay.
Top 7 Robo Advisors In Canada
Below, I provide a summary of my top robo-advisor choices (i.e. those which I have personally reviewed) and the others.
Wealthsimple is Canada’s most popular robo-advisor. They also operate in the U.S. and U.K., and service over 85,000 clients with more than $3 billion in assets under management.
Accounts you can open with them in Canada include: TFSA, RRSP, RESP, RRIF, LIRA, and other non-registered investment accounts.
Recently, they also introduced a Smart Savings Account.
When you invest with Wealthsimple, you stand to benefit from the following:
A customized portfolio that suits your specific financial needs and comfort level.
Automated rebalancing whenever your portfolio drifts away from its intended asset allocation.
Dividend re-investing to maximize your long term returns.
Financial planning advice from a human.
Tax-loss harvesting to minimize your tax liability when applicable.
Safety: through the use of bank-level security and your funds are protected by the Canadian Investor Protection Fund up to $1 million.
Wealthsimple Roundup: a feature that helps you automatically invest your spare change in a low-cost ETF portfolio. They have also recently introduced, Overflow, a feature that tracks your account balance and helps you save/invest extra money you are not using.
Wealthsimple Trade: Want to try your hand at self-directed investing? Wealthsimple Trade is a $0 commission online stock trading service.
They offer two main types of investment accounts: Wealthsimple Basic and Wealthsimple Black. In general, you pay:
Accounts between $0 – $100K: 0.50% fee per year
Accounts over $100K: 0.40% fee per year
WealthBar was Canada’s first robo-advisor. Founded in 2013, their assets under management had grown to over $225 million by early 2018.Accounts you can open include RRSP (individual, spousal, and group), RESP, TFSA, RRIF, LIRA, LIF, non-registered accounts (both individual and joint), and corporate investment accounts.
Benefits: When you open an account with WealthBar, you can expect the following:
Customized Financial Advice from a dedicated financial advisor.
Diversified Portfolio that is customized to lower your investment risk and maximize returns.
Financial Planning Tools for creating as many financial plans as you want. A financial planner is available to advice you as well.
Automated Re-balancing that takes the chore out of investing.
Estate Planning, Tax Optimization, and Insurance Needs Analysis.
Access to private investment pools through their partnership with Nicola Wealth management.
Fees: WealthBar uses a tiered fee schedule that runs from 0.35% to 0.60% per annum.
3. Nest Wealth
Nest Wealth was one of the first robo-advisors to be launched in Canada. Founded in 2014, they had a very different approach to fees, and introduced the first subscription-based pricing model.Accounts they offer include RRSP, TFSA, LIRA, RRIF, RESP, and non-registered investment accounts.
More recently, they also launched “Nest Wealth at Work” which is a group RRSP plan for small businesses.
Benefits: In addition to lower investment fees, diversified and tax-efficient portfolios, you will also get:
Professional Financial Advice: you get a dedicated portfolio manager who is able to offer you customized advice that meets your needs.
Automatic Re-balancing: No need to get your hands dirty punching the calculator to find out how far your asset allocation has strayed. They have got you covered!
Award-Winning Strategies: Nest Wealth, like many other robo-advisors, utilizes time-tested Nobel Prize-winning strategies in managing your portfolio.
Fees: Nest Wealth charges a flat monthly fee based on your account size, starting at $20/month to a maximum of $80/month. With much larger portfolios, Nest Wealth’s pricing structure offers a steep discount on fees compared to the others.
Planswell is a robo-advisor unlike any other. In addition to the general robo-advisor offering of low-fee investment services, Planswell puts extra “icing on the cake” by incorporating insurance and mortgage into their full and individualized financial planning service.Planswell was founded in late 2016 and after a year in operation, could boast of well over 17,000 financial plans.
Accounts they offer include RRSP, TFSA, RESP, LIRA, RRIF, and non-registered investment accounts – both joint and individual.
Benefits: In addition to a customized portfolio, diversification and automated re-balancing, you also get:
Free Financial Planning: When you open a new account, they ask you to answer a questionnaire with about 30-40 questions that takes about 3 to 4 minutes to complete. Their software runs complex calculations in the back-end and they provide you with a full financial plan that is tailored to your financial goals.
Lower Cost: You can’t go wrong with paying 0.40 – 0.50% per annum for their wealth management service. Compared to the 2.35% average fee for equity mutual funds, you are saving lots of money.
One-Stop Solution: They combine your investing, insurance, mortgage, and borrowing under one general financial plan, giving you a clearer picture of your finances.
Fees: Planswell have a pricing structure that is similar to Wealthsimple’s:
$0 – $99,999: 0.5% fee
$100K +: 0.4% fee
Justwealth was co-founded by Andrew Kirkland and James Gauthier in 2016. Justwealth considers themselves as “Canada’s most comprehensive online portfolio management platform”
Unlike the average robo-advisor, Justwealth boasts an array of portfolio options (over 60 different types). It is from these they choose one that fits your specific investment objectives. Their account offerings include RRSP, TFSA, LIF, LIRA, RRIF, and non-registered investment accounts.
Benefits: In addition to automatic portfolio re-balancing, diversification, lower fees, tax efficiency, and account security, you can also expect:
Free Financial Planning: Your account gives you access to experienced Certified Financial Planners.
Free Portfolio Review: Want a professional take on your current investment portfolio? Justwealth will give you a FREE detailed review showing where performance and savings can be improved.
U.S. Dollar Investing: If you prefer, they also provide investment accounts that are denominated in U.S. dollars.
One-Stop RESP Solutions: Their Education Target Date RESP portfolios make saving for your kid’s education as easy as 1, 2, 3…
Fees: Justwealth’s fees are as follows:
$5,000 to $500,000: 0.5% fee
Over $500K: 0.4%
Justwealth is great for large portfolios and RESP accounts. Unlike their other accounts, RESPs are not subject to a minimum balance.
ModernAdvisor is one of Canada’s most competitive robo-advisors when it comes to fees. They offer RRSP, TFSA, RESP, RRIF and non-registered (personal & joint) investment accounts. In addition to automatic rebalancing and diversified low-cost ETF portfolios.
ModernAdvisor also lets you invest in a socially-responsible way, if that’s your preference.Thinking about trialing their investment service? They offer a 30-day trial account with $1,000 of their own money, and if you go ahead and open an account later, you can keep any gains realized on your ‘test’ account.
$0 – $10K: Free
$10K – $100K: 0.5%
$100K – $500K: 0.4%
$500K and over: 0.35%
7. BMO Smartfolio
BMO SmartFolio was the first robo-advisor to be launched by one of Canada’s largest banks – BMO, which has been around for over 200 years.
You can open an account with them with as little as $1,000 and they offer the general accounts types including TFSA, RRSP, RESP, RRIF, joint accounts and non-registered investment accounts.
Fees: Their fees are a bit higher for small accounts compared to my top choices. However, they are still very competitive compared to even their own mutual fund offerings.
First $100,000: 0.7% fee/year
Next $150,000: 0.6%/year
Next $250,000: 0.5%/year
Above $500K: 0.4%/year
All the robo-advisors listed on this page will save you tons of money over the long term when compared to the services of a financial advisor or traditional mutual funds. Which one should you choose to meet your investing needs? It depends! If you are looking for quick options:
For smaller accounts (less than $100K), take a good look at Wealthsimple, WealthBar, and Planswell.
In case you’ll need a much larger accounts, consider the three robo-advisors above in addition to Nestwealth, Justwealth, and ModernAdvisor.
For an easy RESP solution to save for your kid’s future college education, check out Justwealth.
Please let me know your thoughts and comments below.
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Hey, I’m Sagar from Toronto, Canada.
I am a self-taught, motivated Canadian Personal Finance Blogger who loves writing articles about Savings, Investing, Stocks & ETF reviews, Side Hustles, Frugal Living, Credit Cards and Retirement Planning. Husband. Father. Software Developer. Web Designer. Hiking Enthusiast.