It wasn’t long ago that robo-advisors were thought of as a newfangled millennial-made idea for investing-inept 20- and 30-somethings. Now, though, all sorts of Canadians, including high net-worth boomers and new-to-saving youngsters are pouring money into these easy-to-use and low-cost online operations. According to research aggregator Statista, Canadian robo-advisors hold US$5.5 billion in assets under management, which, it predicts, will climb to an estimated US$14 billion by 2022 for a 36.8% compound annual growth rate.
When the first robo-advisors came into being years ago, they offered investors two things: easy access to low-cost ETFs and an eye-catching interface that made tracking gains and losses a cinch. Now, there are robo-advisors that let you buy insurance, include over-the-phone financial and investing advice, access to RIFF and RESPs and more.
Our annual look at the best robo-advisors in Canada digs into the differences between the growing number of robo sites available to Canadian consumers.
What you’ll learn:
- What is a robo-advisor?
- Should I use a robo-advisor?
- Robo vs human advisors
- Guide to each robo-advisor in Canada
A quick look at robo-advisors in Canada
For full descriptions of each of the best robo advisors in Canada, go here.
Shown in alphabetical order:
|Robo Advisor||Fees||Investment Approach||Minimum Account|
|BMO SmartFolio||0.4% to 0.7%||Match with one of five custom portfolios containing baskets of BMO ETFs||$1,000|
|Invisor||0.50%||7 managed portfolios holding passive ETFs by risk tolerence; allocation aligns with global market weightings||None|
|Justwealth*||$4.99/mo to $25,000, then 0.4% to 0.5%||60 portfolios, including US$ denominated; mix of ETF providers; offers tax-loss harvesting||$5,000|
|NestWealth||$20 to $80/mo||Allocated across six asset classes of industry-standard ETFs by risk tolerance||None|
|Questwealth Portfolios||0.2% to 0.25%||5 actively-managed Questrade ETF portfolios; extensive account type offering||$1,000|
|WealthBar||0.35% to 0.6%||5 low-cost ETF portfolios by risk tolerance; also non-traditional private-investment portfolios||$1,000|
|Wealthsimple*||0.4% to 0.5%||Variety of ETFs; socially responsible investment portfolio focussed on cleantech, low carbon||None|
What is a robo-advisor?
Unlike discount brokerages, which allow investors to buy and trade securities online, a robo-advisor takes care of the investing itself. After the platform determines your risk tolerance or goals, all you need to do is connect your bank account to the software, enter the amount you want to invest and off you go. The robo-advisor will put your money into its funds and continually rebalance your dollars to keep your asset mix where it should be.
Should I use a robo-advisor?
Now that robo-advisors are catering to people up and down the wealth spectrum, everyone should consider using one. Study after study has shown that high fees can significantly eat into long-term returns and these sites come with lower than average expenses. In general, these sites use passive funds, so those who want to invest in more actively managed portfolios, or prefer do-it-yourself stock picking, may want to look elsewhere.
Robo versus human advisors
In some ways, the term robo-advisor is misleading – these are, for the most part, companies have found a way to simplify the investing process. They don’t provide in-depth financial advice and they don’t care much about your big life events. Human advisors, on the other hand, can invest and help you figure out what you need for retirement.
However, the future is likely some hybrid of robo and human advice where the software does the investing and the human provides the financial advice. We’re already starting to see that happen, likely because it’s what investors want. A Capital One survey found that 69% of investors would like to use a digital-human hybrid to manage their money, while 74% say they want a financial advisor to help them get through turbulent markets.
Full guide to robo-advisors in Canada for 2019
In alphabetical order:
First $100,000 – 0.7%
Next $150,000 – 0.6%
Next $250,000 – 0.5%
Above $500,000 – 0.4%
Minimum account size: $1,000
Overview: BMO SmartFolio combines the power of a robo with big bank resources. While it makes use of ETFs, it also employs real-life fund managers from BMO Global Asset Management, its massive investing arm, to design its portfolios. While BMO SmartFolio is open to anyone, most of its clients come from BMO’s bank channel.
Investment approach: After asking you a few risk tolerance questions, the company will match you with one of its five custom portfolios, which run the gamut from conservative to aggressive. Each portfolio, which is essentially a fund-of-funds, contains a basket of BMO ETFs. It’s easy to change your asset mix – let them know when a life event happens that requires a shift in approach – while its managers will adjust its five portfolios if they think they need different asset class exposures.
The is the best robo-advisor for… People who want a passive and active combo. While investors can take a set-it-and-forget-it approach, if something does go awry in the markets, then a professional will adjust a fund’s asset mix accordingly. SmartFolio also has a team of advisors that can answer more basic client questions through live chat, email or phone.
Visit BMO SmartFolio for more information.
0.5% no matter who much is invested
Minimum account size: None
Overview: Invisor, which is run by Alliance Insurance & Financial Services Inc., comes at investing a little differently than the others: It asks users to input goals and then puts people into one of seven ETF portfolios. It also offers easy access to insurance products, including life, disability and critical illness, and it has professional advisors on hand to answer investing-related questions.
Investment approach: The company’s seven portfolios are overseen by professional managers, but they hold passive ETFs from Vanguard, iShares, BMO and Purpose Investments. While asset mix varies based on risk tolerance – the most aggressive investors can buy an all-equity portfolio – Invisor says it tries to keep geographic allocation in line with global market weightings. Canadian equities make up less than 5% of a portfolio, while U.S. stock exposure is typically more than 50 percent.
This is the best robo for… Investors who want a one-stop shop for investing and insurance. Invisor isn’t much different from other robos, but being able to buy insurance through the site will appeal to those who want to keep their financial lives in one place.
Visit Invisor for more information.
Up to $500,000 – 0.5%
More than $500,000 – 0.4%
Minimum monthly fee of $4.99 ($2.50 for RESPs) if the account balance is lower than the amount needed for 0.5% per month to be charged. It works out to be around $12,000.
Minimum account size: $5,000. There’s no minimum for RESPs.
Overview: This Toronto-based company bills itself as the more sophisticated robo. A personal portfolio manager helps find the right ETF portfolios for its clients based on their specific goals. It also offers a host of accounts, including RRSPs, RESPs, TFSAs, RIFFs and non-taxable accounts.
Investment approach: The company has more than 60 portfolios—far more than its competitors—including ones focused on global growth, Canadian growth, income and education savings. It also has U.S. dollar denominated portfolios. The company uses around 25 ETFs from seven providers, including Vanguard, iShares and Schwab, and it also offers personalized tax-loss harvesting.
This is the best robo for… Canadians who want a more tailored approach to their robo-investing. With so many portfolios, including a number of tax-efficient options for non-registered accounts and target date funds for education savings, users should be able to find something that suits their specific needs.
Visit Justwealth* for more information.
$0 – $75,000 – $20 per month
$75,000 – $150,000 – $40 per month
$150,000 plus – $80 per month
Minimum account size: None
Overview: Started by Randy Cass, a former BNN host and fund manager with the Ontario Teachers’ Pension Plan, NestWealth is one of the only robo’s geared toward advisors and workplaces. While individuals will find a lot to like, it’s Pro version lets fund companies essentially create their own robos with their own products, while its Plus and Work versions allow advisors to integrate robo-investing into their own practice, and help workplaces set up group RRSPs, respectively. Unlike the others, NestWealth charges a monthly fee and not a percentage of assets, so you’re not paying more money as your portfolio grows.
Investment approach: NestWealth uses a variety of industry-standard ETFs from iShares, Vanguard and BMO. The company will take your money and allocate it across six asset classes, including domestic equities, emerging market and international equities, government fixed income and real-return bonds and real estate. The allocation will vary depending on your risk tolerance and it regularly rebalances too.
This is the best robo-advisor for… People who want a no-fuss, passive approach to investing. It’s easy to use and understand, its cost structure is attractive – even if your assets grow you still pay the same monthly fee – and its ETFs will be familiar to any index investor. NestWealth’s real promise, though, is in its professional lines of business. Companies can use it to enhance their employee benefit offerings and it can help advisors spend less time investing and more time planning.
Visit NestWealth* for more information.
$1,000 to $99,999 – 0.25%
$100,000 plus – 0.2%
Minimum account size: $1,000
Overview: Most people know this company from its discount brokerage, Questrade, which, with more than $8 billion in assets under management, is the largest independent brokerage in Canada. In November 2018, the company rebranded its then four-year-old robo-advisor service from Portfolio IQ to Questwealth Portfolios and slashed its fees. It’s also easy to use its discount brokerage offering along with its robo service, which can, for the right type of person, provide for a more robust investing experience.
Investment approach: Questwealth puts investors in one of five actively-managed ETF portfolios. The securities, which are sub-advised by L.A.-based One Capital Management, hold a number of brand name investments, including securities from SPDR, Wisdom Tree and iShares. The company does offer more account types than some other robos, including RRSPs, spousal RRSPs, TFSAs, RESPs and LIRAs, among others, and it has socially responsible investing options as well.
This is the best robo for… Canadians who might want to use a robo for their core holdings and a discount brokerage for their satellite stock picking. Because of Questrade’s long do-it-yourself history, it knows how to cater to people who prefer to invest on their own. While anyone can use Questwealth, savvier investors may like this one more than some others.
Visit Questwealth Portfolios for more information.
First $150,000 – 0.6%
Next $350,000 – 0.4%
Above $500,000 – 0.35%
Minimum account size: $1,000
Overview:WealthBar is owned and operated by Vancouver’s Nicola Wealth Management, making it the only robo-advisor in Canada that’s run by a traditional investment firm. One of the big differences between WealthBar and its competitors is that it offers, as it says on the site, “unlimited financial advice.” It takes a hybrid active-passive model, with portfolio managers constructing its mostly ETF-based funds. In December, CI Financial Group bought a majority stake in the company, which the company says, could provide access to new investment opportunities.
Investment approach: The company offers two types of portfolios: a low-cost ETF portfolio and what it calls private investment portfolios. The former is similar to what you’d find with other robos – five portfolios that range from conservative to aggressive and include ETFs from Horizons ETFs, Vanguard, iShares and BMO. The latter option includes three portfolios made up of Nicola Wealth Management mutual funds, which are invested in alternative strategies, private equity, mortgages and other traditional and non-traditional investments.
This is the best robo for… Investors who want more choice and different ways to diversity. Diversification is a key part of WealthBar’s message, which is why it includes a variety of asset classes in its portfolios. Even its ETF portfolios have some real estate in them. With active management, access to advisors and the Nicola Wealth backing, WealthBar is well suited to those who like traditional investing, but want to get into the robo-game too.
Visit WealthBar for more information.
First $99,999 – 0.5%
Above $100,000 – 0.4%
Minimum account size: None
Overview: With more than $3 billion in assets under management, this Toronto-based robo is the biggest, and best known, of the bunch. It’s sleek interface provides a great user experience and performance is easy to track. It’s also backed by a $165 million investment from Power Corp., one of Canada’s largest financial firms.
Investment approach: Wealthsimple puts your money into an array popular of ETFs from iShares, Vanguard, WisdomTree, VanEck, BMO and Powershares. It also recently introduced socially responsible investment portfolio that allows Canadians to invest in funds that focus on cleantech and low carbon, among other things. It prides itself on passive, diversified investing, even though it does plan to launch a stock picking version of its site in the near future.
This is the best robo-advisor for… Investors who like simplicity. Wealthy Canadians will also like the perks that come with investing more than $100,000. That will get you into Wealthsimple Black, which comes with a reduced fee, one financial planning session with a human advisor and access to airport lounges around the world. Deposit $500,000 for Wealthsimple Generation and get regular access to real advisors and the ability to create custom portfolios.
Visit Wealthsimple* for more information.