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Everything You Need To Know About Robo-Advisors in Canada

6 minute read

Nick Steinberg

By Nick Steinberg

Investing has traditionally been one of the biggest pain points in personal finance. Doing it yourself was generally ill-advised unless you had advanced knowledge of the financial sector. For everyone else, setting up a portfolio required hiring a financial advisor. That’s not only expensive, but naturally favored wealthier clients due to the way the revenue structure was set up. It was tough for the little guys.

Fortunately, the last decade has helped democratize the investing world thanks to the introduction of robo-advising platforms.

What is a Robo-Advisor?

Despite what the name might suggest, robo-advisors are not actually robots. The “robo” term simply emphasizes the automated process behind these platforms. They’re still very much run by real, knowledgeable people. Essentially, robo-advisors takes care of the investing for you. You tell it your risk tolerance and overall goals, enter the amount you want to invest, and the robo-advisor takes care of the rest.

The main benefits of a robo-advisor come down to cost and ease of use. In general, the fees are much lower than you’d find with a traditional financial advisor. Most platforms are also set up in an easy to understand manner. That means that even someone with no prior knowledge of investing can jump on board without much difficulty.

This mix of affordability and accessibility have helped make robo-advisors an increasingly popular investing option. It also means there are now a ton of companies out there to choose from. While a robo-advisor is a great option for anyone looking to build long-term savings (aka every adult out there), different services will suit different needs. To help take the load off of picking a robo-advisor, we’ve narrowed down the six best options currently available in Canada.

6. Wealthbar

Best for: Investors who crave choice.
Minimum account size: $1,000.

Fees:
$150,000 or less – 0.6% per month.
$150,000 to $175,000 – 0.57% per month.
$175,000 to $200,000 – 0.55%.
$225,000 to $1,00,000 – 0.53% – 0.41%.

Wealthbar is one of the oldest names in the robo-advisor game (though it only launched in 2014). It’s one of the more sophisticated services on the market and it is aimed at the more seasoned investor. While you can limit yourself to opening a basic RRSP or TFSA with Wealthbar, the platform truly rewards those looking for a full suite of investment options.

Wealthbar’s key feature is its financial planning services, which comes complete with access to a (non-commission) licensed financial planner. Clients can go over a variety of options with their advisor, including estate, tax, and insurance planning. Additionally, Wealthbar’s portfolios offer a variety of asset classes, allowing for a level of diversification beyond what most robo-advisors offer.

As mentioned above, Wealthbar best serves clients with large investment portfolios. Although you can open an account with $1,000 and still get a lot out of it, you’ll be stuck with higher fees than most competing services. Thanks to its sliding scale, Wealthbar doesn’t begin offering a good price until you hit the $150,000 threshold, making it a less than ideal option for the average investor.

5. Nest Wealth

Best for: Passive investors.
Minimum account size: No minimum investment required.

Fees:
$20 per month for portfolios with $75,000 or less.
$40 per month for portfolios between $75,000 and $150,000.
$80 per month for portfolios with more than $150,000.

Launched in 2014, Nest Wealth is one of the first robo-advisors in Canada and remains one of the most trusted. While most robo-advisors are geared toward individuals, Nest Wealth’s suite of features has made it a popular option among advisors and workplaces. You can definitely still open an account and get a lot out of it if you’re an investment newbie. However, the way Nest Wealth is set up means large investors will get more value out of it.

Nest Wealth takes a different approach to fees than its robo-advising peers. Instead of charging a percentage of your overall portfolio, Nest Wealth has flat monthly rates ranging from $20 to $80 per month. With a $150,000 investment, this works out to about a 0.053% fee, which is significantly lower than the industry standard. However, a $20 per month minimum is quite high if you’re a small investor.

Bottom line: Nest Wealth is a great robo-advisor option for wealthy investors and companies looking to enhance their employee benefits packages. However, first-timers should probably look elsewhere.

4. Justwealth

Best for: Experienced investors looking for portfolio customization.
Minimum accounts size: $5,000 (no minimum for RESPs).

Fees:
A minimum fee of $4.99 per month for all account types (excluding RESPs).
Up to $500,000 – 0.5% per month.
More than $500,000 – 0.4% per month.
RESPs have a minimum monthly fee of $2.50.

Justwealth can be thought of as one of the more upscale robo-advisors in Canada. Like any good robo-advisor, Justweath auto-manages your investment portfolios and offers lower fees than a traditional equity mutual fund.

However, the company stands out from the pack by offering a large number of portfolio options and personal portfolio management. Justwealth’s Registered Portfolio Managers help clients choose from more than 60 portfolios. This offers a level of customization most other robo-advisors can’t touch, as clients can adjust for considerations such as growth, capital protection, time horizon, and risk tolerance.

The downside is these premium services come at a cost, as you need a minimum balance of $5,000 just to open a Justwealth account. That puts Justwealth out of reach for many younger would-be investors. However, its low fees, customized portfolios, and personalized financial planning makes it one of the most attractive robo-advising options on the market for those with a ready-made nest egg.

3. RBC InvestEase

Best for: Current RBC clients and those looking for a good Wealthsimple alternative.
Minimum account size: No minimum investment required.

Fees:
Free for first year.
0.5% per month after first year.

In general, Canada’s big banks are lacking when it comes to affordable investment options. This is especially true when you measure up their offerings against other robo-advisor platforms. However, RBC has made a strong push into the robo-advising market with its InvestEase platform. It is arguably the best option from the big banks. The big selling points are the lack of a minimum balance requirement and waived fees for the first year. This puts RBC InvestEase on par with Wealthsimple in terms of accessibility and affordability.

Another thing InvestEase has going for it is the backing of Royal Bank of Canada (RBC), one of Canada’s oldest and most reliable banks. In addition to peace of mind, you’ll also have access to a high level of customer service and additional resources. You also don’t need to be an RBC customer to sign up for InvestEase. However, if you already bank with them, you may be able to take advantage of multiproduct rebates for additional savings.

The one major downside to RBC InvestEase is the fee. While 0.5% is a good rate, it’s also what everyone pays. You won’t receive a discount if your portfolio reaches a certain amount. Keep that in mind if you’re looking to make a large investment.

2. QuestWealth

Best for: Investors looking for the lowest fees.
Minimum account size: $1,000.

Fees:
$1,000 to $99,999 – 0.25% per month.
Over $100,000 – 0.2% per month.

Questrade has been aggressively marketing itself as a low cost alternative to traditional brokerage services for some time now. Unsurprisingly, the company’s consumer-first philosophy carries over to its robo-advisor platform, Questwealth. In fact, at just 0.2% to 0.25% per year, Questwealth offers the lowest robo-advisor fees in Canada. Believe it or not, that’s only half the cost of Wealthsimple!

So besides low fees, what does Questwealth have going for it? Well, the minimum balance is actually quite reasonable. You need at least a $1,000 investment to open an account. While this makes things a little more difficult if you can only afford a small initial deposit, it’s by no means out of reach for most Canadians.

Questwealth is also a robust service, allowing you to use its discount brokerage offerings alongside the robo-advisor for a more hands-on investing experience. However, this is probably more than you need if you’re not looking to manage your investments yourself. Still, more options are never a bad thing — especially since you’ll gain more investing experience as you go. Despite a somewhat muddled user interface, Queswealth is easily one of the best and most accessible robo-advisors on the market.

1. Wealthsimple

Best for: Beginners and investors who crave simplicity.
Minimum account size: No minimum investment required.

Fees:
Up to $99,999 – 0.5% per month.
Over $100,000 – 0.4% per month.

Wealthsimple is the first name that comes to mind for many when it comes to robo-advisors and for good reason. Simply put, Wealthsimple is the best overall platform on the market. Striking a near-perfect balance between usability and affordability, Wealthsimple is a great option no matter your level of investment knowledge. The platform’s user interface is both sleek and easy to understand. Historical performance and future projection charts are presented in a simplified manner so you can clearly see how your investments are performing.

While Wealthsimple doesn’t allow you to go as hands-on as some other platforms, there’s still a good deal of customization available. One of the best features is the option to choose socially responsible investments. Investors are becoming increasingly concerned with where their dollars are going, which is why Wealthsimple has resonated particularly well with socially-conscious millennials. You also don’t need a minimum investment to get started. By taking advantage of ongoing promotions, you can get your first $10,000 managed for free.

Wealthsimple may have the look of a platform that is too good to be true. However, when it comes to robo-advisors in Canada, nobody does it better.

Robot Advisor on Computer and Phone

Shutterstock

Nick Steinberg

Freelance Writer

Nick is a writer based in Kitchener, Ontario and has worked in online publishing since 2013. Follow him on Twitter and Instagram @Nick_Steinberg.

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