What is adviceDirect?
adviceDirect is a one-of-a-kind investing platform that combines DIY investing with personalized recommendations – a claim that is actually true in Canada and even North America. adviceDirect is indeed a unique investing platform that provides advice on your investments. You’re in the driver’s seat, but with adviceDirect as your co-pilot. With adviceDirect, you receive personalized buy, sell and hold advice, but you are the one calling the final shots on what to buy and sell, all through their intuitive and helpful virtual dashboard.
This platform is a hybrid of a traditional hands-off robo advisor and a self-directed strategy. It’s an interesting deviation from other robo advisors currently on the market since it allows you to invest in stocks, bonds and mutual funds in addition to ETFs, and we’re going to take an in-depth look at this service today.
BMO InvestorLine: A Name You Can Trust
BMO, short for Bank of Montreal, was established in 1817 and now operates officially as BMO Financial Group. BMO is considered one of the Big Five banks and is the oldest bank in Canada. It’s the fourth-largest bank in the country and eighth largest in North America.
BMO’s official headquarters are in Toronto, and their board of directors includes uber-experienced individuals like J. Robert Prichard (former CEO of Metrolinx), Sophie Brochu (CEO of Énergir), Don Wilson (former Chief Risk Officer at JP Morgan Chase & Co.), and Eric La Flèche (CEO of Metro Inc).
BMO Wealth Management
BMO’s wealth division, BMO Wealth Management, has won many awards and been repeatedly recognized for excellent customer service. BMO InvestorLine received the highest ranking in self-directed investor satisfaction according to the J.D. Power 2018 Canada Self-Directed Investor Satisfaction Study. In 2015, BMO Wealth Management was named Best Wealth Management Bank Canada by International Finance Magazine, and in 2014 and 2015 took home the title of Best Wealth Management in Canada from Global Banking and Finance Review. BMO Wealth Management is comprised of the following businesses: BMO InvestorLine, BMO Nesbitt Burns, BMO Private Bank, BMO Insurance and BMO Global Asset Management.
adviceDirect falls under the umbrella of BMO InvestorLine, which is their online investing brokerage. From InvestorLine and Nesbitt Burns you can access their full-service robo advisor SmartFolio*, go 100% DIY with Self-Directed, or use the hybrid program we’ll look at today, adviceDirect.
*BMO SmartFolio is a product of BMO Nesbitt Burns Inc.
How adviceDirect Looks
adviceDirect is home to the same blue and red colours used in the rest of BMO’s branding. The styling of the main pages is functional and slightly sleek, but not as attractive as some other FinTech companies. That said, the beauty of a website should come second to its utility. For our purposes, we’d describe the website as fresh and functional.
Existing users sign into their accounts through the BMO InvestorLine portal, and from there you are directed to the dashboard, which we’ll explore later in detail.
How adviceDirect Works
If you sign up for a typical robo advisor, you’ll usually complete a questionnaire that helps the robo advisor assess your risk tolerance, your goals, and your investment timeline. From here they will recommend several (sometimes dozens) portfolios for you to choose from, and these portfolios have an appropriate mixture of equity and fixed income ETFs to help you achieve your goals. Because the portfolio selection process is automatic, and a Portfolio Manager manages the entire portfolio across all clients, not just your own, robo advisors are much more cost effective than mutual funds.
Canadians pay some of the highest fees in the world (estimated at 2% to 3% of their total portfolio annually) for actively managed mutual funds, while most robo advisors offer automated portfolios for less than a percentage point. While this difference may seem insubstantial, over the life of your investments, those extra fees can severely hinder the growth of your portfolio.
BMO InvestorLine adviceDirect is a similar framework, and still gives you the lower fees (around 0.75%, but more on that later), but instead of making everything automatic, you are in control of your investments and have a certain amount of trades included in that fee. When you sign up with adviceDirect you’ll still complete the questionnaire, and they’ll still recommend the appropriate course of action for your investments but based on your Investor Profile rather than a preformed portfolio. You will have the final say in which stocks, bonds, or ETFs you purchase. They provide advice, and you get to execute if you agree.
adviceDirect Product Offering
Instead of recommending portfolios like most robo advisors, adviceDirect recommends profiles based on your preferences. They are:
- Income profile
- Balanced profile
- Growth profile
- Aggressive profile
Each profile has a target asset allocation that suits different investment strategies. For example, if you answered their questionnaire and included details about how you have a longer investment time horizon and are looking for a plan that can help you achieve growth over the long term, you may be placed into the growth profile. The growth profile recommends a target asset allocation of 80% equities and 20% fixed income. This profile has a medium to high-risk level.
Once you choose your profile, adviceDirect walks you through building your portfolio through their dashboard. You can purchase stocks, bonds, mutual funds, and up to 60 ETFs within their platform, and adviceDirect will provide you with recommendations and ratings from Marketgrader for stocks, and Morningstar for ETFs and Mutual Funds if you aren’t sure where to start.
After you set up your portfolio, adviceDirect monitors it for you 24/7. If you need to make a change (for example, if your portfolio strays too far from its target allocation and slips out of balance), you’ll receive an alert with personalized recommendations on how to remedy this. Or, if one of your holdings changes from a Buy to a Sell rating, you’ll get an alert as well.
In this screenshot of the adviceDirect dashboard, we can see that this portfolio’s asset allocation needs attention, and by clicking on the “Asset Allocations” tab, you’ll see specific suggestions on how to remedy the problems.
Like all investing platforms, you have to pay to play. With adviceDirect, that means three different tiers, depending on how much you have to invest. The minimum investment amount is $50,000, which may seem like a steep price tag for investors just starting out. But if you’ve been investing for a while through an advisor or mutual funds and want more control for a lower fee, this could be for you. Here’s a quick rundown of the fee structure, with a more detailed analysis below:
|Investment Size||Fee per year|
|$50,000 - $100,000||$750|
|$101,000 - $500,000||0.75%|
|$500,001 and up||$3,750 maximum|
For investments between $50,000 and $100,000, there is a flat fee of $750, which works out to between 1.5% and 0.75% depending on the dollar value of your investments. If you plan to invest between $100,001 and $500,000, you’ll pay a 0.75% fee, and for investments of $500,001 and up, you’ll pay a flat fee of $3,750 per year.
It’s important to note that these fees are based on your total billable assets, not the balances in each account. Billable assets include the following:
- Fixed income
Examples of non-billable assets include:
- Mutual funds
- Money market funds
Finally, these fees include up to 185 free trades per year depending on your asset tier, and unlimited trades if you invest $1 million or more.
Types of Accounts
adviceDirect has got you covered for most of the standard personal or joint accounts that you will need in your investing life, including:
- Locked-in Retirement Account (LIRA)
- RRSP (Registered Retirement Savings Plan)
- Spousal RRSP
- RESP (Registered Educational Savings Plan)
- TFSA (Tax-Free Savings Account)
- RRIF (Retirement Income Account)
- Spousal/Common-law partner RIF
You can also use this platform for non-personal accounts for corporations, sole proprietorship, partnerships, and not-for-profits like churches, community groups, and clubs.
What Makes adviceDirect Unique
- This platform is not a robo advisor or true self-directed investing platform but is instead a hybrid system where you are in charge of the buying and selling, but it monitors your portfolio and helps you stay on track and moving towards your goals.
- There are four profiles to choose from based on your goals and risk tolerance, but how you execute those profiles through trades is extremely customizable.
- adviceDirect monitors your portfolio 24/7 and sends you automatic alerts and notifications if you need to re-balance your account.
- If you want to build your portfolio using ETFs entirely, you can choose from over 60 ETFs and execute up to 185 free trades per year.
- If you need more guidance than the automated monitoring, you can contact an adviceDirect Investment Specialist for more information and support. It doesn’t need to be just about investment advice either; you can also ask them to walk you through using the platform or to provide additional market research.
A Peek Inside adviceDirect
The adviceDirect’s dashboard is similar to that of the SmartFolio and InvestorLine Self-Directed dashboard styling. In fact, all major banks have similar dashboards – not the most beautiful in the world, but it gets the job done. From the main dashboard, you can easily see if any action is required on your account, along with suggested solutions. The goal is to keep the pie on the left-hand side in the green. Monitoring your holdings from the main dashboard is easy in the “Holdings” tab. Different views are available, from high-level views including how much of your money is in cash, securities, and your total account balance, to mid-level views including a breakdown of your holdings by equities, fixed income, and cash, and finally an in-depth view of your equities by sector.
The styling of the dashboard is okay. We’ll give it a B+ for effort.
If We Could Change One Thing
If we could change one thing about adviceDirect, it would be the minimum investment amount. $50,000 may seem like a steep minimum investment amount for a semi-DIY service. However, this product is great for investors just starting out, as it provides so much education and monitoring, which you need when you don’t fully know what you’re doing yet. Unfortunately, this intelligence comes at a cost though which positions it as a premium product for investors with higher assets.
By setting the minimum investment amount at $50,000, BMO adviceDirect is geared towards seasoned investors who have been making steady contributions to their investments for a while and are ready for a more hands-on approach to saving for their goals. But the training-wheels environment offered by adviceDirect is perfect for young investors who want more involvement than their robo advisor is giving them, but aren’t ready to completely go it alone. So if you’re a new investor with a wack of cash ready to invest, this might be the perfect platform for you.
How to Sign Up for BMO adviceDirect
There are three ways you can sign up for a BMO adviceDirect account:
- Sign up online by filling out their 10-step application
- Call them at 1-888-776-6886
- Book an appointment at a BMO branch to discuss your investment options.
Promotion: New clients who open an adviceDirect account will qualify for a special bonus of up to $1,600:
- $400 for an account between $50,000 – $249,999
- $900 for an account between $250,000 – $499,999
- $1,200 for an account between $500,000 – $999,999
- $1,600 for an account over $1,000,000
If you’re comfortable with a little DIY investing, adviceDirect is the perfect online trading platform for you. Savvy investors will appreciate the flexibility to be more involved than other robo advisors traditionally allow but can fall back on a bit of help when needed. While the steep $50,000 minimum is a bit much for some, it’s a surmountable hurdle for investors who have a chunk of change ready to invest. Start investing with adviceDirect.