The Complete Guide to Canada’s Robo Advisors

Do you want an easy, user-friendly way to sock money away in an RRSP or TFSA without having to learn “a bunch of investing stuff”? Perhaps you’re looking for a financial service that matches your lifestyle and allows you to get advice online without having to wait at a bank or sit on a phone for hours? Maybe you’re familiar with low-fee DIY index investing (aka couch potato investing) and are just looking for the quickest, simplest way to put this into practice?

The bottom line is that if you have any interest in investing for the future, you should take a serious look at what Canada’s robo advisors (aka “robos”) have to offer.  This is especially true if you are comfortable with technology and want a financial solution that is easy to access and will take less than ten minutes a month to implement.  Before I get to the ins and outs of just what a robo advisor is and compare some of the available options to find the top Canadian robo advisor, I should point out that the incredible growth that these new companies have seen over the past few years hasn’t happened by accident.  I think that robo advisors are an excellent alternative to traditional ways of managing money and that they specifically represent a superb value for the vast majority of Canadian millennials (and are better regulated than traditional financial advisors!).

If you stay tuned until the end of the article, we have some juicy offers that are ONLY for Young and Thrifty readers – who want to simplify their investing life by using robo advisors!

*Use our Table of Contents below to jump to a specific section, simply scroll down to read the article in its entirety.*

Intro and Guide

Finding the Best Robo Advisor Company

Intro: What the Heck is a Robo Advisor?

I feel for the folks that have started up these low-fee online financial management businesses.  In case you haven’t got the picture yet, I love what they’re doing and what they’re offering.  Unfortunately, in an investing world full of BS lingo, harmful myths, and ridiculous marketing efforts, my real fear is that people will recoil at this misleading name that has been slapped on them before understanding what a great deal they can be.Canada's Robo Advisors

“Robo Advisor” sounds like an ATM that robotically rasps some generic finance-related stuff in a Siri-esque way before taking a bunch of your money.

Or maybe it evokes images of R2D2 spitting out a bunch of numbers – numbers that won’t mean anything to you and that will likely give you a headache.

Plus, I guarantee your full-service financial advisor (or “friend with your best interests at heart” as they likely refer to themselves) will tell anyone who will listen that robo advisors are nothing but heartless automatons that won’t give you any personalized help such as the wonderful advice that they provide.  (They’re full of it, but more on that later.)

Money is an inherently emotional topic, and consequently no one wants to think of their hard earned savings being managed by a robot!  I get it.  I really do.

Online Financial Advice and Automatic Investment Strategies – A Rose by Any Other Name?

Here’s the thing – robo advisors AREN’T ROBOTS.  In fact, they’re not even close.  Here’s where the name comes from and what the reality is:Canada's Robo Advisors

  • The “robo” in robo advisor refers to the fact that there is no human being that will be stock picking your investment portfolio.  I cannot emphasize enough that this is a very good thing.  Human beings are terrible at picking stocks and other investable assets.  Professional money managers are almost as bad as everyone else is at choosing when to invest money and what to invest it in.  I know this sounds insane, but there are dozens of academic studies that prove this fact conclusively.  Please do your own research if you don’t believe me – or for now, accept that not having a human being pick stocks on your behalf will be a great advantage to you.
  • Robo advisors are operated by humans.  You will communicate with humans.  You will email with humans.  You will talk on the phone or via Skype with real live humans if you so choose.  You probably won’t meet with people face-to-face very often – but who has time for that these days anyway?
  • No one would choose to work with robo advisors if they were impersonal and/or robotic in any way.  People simply care about their money too much.  Robo advisors are managing hundreds of millions of dollars in Canada alone, and billions worldwide.  People trust these guys.
  • Canada’s robo advisors are subject to some pretty serious regulations.  From all the research I’ve done, all of the major players are just as safe to use as any of Canada’s other financial institutions.

I think it’s worth repeating at this point that robo advisors are NOT ROBOTS and that if you have any problems or want to talk to a person, every major player gives you multiple ways to do that.  The Canadian Government is well aware of the online investment/advice model and it is well regulated.  So, while the name might sound a bit scary, please do your best not to let that dissuade you.

Canada's Robo Advisors

What Can They Do for You?

In short, Robo Advisors can give you a basic plan, help answer many – if not all – of your questions when it comes to investing your money, and then provide you with a super easy way to turn part of your paycheque into a pretty good investing portfolio.

That sounds simple – but it’s a pretty big deal.

It’s a big deal because most Canadians understand that they should be saving and investing for the future, but they are intimidated by all of the confusing language, the time & energy involved in setting up accounts, and managing the logistics of actually handling their own investment portfolio.  As a consequence of this intimidation, the answer provided by the money managers and investment companies since time immemorial was to hand over your investment dollars to someone in a suit.  They would hold your hand, tell you it would all be ok, and that only they could help you navigate the choppy waters full of financial acronyms and graphs that only a physics Ph.D could appreciate.  In return for this combination of advice and “expertise” you would be charged nothing.  That’s right – it was free – at the point of delivery anyway.  All you would eventually pay is a measly 2-3% of your investments, but that was all numbers stuff – and you got it right?  It was basically pretty easy to understand right?  If you didn’t get it and asked questions about it you were kind of weird and maybe not very smart right?Canada's Robo Advisors

I wish I were exaggerating with my dripping sarcasm, but unfortunately this was the option that the majority of Canadians chose for a long time – and still continue to choose actually.  However, help is on the way.  Robo advisors won’t do absolutely everything for you that a full service financial planner will – but they will do most of it – and do it for much cheaper.

Here’s the real takeaway for the majority of our young (ish?) readers: Robo advisors will provide 98% of the information you need to get started with investing and building a nest egg.  If you need more advice than they are able to provide you can read this website, read a book, or hire a professional such as a fee-only planner or a lawyer to help you fill in the specialized blanks on stuff like wills, insurance, leaving children an inheritance, or some of the other niche financial needs.

We’ll talk more about the actual investment portfolios offered in just a second, but here’s a quick rundown of what all of the major robo advisors offer:Canada's Robo Advisor

  1. Much better investing options than mutual funds!
  2. “Light advice” that can vary from company to company.  In my opinion, if you care enough to be reading a financial blog, then “light advice” will work just fine for you.
  3. The most easy-to-use way to invest your money that I’ve seen.
  4. Very straightforward methods to get your money from your paycheque, and into investments that are right for you.  Less time & less stress = easier to stick with.
  5. Visually appealing websites that make life simple on a computer, tablet, or smartphone.
  6. A safe and secure way to invest and grow your money for the long term.

But Just How Safe Are We Talking Here?

Are robo advisors safe in the same way your Uncle Don had a “super safe” investment in an Alpaca farm a few years ago? (You’re still getting your shareholder payments in sheared wool each year right?)

No – they are as safe as pretty much any other bank or investment firm out there.

Here’s why I feel comfortable saying that:

  • All robo advisors are a bit like storefronts.  The “warehouse” or “back office” is a third party that is a member of the Canadian Investor Protection Fund (CIPF).  If you’re not sure what the CIPF is, here is what their website has to say: “Investment dealer insolvency doesn’t happen very often.  In fact, since CPIF’s inception in 1969 there have been only 20 Member insolvencies.  CIPF has paid claims and/or related expenses of $43 million, net of recoveries, and no eligible customers have suffered a loss of property.Canada's Robo Advisors

  • Even if the worst case scenario were to occur and bankruptcy ensued, robos’ clients’ money is kept separately from the companies’ own balance sheet.  Even before it got to that point however, it is likely another of Canada’s robo advisors or major financial entities would buy a distressed robo company just to get their client accounts – thus moving your money to a new company or “storefront” but ultimately not losing a penny.
  • All the robos that I looked into are very transparent and specific on their websites when it comes to addressing precisely where your money is held and why you are protected as a Canadian consumer. They are also very transparent about ownership and management (for example view this Wealthsimple review we created).
  • The robo advisor model has been used around the world for several years now.  For example, the American robo Betterment has been around since 2008, and now has over $3 billion in assets under management.  These guys are going to be around for the long haul, and they are NOT “still working the kinks out”.  These models are tested and refined – and will continue to get better.
  • If a robo advisor were to be bought out or go bankrupt your assets would be just fine from everything I’ve read.
  • Robo investing platforms have a fiduciary duty, more than their traditional counterparts.

What Is This Robot Investing My Money In?

#1 There is no robot investing your money.

#2 There is a pre-agreed upon way to invest your money that you will choose and then a person, in tandem with a computer will carry out on your behalf.

Canada's Robo Advisors

Basically, all robo advisors have done is take the couch potato investing theories that geeky personal finance bloggers like yours truly have been raving about for years – and make them much easier to invest in.  Naturally, they won’t offer this service for free, so there is a relatively small fee attached.

Each robo advisor will offer this service a bit differently and charge a slightly different price in order to do it (more on that in a second), but at their root, each robo seeks to take your investment dollars, learn about your goals, and then recommend a basic index-ETF portfolio that each of your investment dollars will be split into going forward.  If you’re thinking to yourself that this sounds a lot like our Free eBook on ETF Investing, or Dan Bortolotti’s (aka the Canadian Couch Potato) model portfolios, then you would be correct.  Neither Dan nor myself invented this stuff – we (along with many other financial bloggers) just sought to simplify theories put forward by super smart people like Eugene Fama, Harry Markowitz, and John Bogle.  All those three did was win Nobel Prizes and create one of the world’s largest financial management empires respectively.  Robo advisors will put your money in a portfolio that is very similar to (if not exactly) what I would recommend.  This approach will help you outperform at least 90% of Canadian investors that seek to invest through mutual funds and/or picking their own stocks.  Depending on what study you read, you might even outperform up to 98% of these investors over the long haul (read the free eBook for more on this)Canada's Robo Advisors.

Each of the major robo advisors will make sure that some of your money is put into Canadian stock market ETFs, International stock market ETFs, and more conservative investments such as bonds and GICs.  Each will do this in a slightly unique way, but without getting too nerdy on the details, what you really need to know is that there is a ton of proof, science, and simplicity behind the financial management strategies that will be applied to your money.  For what it’s worth, I endorse this approach wholeheartedly, and I have yet to find a Canadian financial blogger who doesn’t.

We wrote a few article comparing Canadian robo advisors to leading funds:

Why Are Robo Advisors Such a Good Deal?

When compared to the way most Canadians still choose to manage their money, robo advisors are a fantastic deal.  What it really comes down to is how much of your investments are you willing to sacrifice each year in return for financial advice and help getting money from your paycheque and into an investing portfolio?  Each robo advisor has their own way of charging for their services.  Some charge a flat rate, while others charge a certain percentage, and a couple charge a combination of the two.  What all of the robos have in common is that they are simply a much cheaper way to invest than the traditional bank mutual funds.  The larger your nest egg grows the more true this is.

If only someone had a super handy calculator that would not only allow you to compare the cost of investing with each different robo advisor, but also compared the fees involved to that of traditional bank mutual funds – oh wait there is!  Thanks to Sandi Martin from Spring Personal Finance and John Robertson from The Value of Simple, we have a brilliant tool that should allow you to easily see which companies offer you the lowest prices for your specific circumstance (which is not the same as the best company for you, but might go a long way to helping you decide). It is available here.

Also, while the differences on this calculator are substantial, keep in mind that those differences will be compounding over time.  The calculator shows after 10 years, but plug those numbers into any basic compound interest calculator for 25-30 years, and the difference between the robos and major banks become absolutely massive (six figures for most long-term retirement investors).

Screen Shots from AutoInvest.ca Calculator:

 

Obviously the best robo advisors are able to save significant costs relative to their traditional bank counterparts because they don’t have the brick and mortar overhead, number of employees, or the dividend-hungry shareholders that the big banks do.  They can then pass these savings onto consumers.  One variable that Sandi and John’s calculator/tool does not take into account is that these passively-managed robo advisor portfolios are quite likely to have higher overall returns relative to bank mutual funds due to their couch potato/index fund algorithm – and that’s in addition to the lower fees.

I personally believe that both younger and older Canadians who are comfortable in an online-only environment will find the robo advisor platforms much easier to interact with than those of the big banks and investment companies.  That is their sole purpose after all.  I cannot emphasize enough how intuitive and aesthetically pleasing the leading top robo advisors are.  This being said, I think it’s likely that big banks will soon follow BMO’s lead and put forward their own robo advising options that copy the best parts of what’s out there (or buy out some of the current leaders).

Overall, because I actually prefer the flexibility of working with an online platform as opposed to face-to-face talks, I would actually pay more for an online-only model.  The fact that my money is invested much more effectively than using big-bank mutual fund fees, and I see a major cut on fees, means that this isn’t even a close comparison for me.

If Robo Advisors Are Such a Great Deal, Why Do You Still DIY?

After raving about what a good deal robo advisors are, you might do a double take when I say that I don’t plan on using them.  I will still continue to invest using the Do It Yourself couch potato method that we explain in our free eBook.ETF-Investing 200

That being said, I have now started recommending the robo advisor route for 80% or so of my friends.

Why is it good enough for my friends but not for me?  It’s all a matter of value and eliminating obstacles that get in the way of consistently turning part of your bi-weekly or monthly cheque into an investment portfolio.

Anyone can build the exact same investing portfolio for themselves that they can get through a robo advisor – most of the robos even go so far as to show you the exact portfolio options available on their website or during the first consultation you have with them!  There is very little that is new or original when it comes to the investing side of the robo advisor operation.  One thing that I really admire about all of the major robo advisors in Canada is that they have been entirely up front with me in admitting that you can implement a DIY index ETF portfolio for significantly cheaper than what it will cost you through them.  Personally, I feel very comfortable setting up my own online discount brokerage account and managing my portfolio (and it looks pretty much identical to the ones that would be recommended to me through the robo advising services).  That being said, I’m kind of a nerd and not exactly the target audience for these companies.

So, to recap so far, DIY index investing is definitely cheaper than using a robo advisor.  I still maintain that I don’t think it is overly difficult to DIY using a basic portfolio of index ETFs.  I would compare the overall difficulty level to grade 9/10 math.

Is DIY or a Robo a Better Fit for You?

Ultimately, how I choose to manage my investments probably doesn’t matter much to you – what should matter is which options will get you the best results going forward.  Here’s a few quick questions to help you decide how to invest your money (assuming you have come to the same conclusions that I have and determined stock picking is probably a terrible idea, and mutual funds are close behind).

Canada's Robo Advisors

1) Do you want to do your own Gr.9/10 math?  Please don’t answer this question based on pride.  Seriously ask yourself if you want to make this commitment 4-12 times a year when you rebalance your investing portfolio.  If you don’t, then go with a robo. (I’m fine with Gr. 9/10 math, but don’t ask me to do elementary-level lessons in learning any foreign language.)

2) Do you want to do a few hours of reading and paperwork in order to fully understand index investing and how to implement it?  If you don’t, then go with a robo.

3) If a strategy is easier for you, will it make a large difference in how successfully you implement and stick with it?  Think about going to the gym.  If your gym was 15 minutes closer to your house, would you be slightly more likely or much more likely to use it?  If convenience and ease of use are major factors for you, then go with a robo.

4) If you’re just not super confident when it comes to investing terms such as ETF, RRSP, TFSA, etc., and think it would be really nice to have someone to email or chat online with from time to time, then go with a robo.

Each of these four questions might seem sort of “small potatoes” to you, but truthfully, they’re not.  Making investing easier is worth A LOT of value to the majority of Canadians.  Sure, it will probably cost you somewhere around .5%-.7% of your portfolio annually, but if it makes the difference between you investing $5,000, and not getting started at all, that is a very minor concern.  Plus, don’t forget that you’re still way ahead of traditional financial advice/investing models.

If there’s one thing I’ve found out since I started writing a personal finance blog it’s that people can be really mean in internet comment sections. Our goals it to give the best advice on this matter and showcase and compare the best robo advisors, nothing more, nothing less.

BUT

If there’s a second reality I’ve learned, it’s that most young Canadians I interact with don’t really want to manage their own investments.  They want to “set it and forget it” and then re-visit the idea again a few years before they retire.  This is why workplace pensions are so sought after.  I’ve also noticed that many Canadians get a burst of energy, read a bunch of stuff, and then fail to follow through and execute the investing strategy they’ve read so much about.  Or they get bogged down in stuff like specific ETF choices and then they start thinking that maybe picking a few a stocks isn’t such a bad idea, etc.  For this majority of Canadians, the robo advisor model is a godsend and will probably make a really significant difference in people’s lives (like retiring or reaching financial independence years sooner-type-of difference).

Comparing Canada’s Best Robo Advisors

Robo Investing Comparison:

Also, please consider the automated calculator that enables you to view a detailed prediction of fees and expected value based on your individual details, and suggest which is the best Robo for your needs:

Mini Robo Reviews

Asking Robo Investing Companies to Highlight Advantages

Here’s how our major contenders stacked up on our search for the best robo advisor when I asked them what made their respective offering different from their competitors’:

WealthSimple’s Mallory Greene:

  • Over 10,000 clients & $400M assets under management = largest in Canada.
  • $32 million in funding (including a massive investment from mega financial titan Power Financial) allow consumers to confidently trust WealthSimple.
  • Only mobile app in Canada that allows you to sign up for an investment account.
  • Fractional Shares: Allows us to invest smaller account balances. We have no account minimum.
  • Acquired our own broker: ShareOwner – Only automated investing service that controls the end to end investment experience for clients, from trade execution and custody to portfolio construction and advice, enabling future innovation across every element of investing.
  • Advice: Human assisted. Advisors come from full service broker world managing high net worth clients. No commissions.
  • 35 employees, 15 are full-time developers building technology.
  • Everything is automated – from rebalancing to dividend reinvestment, even tax efficiency.
  • We offer advice – our clients can reach out to their dedicated Wealth Concierge team at any time to discuss their financial goals and objectives. We’re happy to speak to them over the phone, text, email or Skype – whatever is most convenient for them.
  • Socially Responsible Investment (SRI) portfolios invest in companies that do business in a way that meets a certain threshold of social responsibility. We designed an SRI portfolio using ETFs that prioritize low carbon emissions, advance clean-tech innovation, and promote sustainable growth in emerging markets.

Nest Wealth’s Randy Cass:

Nest Wealth Review

  • [We are the] only platform to charge a flat subscription price regardless of assets invested.  We believe that it no longer makes sense to charge a cut to do the same job at $1,000,000 that we were doing at $150,000.
  • Our CEO has been managing portfolios for 15 years. Almost everybody in our company has been involved in this industry before.  At our core, we are a financial services company using technology to provide a better product and experience to our clients. Others tend to look at themselves as technology companies that happen to be in financial services.
  • We are the only robo-advisor that has made the deliberate choice to keep all our clients’ money under the umbrella of a large Canadian Bank… this gives them peace of mind when they fall asleep at night.
  • We are the only robo-advisor that creates a customized portfolio for each client. No pre-packaged portfolios or placing people in buckets that are the ‘closest’ match.  Every individual should have a portfolio that reflects their risk, goals and financial situation.
  • We only use the best blue chip ETFs with the lowest fees. We are the purest play on the Efficient Market Theory. We have no affiliation with big fund companies and don’t use ETF products of those that have direct or indirect equity ownership in our company. We are Canada’s largest independent digital wealth management solution.  Low fees are only part of the best solution. The other part is making sure the portfolio is constructed using the best ETFs in the best combination. We have complete independence, pick our ETFs and build our portfolios using only objective data.

WealthBar’s Tea Nicola

Canada's Robo Advisors

  • Believe that we are the most focused on financial planning as opposed to investing only.  The issue that we’re trying to address is that investing and building a diversified portfolio is only 1/2 of the battle of good money management. The other half of the battle is a very human element of coaching, planning, and advice.
  • WealthBar is working hard to address the other half of the equation by offering that dedicated financial advisor to work with each client. This is what differentiates WealthBar from the other robo-advisors: We’re one of the only robo-advisors in North America that puts a financial advisor at the center of our relationship with our clients – and it’s at no additional cost.
  • Our financial advisors are there to help clients create a financial plan, help them choose the right accounts, investments, deal with major life situations, tax optimizations, or even just chat about how horrible the Canucks are doing in the playoffs. Each client gets a dedicated advisor that’s there to help you make the right financial decisions and ensure you have a plan that actually leads to your goals. The value that advisor provides can help our clients save thousands in taxes…
  • There’s another key differentiator, which is access to our private investment pools. If I can say so myself, I love them. Before the days of WealthBar, these were only reserved for high net worth investors with greater than $1M – we offer these to anyone with more than $10,000. They contain asset classes you can’t get publically such as private equity and hard asset real estate. The result is that it’s significantly less volatile, without sacrificing too much in growth. They grew nearly 8% last year, and even in January, one of the worst months since 2008/2009, it was only down -1.4% while market was down significantly more. The expense ratio on this is a bit higher, but well worth it for anyone who wants extra protection from volatility – I’m personally 100% in on the NWM core portfolio.

ModernAdvisor’s Navid Boostani

Canada's Robo Advisors

  • Their Springboard program allows users to demo online investing and learn how it works, using ModernAdvisor’s own funds first. Each Springboard account starts off with $1,000 and over three months, you experience in real-time how the funds would perform if invested at your risk preferences and investment goals.
  • ModernAdvisor is the newest entrant to the robo advisor industry. They offer the most competitive fees for portfolios sizes of at least $100,000 at 0.4%.
  • ModernAdvisor offers socially responsible investing to users at the same low fee as conventional investing. About 75 to 95% percent of your portfolio can be eligible for responsible investing.
  • ModernAdvisor will tell you what hidden fees you be paying on your current mutual funds investments, using their Fee Analyzer tool.
  • Based on your risk appetite and initial investment amount, ModernAdvisor generates a graph showing a projection of how much you would save by investing with them instead of with mutual funds.

BMO SmartFolio

By combining the familiarity of a major Canadian bank with the cost-conscious nature typical of robo advisor options, BMO Nesbitt Burns has produced a very competitive final product.  While not the cheapest of the online investing options that have recently entered the Canadian marketplace, the folks behind SmartFolio believe that their slightly higher fees are justified by the value provided by their active management strategies and elite customer service.
SmartFolio is an excellent alternative to relatively expensive mutual fund-based options, and the sometimes intimidating DIY discount brokerage route.  It is a great offering to compare against Canada’s robo advisor platforms and offers the ultra-safe brand of banking that only 200+ years in the Canadian market can provide.
Click here and use promo code YTSF to get your first $15,000 managed with BMO for free for one year when and open a SmartFolio account today.  Before investing any of your money BMO will ask you a few questions to identify your risk tolerance and investment objectives.

The Others

Nest Wealth, WealthSimple, and WealthBar aren’t the only robo advisors out there, but from what I can tell, they control the vast majority of the robo market in Canada.  This isn’t to say that the others aren’t worth a look.  The other robos in Canada include:

  • Questrade’s Portfolio IQ
  • Invisor

Then there are some “almost robos” that offer certain products and services in common with robo advisors, but are substantially different in one way or another.  For example, Tangerine offers “turn-key portfolios” that are another relatively simple way to put your money in a diversified portfolio – but I just personally don’t find them competitive with what the leading robo advisors are now putting out there.

Shareowner is another place that specializes in low-cost investing (*note: ShareOwner is owned by WealthSimple) but doesn’t offer the same advising services as the three market leaders that we focused on.

Overall Thoughts and Recommendation

Robo Advisors are really the perfect value proposition for people that don’t want to pay ridiculous fees and percentages for basic financial advice (*cough big banks and large investing companies in Canada *cough) but are intimidated by venturing out completely on their own to build a DIY couch potato portfolio.  With new investment regulations such as Canada’s “CRM2” coming into play, and the idea of investor fees getting more and more air time, I think the leading robos are in a great position to benefit as investors (especially young investors who prefer to interact online) become educated on just how much they can save by going with this “light advice” route.

I know that this is a complete fence-sitting cop out, but rather than recommend any single one of these robo advisors to ALL Canadian investors, I’d rather focus on the fact that all of them are a great deal relative to the traditional options out there.  If you’re still confused as to what a “traditional option” is, think of pretty much any financial institution that spends gazillions of dollars on buying naming rights to stadiums and arenas, or has multiple strip mall locations.

Truthfully, I don’t think you can really go wrong with any of the best, market-leading, Canadian Robos.  In order to make a final selection, I’d look at their websites and platforms, and after narrowing down the list, talk to several of them and get a feel for which one will work best for you.  Ultimately what it REALLY boils down to is which of these services will make you the most likely to save and invest more of your paycheque?  Which one of the robos really inspires you to go to their website or app and use it because it just makes sense to you?  Whichever robo grabs you in this way is probably the one that will give you the best results when you come to retirement in 20-40 years.  They each offer unique bells and whistles, but at the end of the day it’s all about knowing yourself and making it as easy as possible for you to meet your specific goals.

I still prefer DIY index investing in a vacuum – but it’s vitally important to remember that you aren’t in a vacuum.  You are you, and chances are that if you’re an “average middle-class Canadian” you have a lot on your mind, and aren’t really sure you want to jump into the DIY stream.  That’s perfectly fine – Canada’s robo advisors are your next best bet.

FREE Offers Exclusive to Young and Thrifty Readers!

We’re kind of a big deal – or at least that’s what we told those robo advisor guys.  So if you want to see what Canada’s robo advisors have to offer – For FREE – then check out these great deals:

1) WealthSimple will let you manage $10,000 for free if you simply click here and decide to open an account with them.

2) Nest Wealth is offering to let you try their service for free for three months.  Simply click here to see what Canada’s 2nd biggest robo advisor has to offer – for $0!

3) WealthBar will happily allow Young and Thrifty readers to manage $20K for free for a full year, to anyone who mentions to their advisor that they signed up after reading this article and uses this link.

4) Finally, click here to open an account at ModernAdvisor and instantly get $50,000 managed for free – for a full year – simply because you’re a loyal Young and Thrifty reader.

5) JustWealth has also recently signed up to give Young and Thrifty readers a juicy bonus.  When you click here and give them a try they’ll toss $50 into your account!

With these guys willing to allow you to try their services for free, what do you have to lose?

Updates

If you have any questions about Canada’s robo advisors, toss them in a comment below, or email them to us, and we’ll answer them right here.  If any new robo-advisor shakes up the Canadian market, or there is a major shift in the robo scene, we’ll let you know about it.

August 2016 Update
Robos have continued to gain steam with both investors and the media with the aforementioned CRM2 beginning to kick in. I have yet to read an article that argues that Canada’s Robo Advisors have any real issue with safety or concerns about anyone losing money.

As far as I know, all of the Robo Advisors we list in our article continue to honour Young and Thrifty-specific bonuses for our readers. There is still time to try these services for free if you simply mention that Young and Thrifty sent you.  In addition to those freebies, read on below for a great offer on behalf of new Canadian Robo Justwealth.  Finally Questrade wanted to get in on the action with their Portfolio IQ product and if you open an account by clicking here, Questrade will offer you your first month managed for FREE.

One cool new trend that I heard about on Preet Banerjee’s Mostly Money, Mostly Canadian podcast (check it out if you haven’t already) is that many fee-only advisors are using the robos’ service as the investment management aspect of their value proposition to clients. Basically what this means is that people are finally starting to realize that all of this ridiculous propaganda that mutual fund pushers have been throwing out there for decades is ridiculous, and that ethical advisors are now trying to make a much better argument.

Essentially, they’re saying, “Look, our value isn’t in picking a hot stock or fund – we know that this passive investing strategy (aka couch potato investing) is scientifically proven to be the best long-term strategy for a relatively small-scale investor like yourself. Instead of talking about that, we’re going to set up a really simple contribution system for you and leave it alone. Then we’re going to put all our energy into other good stuff like tax management, insurance coverage, wills, and other financial matters that have often been ignored because people were so focused on investments.”

I hope this trend continues, as it would really diversify current financial advice offerings, and allow people to really choose the model that best fits their needs.

One new market entrant took the time to chat with us with is named Justwealth. (As far as I know, you don’t actually have to have “wealth” in your name to join the robo advisor club, but then again I don’t know the secret handshake either so…)

Click Here in order to snag Justwealth’s exclusive offer to Young and Thrifty readers of a $50 deposit straight into their account!

Here’s what Chief Investment Officer James Gauthier had to say about his company’s offerings:

  • Justwealth has vast experience in the area of personal wealth management. Our investment professionals have previously managed tens of billions of dollars for large financial institutions on behalf of Canadian retail and high net worth investors.
  • Justwealth offers more portfolios (61) than any other online Portfolio Manager by a wide margin. This ensures that we have a portfolio that is perfectly aligned with an investor’s investment objective – we don’t try to put square pegs in round holes! We also use more ETFs (29) and ETF providers (7) than any other online Portfolio Manager.
  • We are able to manage all account types and have portfolios and investment strategies designed specifically for investors with non-registered (taxable) accounts.
  • We offer our innovative Education Target Date Portfolios for RESP accounts, and are the only Portfolio Manager in Canada (online or traditional) with an investment solution that “matures” in the exact year that a child begins post-secondary education.
  • Every client of Justwealth receives their own Personal Portfolio Manager who takes the time to fully understand the investment needs of their clients and services them on an ongoing basis. We make financial planning and investment counselling available to every client.
  • We treat clients the same way that we would wish to be treated ourselves: Justly! We do not receive any forms of commissions, kickbacks or trailer fees. We do not have any arrangements or give preferential treatment to any ETF providers. We will not attempt to sell our clients insurance or accept any referral fees for other financial services. All investment decisions are made in the best interest of the client.
  • Justwealth is a proud member of the Portfolio Manager Alliance of Canada (PMAC).

After reaching out to the folks we had previously contacted about any new offerings, Wealthsimple responded by telling us that they:

  • Now have 15,000+ clients & $500M+ in Assets under Management.
  • Won the Webby Award for Top Financial Services Website in the world.
  • Launched a Portfolio Review Service that allows users to submit their investment portfolio to be reviewed by Wealthsimple’s team of registered Portfolio Managers.
  • Launched Wealthsimple for Advisors: An automated platform for financial advisors to manage their clients’ investment portfolios.
  • Integration with Mint Platform: First financial institution to offer secure, read-only Mint access to their clients.

If any other robo advisors wish to have us update their offerings, please let us know and we’ll get them up there.
Also, I’m always interested in hearing about Canada’s robo advisors from the consumer side of things. If you’ve compared robo advisors and come to certain conclusions, or if you just want to say great things about the folks that you’re sticking with, please don’t be shy about leaving an update in the comment section or emailing us directly through our Contact Us page. Stay tuned as always for periodic updates on Canada’s robo advising industry going forward.

FAQ

1) Do any of Canada’s robo advisors offer Registered Disability Savings Plans (RDSPs)?

At this time, only WealthBar offers RDSPs – and they’re only available if you open another account such as a TFSA, RRSP, or unregistered account with them first.

2) Which of Canada’s robo advisors offer Registered Education Savings Plans (RESPs)?

At this time WealthBar, WealthSimple, ModernAdvisor, and Nest Wealth all offer RESP options.

96 Comments

  1. Randy Cass on March 28, 2016 at 9:52 am

    Kyle,
    As the founder of Nest Wealth, I want to thank you for the great job you’ve done here of breaking down the new services available. Articles like this are hugely important when you realize the vast majority of Canadians are still unaware of the choices they have when it comes to investing their savings.
    Education is a huge part of change and the amount of work you clearly put into this article will go a long way to helping on that front.
    – Randy



  2. Kyle on March 29, 2016 at 5:46 pm

    Hey Randy,

    Thanks for stopping by! We’ll keep on keepin on. You guys keep disrupting the traditional terrible deal that Canadians are getting when it comes to financial planning and investment options!



  3. Larry on March 30, 2016 at 11:09 am

    Great post Kyle. I especially liked:
    ” I



  4. Kyle on March 30, 2016 at 1:47 pm

    I like that idea Larry. Just out of curiosity, are you thinking about recommending the robos in this situation?



  5. Larry on March 30, 2016 at 2:05 pm

    I haven’t thrown in the towel yet with pushing them toward DIY. It’s just so easy to do once you get over the initial resistance.

    I think I’d encounter the same trouble with follow through for getting people to use a robo advisor that I find with going the DIY route.

    My other concern is the future of robo. At one time, index funds were plain and cheap. Now, many have morphed into expensive trading monsters. Will the robos change over time to boost sales and margins?



  6. Yash on March 30, 2016 at 4:22 pm

    Do any RoboAdvisors support RDSP accounts? Complexities aside I would think that could be some significant business for RAs given it doesn’t appear there are many (if any?) really good, no/low-maintenance RDSP investments.



  7. Kyle on March 30, 2016 at 9:27 pm

    I think competition will keep sales and margins in check Larry. There are still some really solid index fund options – just have to keep it plain and vanilla – look how much fees have come down on basic index ETFs over time right?



  8. Kyle on April 1, 2016 at 9:54 am

    Hey Yash, we’ve posed your question to the robos and we’ll toss the answers up into the main post.



  9. christopher wicks on April 1, 2016 at 10:30 pm

    Just wondering….do any robo advisers offer RESPs yet?



  10. Rob on April 2, 2016 at 7:04 am

    Great article and totally on board.
    I’ve been with Wealthsimple for over a year now, and it’s been the best financial decision I’ve ever made.
    I was “managing” my own money, refusing to give 2-4% for a mutual fund at my bank. I was glued to BNN, CNBC, and my stock app on my phone. It was time consuming and emotionally exhausting, not to mention (in my case) money losing!



  11. Oliver on April 2, 2016 at 10:57 am

    I’ve been using a robo-advisor (Invisor) for almost a year now, and have had far more human interaction with them than I ever did with my bank.

    It’s also refreshing to feel like I’m getting objective investing advice rather than being sold whatever mutual funds my bank is trying to push on people at a given moment.

    Interested to see the longer term impact these organizations will have on how people invest in the future!



  12. Kyle on April 2, 2016 at 8:33 pm

    Thanks Oliver! Tell the folks from Invisor to get in contact with us if they want to let readers know why they are awesome!



  13. Kyle on April 2, 2016 at 8:36 pm

    You’re not alone Rob. IF you look at the statistical averages, it’s very difficult for individual investors to outperform their benchmark index. Glad to hear that you’ve been so happy at Wealthsimple!



  14. Kyle on April 2, 2016 at 8:37 pm

    Hello Christopher, I’ll add your answer to the main article as soon as I hear back from the robos.



  15. Brian on April 5, 2016 at 10:48 pm

    Great article. While I agree with the general premise that regular investing in lost cost ETFs is better than doing nothing or investing in mutual funds I still think that there is an additional layer of complexity that is rarely discussed when comparing robo-advisors. I have compared the portfolios between companies at similar risk levels and they are widely divergent with respect to asset allocation. I think over the long term these differences will lead to performance differences that will trump fees. This is the main reason I am still sitting on the fence.

    I would be interested to see a comparison of portfolios between companies. Any thoughts on which most closely approximates the ideal asset allocation. Or is it too early too tell? I feel longer term performance is still a huge wildcard.



  16. Kyle on April 6, 2016 at 8:38 am

    Hi Brian,

    I think it’s very difficult to compare the portfolios of each of the robos without actually owning an account and having them assess your risk tolerance and overall financial situation. I mean a couple do completely customized portfolios, so without talking to them how could you compare portfolios right? Also tough to say what the “ideal asset allocation” actually is, is it not? I’ve read dozens of books by really smart people that completely disagree on what the optimal allocation level is – heck, the Ph.Ds can’t even agree on if gold/precious metals should have any place at all in a portfolio! In my opinion, all the major robos allow you diversify your dollars across a pretty wide spectrum.



  17. Ben on May 5, 2016 at 10:48 pm

    Any updated promo codes for the ones that expired at the end of April? (specifically ModernAdvisor but others too!)



  18. Kyle on May 8, 2016 at 2:25 pm

    Sorry Ben, feel free to mention you’re a Young and Thrifty reader and they might toss something in!



  19. Dany G on May 30, 2016 at 3:34 pm

    Thanks



  20. Dean on June 6, 2016 at 12:44 pm

    Great article and very helpful. Have you done any reviews on steadyhand.com out of Van,BC ?



  21. Kyle on June 8, 2016 at 10:17 am

    Thanks Dean, appreciate the feedback. I read about Steadyhand when writing this article, but they aren’t really a comparable option as they offer mainly mutual funds as investment vehicles. If you really think that anyone out there can pick mutual funds that outperform, Steadyhand might not be a bad choice – I just don’t think this is possible.



  22. Sedan on July 17, 2016 at 11:04 am

    Great Content . Love it . I am new to Canada and was not familiar with Canadian Robo Investors. Thanks for the breakdown!



  23. Kyle on July 17, 2016 at 11:08 pm

    Thanks for stopping by Sedan! Glad you found the info worthwhile.



  24. Paris on August 15, 2016 at 5:41 pm

    Great article Kyle, thanks for doing it. Just spoke with ModernAdvisor, they are now offering RRIFs and willupdate their FAQs shortly, and if asked will also extend the youngnthrifty promo until the end of Aug., they also mentioned an additional 3 months using the promo code ‘Signup’, I haven’t as yet, would like to interview the other 3 Robos to see if they will match or beat the $50K MA is offering or an extended ‘free’ period. If y’er interested will update y’all later.



  25. Kyle on August 16, 2016 at 12:58 pm

    Thanks for the update Paris. Appreciate it! Would you mind stopping back here after you’re done checking out everyone and giving us a quick rundown on why you ultimately chose the one that you did?



  26. Jean-Fran on August 22, 2016 at 12:07 pm

    Great article. I am old enough to remember when ING came to Canada to change the rules of big banking and ended up being a ScotiaBank subsidiary. Bummer. Choosing an advisor is a long term decision, be it traditional or robo and transferring accounts is usually painful and costly, so you do want to choose wisely upfront. Do you think these startups will eventually consolidate or worse, become “hip” subsidiaries to the big firms/banks? That usually means a pressure for higher revenues and profits from shareholders, as well as quasi-monopolistic practices. Let’s hope not.



  27. Kyle on August 26, 2016 at 12:57 pm

    I share these worries JF. Here’s my hope: that all of these companies push each other to snag as much market share from traditional wealth management in Canada. They can do this by having great customer service, better platforms, and more innovative ideas. Then, I sort of think the best long-term outlook sees 3-4 main robos breaking away and buying out the rest. The question then becomes do they in turn take the sweet sweet offer that will no doubt come their way from our banking oligopoly? That I don’t know…



  28. Hyacinthe on August 30, 2016 at 8:17 am

    I remember reading that RESP opened at some discount brokerage would not always support every grant available (Federal and Provincial, if applicable). Do you know what’s the situation on this specific point with Wealthsimple an other robos?



  29. Kyle on August 30, 2016 at 10:11 am

    I’ve never read that before Hyacinthe. I couldn’t find anything about it when I did a quick Google search. I would have to think that because your RESP would officially be placed under the large umbrella that handles the actual accounts on behalf of these robos, that it would qualify for all of the grants available.



  30. Potato on September 1, 2016 at 11:52 pm

    Not all discount brokerages offer offer the provincial grants (or the low-income bonds), and many of the robos don’t, either. It looks like ~4 of them do, and that’s going to be a selection criteria in the next version of the comparison tool (spoilers!).



  31. Kyle on September 2, 2016 at 12:59 pm

    Wow… very interesting. That’s a massive massive advantage. When you update the tool, I will add that to this article John.



  32. Ben on September 2, 2016 at 1:33 pm

    Potato – which four DO offer all the provincial grants you’re talking about?



  33. JH on September 12, 2016 at 7:49 am

    Not sure if anyone’s come across this but do any of these Canadian robos provide services for Canadian expats?
    I’m not a resident of Canada anymore but would like to move my funds over to a robos.

    I guess I could also do the DIY option but just curious.
    Thanks!



  34. Kyle on September 12, 2016 at 8:52 am

    I would assume all of the robos could answer your questions JH. Personally, I’d just send them a quick email as they’ve all been great at responding ASAP. Then come back here and let us know of course!



  35. Jonathan Ho on September 12, 2016 at 3:32 pm

    Thanks Kyle – I did just that and emailed 2 robo firms:

    1) WealthSimple is currently unable to support non-residents or create accounts for Canadian expats who are non-residents. So that’s out of the question for me.

    2) WealthBar can provide services and open accounts for non-residents but requires min. investment amount of $25,000 CAD and a Canadian bank account.



  36. Kyle on September 15, 2016 at 5:35 pm

    Ok good to know. Thanks Jonathan. It be worth checking out the other options as I’m sure they are competing hard for market share right now.



  37. OC on September 22, 2016 at 7:23 am

    Thanks for the article! I’m a complete novice at this and would like your advice: For someone looking to invest about $10,000 (with monthly top ups of maybe $500) for the next 5 years or so, do you suggest opening a TD e-series account or finding a Robo Advisor? And what if there isn’t a 5 year contingency (i.e. the money would stay in there for a long time)? Thank you.



  38. Olivier Bougie on September 23, 2016 at 2:58 pm

    Hello Kyle,

    i am 25 YO just graduated and started a new job, i want to start investing via a ROBO advisor BUT I live in Quebec and I would really really really much like to know if there is a ROBO advisor that offer FRENCH services?! Could you adisve me on which ROBO adivsor i should take?!



  39. Kyle on September 24, 2016 at 9:05 am

    Hello Olivier,

    Congratuations on graduation and the new job! I would recommend simply going to each of the Robo’s sites and asking them if they have a French person on staff that you could work with. I would think several of them do! If you wouldn’t mind, let us all know who you decided to go with and why – so I can answer the question for any future Quebecois!



  40. Kyle on September 24, 2016 at 9:14 am

    Hi OC, glad you liked the article (don’t be shy about sharing it so that more Canadians can benefit). I’d definitely go with a Robo for the simple reason that you’re so much more likely to stay with something because the ease of use. They’ll also be a lot of help in answering any “novice” questions whereas the eSeries won’t be. Congrats on amassing a great little nest egg to get started!



  41. Mirs on September 25, 2016 at 1:22 pm

    Hello, great article, it’s easy to understand. I’m a student, a beginner investor, and I only have $100 to play with (to learn about investing). I learned about penny stocks and then read about how risky they were, so I steered clear of them. I was thinking of acorns since it uses very little investment (no idea if it’s open to Canadians). I was wondering if there are any Canadian robo companies that used the concept of using spare change /low min investments?



  42. Kyle on September 26, 2016 at 3:09 pm

    Most of the robos don’t have minimum deposits Mirs, I don’t see why you wouldn’t be able to transfer money to them on whatever basis you wanted with free transactions.



  43. Olivier Bougie on September 26, 2016 at 3:14 pm

    Hello Kyle,

    its more a personnal finance question.

    currently 25yo, M, 0$ saving atm, but starting this month with a robo advisor.

    i currently have 3 goals:
    1-go in appartment next summer
    2-buy a house 3-5years
    3-retirement

    Q: should I save 100% toward my house to have a higher downpayment?! OR should i open 2 differents saving account (1 for house, 1 for retirement) with 2 different risk profile?

    Also is it worth investing if my horizon is only 3-5years?! or should i jsut use my bank account?!



  44. Paris on September 26, 2016 at 7:47 pm

    Mirs
    For what it’s worth, I did a trial funding of a whole $5.00 (I wanted to see if I could set up Wealthsimple as a ‘Biller’ from EQ bank) and they accepted it, so you should be able to start with the $100. Advise again for what it’s worth, put in the hundred and don’t watch every day, there will be fluctuations, sit back and let it grow.
    As an aside, if you have any friends interested in investing, if you invite them to check out Wealthsimple, W/S will bonus you with an additional $5000 managed free (unfortunately not $5000 cash, huge grin), don’t forget to mention Y&S when or if you sign up. If you are stuck for a ‘friend’ Kyle can probably forward my email address.
    I’m doing a comparison on three Robo’s and am forwarding the info to Kyle to pass on to the blog. Good luck ! ! !



  45. Kyle on September 26, 2016 at 7:52 pm

    Thanks for that update Paris. Seems pretty conclusive to me.



  46. Kyle on September 26, 2016 at 8:02 pm

    In that case Paris I’d save for both at the same it were me. I’d also keep it simple and look at saving for your house in a high-interest savings account with an online bank like the ones I wrote about here. The Home Buyers Plan is certainly the quickest route in this regard. Cheers.



  47. Mirs on September 27, 2016 at 10:36 pm

    Thank you Kyle and Paris! I’ll look into it.



  48. EC on September 28, 2016 at 1:30 pm

    You mention monthly contributions a few times in this article. Would you still advise using a robo advisor for a one-time investment of 100,000? I am no longer working but still have 20 years to invest. In other words, I no longer have the income to support monthly payments but I could transfer money in from a shitty RRSP.



  49. Lynn on September 28, 2016 at 1:34 pm

    You might want to mention that WealthSimple’s offer only lasts two years (perhaps NestWealth too). It’s not noted in article or on their link, I only found out after I went through the lengthly process of opening an account for my small business.



  50. Kyle on September 28, 2016 at 6:57 pm

    While I cannot recommend a specific security to you EC, I can say with certainty that in a vacuum, using a robo advisor to invest a lump sum is a great idea. It will keep your costs super low and their “light advice” would be more than enough to explain what your options were and why they would make their eventual recommendation.



  51. Brandon Jones on October 1, 2016 at 10:13 am

    Thought-provoking article.

    We are a retired couple who have a total of $750,000 in two RRIFs. We depend on that money (in combination with CPP and OAS) to provide a steady monthly income. Can a robo-advisor help in our case?



  52. geo on October 2, 2016 at 12:38 pm

    If I am a high net worth individual near retirement do you see the other aspects of full service (retirement planning, RIF’s…) outweighing the low fees of robo investing.



  53. Kyle on October 3, 2016 at 3:10 pm

    That’s a great question Geo, and to be honest I’d say it depends on your needs. What I would do is contact a fee-based financial planner and see what they would quote you for the exact services you want. At that point you can compare to the percentage savings on your investments. I really like fee-only combined with robo package.



  54. Kyle on October 3, 2016 at 11:03 pm

    I can’t see why a robo advisor wouldn’t work just fine for you Brandon. It really depends on what sort of fees your current advisor/investments are charging you if you want to make a comparison.



  55. Bob on October 6, 2016 at 10:42 am

    So if you put your money into the markets in 2007, you are just climbing out of your deep dark hole many found themselves in who were buy and hold ivestors. How do Robo Advisor’s protect your capital other than by basic diversification through a group of ETF’s? I know, I know, everyone loves to say it’s impossible to time the markets! I’m wondering how popular these new services will be if/when we have another meltdown of the markets?



  56. Kyle on October 7, 2016 at 10:23 am

    The short answer is that they won’t protect it all Bob. That being said, I’m not sure your overall views of the market are correct. You mention that people who were in the market in 2007 are “just climbing out”, but in fact if they stayed fully invested throughout the “Great Recession” then they long ago climbed out and are now flying pretty high. The average annual return over the last 20 years (which included the crash you mention and the tech crash of 99/2000) is just slightly lower than the overall average for the last 100+ years. Your question is a logical one though, basically the real question is can Robos help mitigate our “lizard brains” (check out guys like Daniel Kahneman and Robert Thaler on this) that want to cut and run when we see stock markets go down? The answer is I’m not really sure. I hope that people will listen to the humans on the other end of the computer when they show them the math behind buy and hold, but I’m not really sure they will. I guess probably about as many listened to their “in-person advisors” when the last crash happened/



  57. Jay on October 19, 2016 at 2:18 am

    Hi Kyle. Is there any plan to update this guide? Your list appears incomplete when compared to the recent globe and mail article from Oct. 12 titled “The 2016 robo-adviser guide” (www.theglobeandmail.com/globe…e32302639/). Thx – just wanted to ensure you were aware you were missing some! Jay



  58. Kyle on October 19, 2016 at 3:08 pm

    Hi Jay, we will be updating the guide for sure. The problem at this point is honestly that I don’t think a lot of those Globe and Mail options are going to get off the ground very far, and I don’t want to overwhelm people with options. The ones that we’ve reviewed have been in the market for a while and we’re confident in their ability over the long haul. I’m keeping track of what the Globe reports though!



  59. Matthew Boyd on November 7, 2016 at 5:31 pm

    Hi kyle, great read, thanks. Im new to all of this and i think the robo investing may be best for me. You certainly endorse them strongly but im very paranoid given the books ive read so far about investing (hidden fees in mutual funds etc). For that reason i have a somewhat awkward question. Do you receive an affiliate commision from any of the companies you have recommended above? If so would you mind commenting on why you would still stand by your recommendations?

    I hope these questions dont cause offence im just really paranoid about choosing the right strategy (i literally have no investment experience).

    Thanks again for an interesting article im looking forward to reading your ebook. All the best,
    Mat



  60. Kyle on November 8, 2016 at 10:10 am

    Hey Matt,

    No offence taken. You are certainly right to be paranoid about investing fees (I have been labelled this way myself multiple times).

    When I wrote this article I was not getting any commission fees from the robos. Two robos have since offered me a commission which I have accepted. While I’m not sure legally if I can disclose the amount in each case due to some wording in the contracts, it is closer to one digit than three digits per account opened.

    Here’s why I would argue you can still trust the integrity of the information:

    1) If it’s not apparent which robos gave me a commission and which haven’t, then that speaks pretty well I would think.
    2) I know that I could make much much more convincing people to purchase mutual funds (as you noted) so if my main goal were to become rich I wouldn’t be writing this.
    3) I freely admit that I personally choose to invest in a way that actually minimizes fees to the bare minimum – but requires more work. Again, if my goal was to convince you that robos were the only way to invest I doubt that I’d include that comparison.
    4) Feel free to search out the robos on your own, and that way I actually don’t get any referral fee (you also don’t get our special bonuses either). I don’t ethically mind taking compensation from robos if they offer because I know that I’m helping to grow the overall market for a product that I support and recommend to my students and friends – so if I get a small amount of the overall money flowing into a growing industry I sleep well at night.



  61. Jordan on November 25, 2016 at 11:33 am

    New to Robo-Advisors….and new to ETFs…
    I have some funds to invest…anywhere from $50k to $250k..
    but am a bit fuzzy on the value of Robo-Advisors over either using my own brokerage account that does NOT charge any commissions on ETFs investing or using a commission based Financial Advisor (not associated with a bank, they would mostly put my money in Mutual funds though.. Is the value simply that ROBOs will invest in ETFs and automatically adjust the portfolio based on my risk assessment? So on a $100k portfolio I would be paying roughly $650-$1000 per year so the ROBO can automatically adjust the portfolio? If I choose some ETfs myself, some of the fees are far less than what ROBOs are charging. Is it the time needed to follow the investment that is the true value? Did I understand this correctly? What else am I missing? I am sure I echo many other passive investors. Many thanks



  62. Kyle on November 26, 2016 at 12:44 pm

    Take a look at my section comparing Robos to DIY Jordan. Basically what you are paying for is the advice that comes with a Robo (ie TFSA vs RRSP), the easy with which you can invest (no worrying about buying and selling), and the automatic re balancing. Also, if you use our offers, you’ll be paying quite a bit less than $650 on your first $100K.



  63. Alicia on December 1, 2016 at 9:43 am

    Hi Kyle,

    Loved the article as it was exactly what I was looking for- an overview of the different Canadian options. A bonus that there are perks when mentioning young and thrifty, I will continue to follow! I am thinking Robo is the way to go for me but as I am hoping to use some (in all honesty most) of the money made towards a home in the next few years & I had a novice question:

    I know that the general recommendation is to invest your money for longer term to see greater returns… Do you know if there are any penalties or fees associated with pulling your money out/ planning for shorter investments? (I am leaning towards wealthsimple but am not set on this yet).

    This was always a barrier for me with RRSP ect. I was hesitant to put anything of substance in, knowing that if I need the money or if the perfect home came up I would ultimately be penalized for touching it.

    Thanks,

    Alicia



  64. Kyle on December 2, 2016 at 3:20 pm

    Hi Alica, your big question is actually several little questions rolled into one. You will have to ask the specific robo that you talk to about specific penalties associated with pulling money out. I’m pretty sure most of them are almost fee-free at this point – however robos are not the CRA. If you withdrawn RRSP money it counts as income – unless (and this is key) – it is to buy your first home or to go to post-secondary education. If that’s the case check out our articles on the Home Buyer’s Plan and Life Long Learner’s Plan. Ultimately what you need to do is come up with a plan (maybe with an advisor, maybe just do your own homework) on what your short-term and long-term financial goals are – and then plan accordingly.

    Cheers,
    Kyle



  65. Ryan Rego on December 28, 2016 at 3:31 pm

    Hi Kyle, great article! I am a millennial who has been doing some DIY investing using Questrade (buying only ETFs). Currently, I have the time and enjoy doing it myself, but I will probably use Wealthsimple when it becomes too much work. However, I had a question that I thought maybe you could answer. I know ETFs follow a more passive strategy, but when looking at their portfolio turnover, some were as high as 30-40% (e.g, iShares Core S&P/TSX – XIC, quote.morningstar.ca/Quick…ture=en-CA). Any thoughts on why its so high?



  66. Kyle on December 28, 2016 at 9:57 pm

    It simply reflects the automatic rebalancing necessary to reflect the underlying index.

    Cheers,
    Kyle



  67. elwood on January 2, 2017 at 10:12 am

    Are there robo advisors that specialize on ‘ethical’ investment? I am only interested in investing in ways that I know where the money is going and that no people or the earth are being exploited.

    I would be happy to use a robo advisor, please let me know if one or more have ethical investment options.

    Thanks!



  68. Kyle on January 2, 2017 at 9:03 pm

    Hi Elwood – thanks for dropping by as always.

    Judging by this Globe and Mail article, it looks like Modern Advisor and Wealthsimple would be your best bets. Let me know what you think of the offerings. I’m curious to see if their definition of “ethical” meets your standards.



  69. Potato on January 2, 2017 at 9:20 pm

    Hi Elwood, just to add to what Kyle has said, ethical investing can be a tricky thing to nail down. To some people, bitumen mining in Alberta is a more ethical way of producing oil than drilling in third world countries. To others, it’s worse because of the carbon footprint. Others don’t want anything to do with petroleum production. Some don’t want to invest in nuclear energy, while others would prefer that over fossil fuels.

    For both Modern Advisor and Wealthsimple, the Jantzi social index is used for the Canadian portion. Odds are there will still be some component in there that you’ll disagree with, and this imperfect ethical approach will cost you in the neighbourhood of 0.4%. While it’s admirable to use every action in your life to support your beliefs, socially responsible investing may not have much of an impact.

    So another way to go is to invest in plain vanilla, broadly diversified funds with minimal fees, and then take that 0.4% difference and donate it to charities and advocacy groups that will help have a more direct impact on the areas you’re concerned with.



  70. Kyle on January 3, 2017 at 10:47 am

    I never thought of that before John – it’s like buying carbon offsets. Interesting idea.



  71. Elwood on January 3, 2017 at 11:28 am

    Thanks for the info. I looked at Modern Advisor, but it seems it becomes hundreds of different stocks in each ETF and that is impossible to investigate. As you said, ‘ethical’ is defined by each person, and no doubt someone finds one way of gas production as more environmentally conscious than another, so it ends up in the ‘socially responsible’ category because it is the least worst option. Certainly not my definition of ethical or socially responsible.

    Which always leads me back to just investing in land or real estate – the problem is that I sit with the money in a bank account until I have enough to purchase a property or land.

    Thanks for your help and suggestions.

    As for the recommendation to take from one area and give to another – this is exactly what creates the problem; greed before ethics.

    Its like saying if one was a pedophile to continue with exploitative activities in a country where it is legal, but then donate money to a specific charity locally to make a difference. It makes no sense and continues to perpetuate the problems.



  72. Steve on February 9, 2017 at 9:54 pm

    Great blog guys. With NestWealth, it says the assets are under a Chartered Bank. Which bank are the asset held under?



  73. Kyle on February 10, 2017 at 9:20 am

    National Bank Steve.



  74. AbsNovice on March 5, 2017 at 6:12 pm

    just because of lowest fee over 15 year period I’m very inclined to go with JustWealth but there seem to be so little reviews available online that it makes me nervous. You did say that all these autoinvest companies are safe but because all my savings will be in their hands, it scares the hell out of me compared to a bank and that’s the reason my cash has been lying in a bank and not in any stocks though I realize that with advancing age, I must start investing right now. What’s your thoughts



  75. Kyle on March 6, 2017 at 10:14 pm

    Hey AbN. Without knowing the rest of your financial details it’s impossible to tell what you should be doing – but if you’re reaching an “advanced age” a robo should recommend a very cautious portfolio with a health dose of bonds.



  76. Paris on March 7, 2017 at 11:34 am

    Hi AbsNovice
    In my view you are correct, there has not been a lot of reviews on JustWealth (or at least ones I’ve seen), but I can tell you from experience J/W do offer great CUSTOMER SERVICE & SUPPORT, to the point their CFO answered my email questions, on the weekend, while attending his parents (50th ?) anniversary.
    Kyle’s advise is solid, however, if a person in not tooooo risk adverse, another suggestion might be to open accounts with 2 or 3 Robos, as well, open different accounts within each Robo (Investment, TFSA, RRSP, RRIF accounts). You could have different risk levels assigned to an TFSA than to an RRSP, etc.
    As an aside this is exactly what I did with JustWealth, ModernAdvisor, & WealthSimple, the result is exposure to 20+ ETFs within my portfolios only 1 ETF duplicated.
    All three have great websites, JustWealth maybe not quite as polished but is certainly transparent and easy to follow.
    Kyle has negotiated a good starter package(s), take advantage of the reduced fees offered, discuss your timing (retirement ?) with the Robo staff and ask for their portfolio recommendations. Good luck and maybe let Kyle know your experience?
    P



  77. Kyle on March 7, 2017 at 6:06 pm

    Thanks Paris!



  78. Ken West on March 10, 2017 at 2:53 pm

    Kyle
    Great article!
    I am currently looking to change over my whole portfolio from RBC to BMO (robo), a fee reduction of 1.75% on ALL
    holdings to less than >.7% (BMO) on the LIFF and RIFF portions and 0% on the TSFAs. I chose BMO as I like many of the etfs they have as well I can go to the local branch to see a “face” my human advisor attached to the account. I also like being able to select what funds I want in my accounts.

    Again Thanks

    Ken



  79. Kyle on March 11, 2017 at 10:02 am

    That’s a massive reduction Ken – Congrats!



  80. Phil on March 28, 2017 at 5:14 pm

    My wife (42 years old) and I (59 years old) currently have about $800,000 in Tangerine Investment Funds (locked and unlocked RRSPs, non-registered, TFSAs), mostly Balance and a couple Balance Growth portfolios. I am generally happy with their performance but as our investments increase over time, I find their MER a bit high. Would you recommend going with a robo-investor at my age. Thank you for any guidance.



  81. Kyle on March 30, 2017 at 12:48 pm

    I really would Phil. As you get a bigger pie, those percentages take away some pretty big bucks right? Specifically I’d check out Nest Wealth and Wealthsimple’s offerings for high networth investors – BTW, congrats on building a solid nest egg!



  82. Kate Lazier on April 3, 2017 at 7:56 am

    Hi there,
    Great review. Do you know which companies offer corporate accounts? I know Wealth Simple does and BMO doesn’t but how about the others?
    Kate



  83. Kyle on April 3, 2017 at 9:50 am

    I am not sure off the top of my head Kate. I would definitely check with NestWealth, Modern Advisor and Just Wealth though.



  84. Andrew Bradley on April 27, 2017 at 10:05 am

    This guide is a great way to understand what are Robo advisors. I really like the decision tree info-graphic on how to decide what is the right choice for you.



  85. Peter on June 12, 2017 at 1:36 pm

    Where can I find a chart comparing the real past net returns on the top 10 Canadian robo advisors? I’d like to see past 6 months/1 year/2 years/5 years/max.



  86. Kyle on June 13, 2017 at 10:10 am

    Hi Peter, there is no such chart that can exist due to the fact they all have different underlying baskets of securities. While they all subscribe to passive investing through broad index ETFs to some degree, there are some differences in how they approach this goal. These baskets have all changed over the relatively short time they have been around – and I don’t believe any of them have been around for five years. The key question you need to be asking though is why would real past net returns matter at all? Past performance is a very poor indicator of future returns!



  87. Potato on June 13, 2017 at 10:52 am

    Hi Peter, to add to Kyle’s comment, the oldest robos are not yet 3 years old, so going back any further isn’t really possible.

    Then how do you compare them? A conservative/balanced/aggressive archetype? That might be possible, but some of the firms will complain that their service creates individual portfolios so any archetype isn’t really applicable to them, anyway.

    Plus as Kyle noted, their portfolios change over time, so how useful will looking back be? To give an anecdotal example, without naming names, one firm when they launched was building portfolios with relatively higher-cost actively managed ETFs. They noticeably underperformed a plain vanilla index portfolio that year, and switched up their portfolios to use more passive, lower-cost ETFs — indeed, just like mutual funds face pressure to become closet indexers, we’ll likely see pressure on the robos to be more passive and low cost (CCP/VoS-esque). So if you looked back and saw the poor historical return, should that affect your decision to use them now given that your portfolio won’t have those expensive, exotic funds of yesteryear?

    Similarly, while they’re all based on the general idea of building you a broadly diversified, low-cost portfolio, they all have minor differences in how that portfolio looks. Some might use currency-hedged funds while others don’t, or have an even split of US to other international markets, while others have a slight tilt one way or the other. There isn’t really a right answer to any of those minor decisions, but looking back someone will have had some performance edge because of the decisions they happened to make — which very well might reverse in the next period.

    Anyway, it’s not an uncommon request. But there are challenges to build such a comparison. I ballparked the cost of setting one such comparison up at around $5k/yr, and there hasn’t been any interest to pay that kind of cost for a tool with limited ability to help make a decision. Maybe one of the groups with more resources (like the G&M, MoneySense, or PWL) will build it if you ask (and maybe they can get it done for less).



  88. Paris on June 13, 2017 at 12:18 pm

    Hi Peter,
    Kyle is of course correct.
    As there are multiple criteria it would be extremely difficult to compare net returns even if they were available, here are a few things to consider and how they might impact an account(s):
    – what are the Client’s risk levels per account
    – what are the Client’s time lines (retirement, saving for a house, kid’s education, etc.)
    – Clients’s comfort level of being “in the market”
    – what are the exit fees if and when, (both the Robos – most don’t have any and the Custodian’s – most do . . . but some of the Robos will cover them
    – What are the fees if you transfer $$$ in from another Financial Institution . . . most Robos will cover them up to a set limit +/- $150 . . . usually though there is a minimum amount needed to be transferred in 25K comes to mind but check with each Robo
    – Are there minimum account size . . . per account (RRSP, TFSA, RRIF, Cash) or is it cumulative
    – Are there joint accounts available and do they count towards the minimums
    – Does the Robo offer any additional ‘perks’ such as Financial Planning
    – What is the response time to questions
    – Is there a blog, news letter, generic financial advise
    – What are the qualifications of the adviser/contact (CFA, CA, CRA, and I think there are probably a couple more).
    Whew, all these questions eh ! ! !

    Depending on the amount of $$$ you are looking to invest, and your time line, have you thought of using the promotions that Kyle aka Young and Thrifty has set up to try a couple of Robos ? ? ? It should give you a ‘flavor’ for the cost vs. service vs. return vs. . . . vs. . . .vs . . . . . . . .
    And on that happy note, hope that give you a couple of things to ponder . . .



  89. Max on June 25, 2017 at 2:42 pm

    Hi Kyle,

    I’m 22 years old, still in university for 2 more years. I don’t have a lot of funds to invest and would be looking at around 1000 with irregular contributions, based on how much I can afford to invest as a student. I have no previous experience with investing, so this is a very new topic area for me. I want to look at different options available and get my feet wet, so when I graduate and start working full-time, I will have the knowledge of where to invest.
    Since I already have a TFSA account with Tangerine, I was looking into their tax-free funds. After reading this article I’m now wondering, would a robo-advisor be a better option?

    Also, is it not possible to use a US robo-advisor in Canada?



  90. Kyle on June 26, 2017 at 10:14 am

    Hey Max,

    First of all – Awesome job planning for the future while still in university!

    Secondly, I’m not sure exactly what “tax-free” funds would be from Tangerine? Perhaps you mean their turn-key funds which they then put inside a TFSA? Or just a high-interest savings account. If you’re simply saving for a housing downpayment or a short term goal, a basic GIC or high-interest savings account would work just fine.

    If you’re looking for something more long term though, I definitely suggest looking at a robo. Check out our calculator here that shows how much fees you’ll be saving vs the Tangerine option (not to mention the advice component robos provide. And to answer your question – at the current time Betterment and Wealthfront etc, cannot provide service to Canadians (they are not set up for RRSPs etc).



  91. Max on June 29, 2017 at 2:40 pm

    Hi Kyle,

    Thanks for the response. Tangerine refers to them as Tax-Free Investment Funds.
    Since I don’t have a lot of funds available to invest long-term, I would only set up an account and put in a little bit to get some experience in investing. Would that be beneficial at all or should I just wait until I graduate and have enough set aside to invest over a long period of time?

    Regarding the US robos, I assume there are some legal issues with them operating in Canada?!



  92. Kyle on June 29, 2017 at 7:18 pm

    That’s a bit of a different thing entirely Max. Before doing anything else I’d honestly just read a bit more on this site to get a feel for what different investment options are out there, and what risks are appropriate for you to be taking.



  93. Bill Silverberg on July 21, 2017 at 11:35 am

    You keep referring to young investors etc
    I am 80 yrs old and my wife is 75
    I Plan to retire In 2 years
    Robo Advisors are relatively new. They have not experienced a market turn down as yet. Who knows how they will perform ?
    For a person our ages would Robo Advisors make sense?
    We are with a bank wealth management firm now
    Thanks



  94. Robert Ross on July 21, 2017 at 12:48 pm

    Nest Wealth charges a flat fee no matter how many different accounts you have with them, not per account as you stated in your article.

    I asked Nest Wealth to clarify this. So in my case, I would pay $80 per month for an RRSP, TFSA and non-registered account in total. Plus a maximum of $100 per year in trading fees for all three account types above.



  95. Kyle on July 31, 2017 at 12:03 pm

    This not true Robert – Nest Wealth gives people that click through from Young and Thrifty or AutoInvest.ca a bit of a break, but here is what it clearly states on their website: “For each account you have open, NBCN Inc. charges a custodian fee. We cover the custodian fee for your first account, and NBCN Inc. will charge you annually for any additional accounts you have open—$100 a year per registered account (e.g. RRSP, TFSA) and $75 a year per non-registered account (e.g. Cash).”



  96. Kyle on July 31, 2017 at 12:06 pm

    Hello Bill. I know exactly how the robo advisors will perform – they will get hit by the market down turn almost exactly as much as the average of the overall market. The reason we know this is that robos don’t rely on active management (they don’t pick “winners” and “losers”) but instead use broad index ETFs.

    In terms of a person your age, here is what I would recommend Bill – use a robo advisor along with a fee-only advisor. This will give you high quality advice on intricate matters such as RRIF drawdowns and tax planning, decoupled from your investment decisions (no one trying to put you into certain investments just to get a commission).



  97. Louise on October 19, 2017 at 8:26 am

    Great article! Im a rookie at this investment stuff, but dismayed by the banks fees and the impact they can take on my investments…. so strongly looking at the robo options. What penalties/fees do they generally charge, if say I want to move my investments again, away from them?? If I get spooked, I mean!



  98. Kyle on November 1, 2017 at 11:18 am

    Hi Louise. In general they charge a couple hundred bucks BUT you can almost always negotiate with wherever you move your money to, in order to have the new company cover the old company’s fees! If you use our promos you can try several robos for absolutely free.



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