Questrade Portfolio IQ Robo Advisor Review

If you have been living under a rock (aka, not tuning into regularly scheduled programming here at Y&T), you have probably not heard of robo advisors before.  Well, robo advisors are definitely here to stay and are moving and shaking the financial world by merging finances and technology (hence the term “fintech”).  People want to access their money when they want, where they want, and on their own terms.  More and more Canadians are waking up to low-growth realities and they don't like to feel gouged with the high fees and lack of performance typically associated with traditional mutual funds.  For more information on the overall industry and FAQ, check out our complete guide to robo advisors available in Canada.  Today's post is honing in on one of the robo advisors available since 2014: Questrade's Portfolio IQ.

Who's Behind Portfolio IQ

Who's behind Portfolio IQ, you ask?  Our old friend Questrade is behind Portfolio IQ.  They are Canada's fastest growing online discount brokerage, with 30,000 accounts opened every year.  Questrade has over $4.5 billion of assets under management (that's a lot!) and has established themselves as a leading player when it comes to presenting Canadians with ultra-cheap DIY investing options.  Questrade is a big company compared to the other robo advisors out there.  They also have some pretty snazzy commercials that make you question your current investments with the big banks.  To put all of our cards on the table, we have been fans of Questrade for a long time now and love the fact that they let you purchase individual ETFs for free within a discount brokerage account.  Let's hope they bring the same passion for savings to the robo advisor space going forward.

How Portfolio IQ Looks and Ease of Use

Portfolio IQ is embedded within the Questrade dashboard and interface (see below).  It has a sharp purple and green motif and it is easy on the eyes and fun to look at.  It is also easy to use – which shouldn't be a surprise given their time in the online investing world.

To see how your portfolio is performing, you can look at Investment Summary in Questrade (which is the usual platform that you will see if you are already a Questrade account holder).

Questrade often updates the interface (as well as the rest of their platforms) but usually the change is intuitive enough to figure it out fairly quickly.

How it Works

How Questrade Portfolio IQ works is that you don't need $100,000 to benefit from a financial advisor who will actively manage your portfolio – you can start with as little as $2,000.  It is for people who want to invest but don't have the time, energy, or know-how to DIY.  It is also for people who want to retire 30% wealthier (one of their slogans) because that's how much you are paying more in terms of sacrificed growth due to fees if you go the traditional big-bank mutual fund route.  (I would argue that this is an imprecise measurement – and that the total for most people would actually be substantially higher than that.)

Basically instead of you managing your ETFs and re-balancing twice a year or so (aka couch potato investing), they will manage your ETFs for you and re-balance your ETFs (almost completely hands-off once you set your initial target allocations – if that's what you want) and you will pay a fee for that (see below).

Many people are too worried or scared to get into the stock market, or are worried about their emotions and how they might react when the next crash happens, so having your money managed for you might be a good idea if you fit into this category.  If looking up individual ETF symbols and doing a little investment reading isn't your thing, robo advisors such as Portfolio IQ are probably your best bet.

What Portfolio IQ Will Cost You

The pricing of Portfolio IQ is based on a tier system (similar to several other robo advisors).  The more you invest, the less it will cost you as a percentage of your account. The minimum that you need to invest with Portfolio IQ is $2,000, if you have less than $2000 you can still open an account but it will be in cash until you meet the threshold.

The Portfolio IQ MER fee does not include the underlying ETF fee which they say ranges from 0.31-0.83%.

  • $2000-$99,999- 0.7%
  • $100,000-$249,000- 0.6%
  • $250,000-$499,999- 0.5%
  • $500,000-$999,999- 0.4%
  • $1,000,000+ – 0.35%

Types of Accounts

The types of accounts that you can open with Portfolio IQ are:

  • Cash Account- Personal or Joint
  • RRSP
  • TFSA
  • RESP
  • LIRA- Locked In Retirement Accounts
  • RIF- Registered Retirement Income Fund
  • Corporate Accounts
  • LIF- Life Income Fund

What Makes Portfolio IQ Unique

Portfolio IQ is actively managed – sort of.  This is probably the biggest difference between Portfolio IQ and the offerings of Canada's other robo advisors (also probably accounts for why their fees are slightly higher at the lower tiers).  The belief is that by mixing some basic vanilla index ETFs with actively managed options they can offer better value and superior returns.  They state they have assembled a team of experts who do daily research and market analysis and they adjust their strategies to take advantage of the market.  To be honest, I remain sceptical on that active management adds value and/or that it will beat passive management over the long term.

Account Protection up to $11 million If you have $9 million lying around and you don't want your investments protected up to the $1,000,000 level that the Canadian Investor Protection Fund automatically protects you with, Questrade protects ALL clients for an additional $10 million for free.

MyFamily Program– You can link your Portfolio IQ accounts with your friends and family, and you will be a able to access lower fees (if your accumulated portfolio value meets the next tier for lower Portfolio IQ pricing).  Find your friend who has $999,999 in portfolio assets and together you guys can decrease the cost of your Portfolio IQ pricing!  (Perhaps there is a side benefit to getting Canadians to talk about investing and personal finance a little more?)

They Show you the Robo Portfolio's Past Performance– What makes Portfolio IQ unique compared to other Robo Advisors, in my research so far… is that you can see the past performance of the selected portfolio (Aggressive, Growth, Balanced, Income, or Conservative Portfolio) since 2011.  It is not the actual performance of Questrade Wealth Management Inc. clients but created by One Capital Management LLC (a company based in California, USA) based on the ETFs performance within that portfolio (pretty snazzy if you ask me).  I should also note that five years is not really an indicative frame of reference for long-term retirement planning, but at least there is some data there if you are curious.

Automatic Reinvesting when you make any cash deposits or have any dividend distributions, Portfolio IQ will automatically reinvest this into your portfolio.

A Peek Inside Portfolio IQ

When you first sign up for an account, you will be asked the standard questions to assess your timeline for savings and your risk tolerance.

For example, the question below asks the account holder whether they want to preserve capital, provide a steady stream of income, have a balance of income and growth, generate substantial asset growth or achieve maximum asset growth.

screen-shot-2016-11-26-at-10-25-53-pm

After a number of questions, you will be given an asset allocation.  In the demo account that I opened, it says I would work best achieving a balanced approach, which involves 60% equity and 40% fixed income.

screen-shot-2016-11-26-at-10-27-51-pm

Then the balanced portfolio is created and reviewed with you, you will be able to see the exchange traded funds that are held within this portfolio.

This is a screen shot of the example of ETFs that Questrade IQ will use to create your customized portfolio.

screen-shot-2016-11-26-at-10-30-55-pm

The great thing about Portfolio IQ that is different from the rest of the robo advisors is that they allow you to see the past performance of this particular portfolio (that extends beyond 2 years since Portfolio IQ was only created in 2014).  They do this by aggregating the exchange traded funds and analyzing their performance.  Once again I would caution that it is wrong to put too much stock in this short-term performance, but it is a cool feature.

You can see below the 1-year performance, the 3-year performance, and the 5-year performance.  Inception would be a more accurate performance of the Portfolio IQ balanced portfolio since Portfolio IQ was only available 2 years ago in 2014.

Portfolio IQ

Act Now!  How to Open up a Portfolio IQ Account

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Sound enticing to have your money managed with Portfolio IQ and to not have to worry about re-balancing and checking the stock market all the time?  Well, you are in luck because Young and Thrifty Readers can get their first month with Questrade's Portfolio IQ managed for FREE.

All you have to do is Click HERE to open up a Portfolio IQ Account and you will get your first month managed for FREE.

13 Comments

  1. Potato on January 12, 2017 at 11:15 pm

    Holy slicing-and-dicing, batman! And that screenshot only adds up to ~36% of the overall portfolio!

    Non-registered investors beware! Your ACB tracking is going to be no fun at all.



  2. John McKay on January 16, 2017 at 10:06 am

    Sorry guys, I have to chime in here. I’ve been a Questrade enthusiast since day one. I’ve had a portfolio IQ account for a long time. The returns have been pretty good, however I have moved away from portfolio IQ to Wealthsimple and Wealthbar. I was not happy about the allocation with portfolio IQ. They have me in 3 ETF’s only (1of which is their own house brand ETF loaded at 80%). I actually like the Questrade ETF’s and thankfully the one they put me in is a performer. To put a customer 80% into their own house brand ETF is a red flag. I am OK with the management fee, but it’s a touch on the high side. Very concerned about the asset allocation and they don’t seem to “change up” the investments very much. (If at all). It’s like the’ve forgot about me. For those of you thinking about portfolio IQ, too me it’s worth considering the obvious, there are better choices, a lot better. In addition to the limited portfolio, I’ve been unhappy with their platform, basically, it sucks. It takes along time to get into where you want to go, the ease of navigation is not there. I’ve learnt my lessons with Questrades portfolio IQ and I’ve moved on to better firms with lower fees, more diversification and much better platforms.



  3. Kyle on January 17, 2017 at 9:24 am

    Hey John, thanks for stopping by and leaving your two cents! Just for the sake of full information though, could you please tell me which ETF they had you 80% in? I’m curious as to how that could have occured. More ETFs doesn’t always mean a more diversified portfolio – regardless of if one had a good performance for a single year or not. I’m assuming that the portfolio didn’t change because it didn’t get “out of balance” during the time you were with them – because that part would be automated. By comparison where do WealthSimple and Wealthbar really shine?



  4. Edgar on January 18, 2017 at 11:35 pm

    Thanks for the article. Will you be doing one like this for Wealthsimple?



  5. John McKay on January 19, 2017 at 1:16 am

    Hi Kyle, I agree with your comments. More doesn’t always mean better, but 80% in 1 ETF ! I see it only one way, it’s diversification suicide! The 80%r was QGE. The first 6 months I watched IQ switch things up a bit (not much, just a bit) and after that ……… oh about a year or so of NO change. I didn’t do the calculations, (after all that’s why I went the IQ route) I would have to say, I didn’t see any big impact presenting the need to rebalance. Next question, By Comparison, How do WealthSimple and WealthBar really shine?

    Wow, I mean it’s day & night. WealthSimple are the fastest easiest site to navigate, from any device, you can get in, transfer, fund, check status, reports …….. everything at lightning pace. The part I like the best is the allocation, the info is right there, it gives a split of the investment spread over a number of ETF’s. I mean, I gave the beast a test drive and it did not disappoint. WealthSimple …… is an outstanding platform with numerous & diverse allocation of funds that agree with my principles of investment (that I have learnt the hard way over 20 years). I’ve got to laugh, because I thought I’d try this just for kicks. I put $20 in on my first funding, the next day they had it split up into about 8 different ETF’s (fractional as well)! Holy crap! Since then I have funded alot more and it’s flawless.

    Then we have Wealthbar, I am in BC and I can actually talk to these guys during regular west coast business hours. When I speak to the guys at Wealthbar I am speaking to the account managers (not just another pretty face) who have been just excellent. WealthBars platform is clear, simple and the execution of funding or transfers is easy. Mobile device friendly as well. The things that I like the best about Wealthbar are the portfolio options, they offer an excellent ETF split and they also offer their own investment pool options that are time proven and performance driven (These guys have been successfully swimming the pool for long time). The Wealthbar instills confidence and there is still more to it, they offer a financial planning feature online and will review it with you, pointing out goals or areas of concern. WealthBar, in my opinion is a totally professional firm aimed at all generations Y’s, Millenials, Gen-X’rs, Boomers, Retirees and all. My experience is ….. they provide me with better service than my past “Big Firm” brokerage house. On top of all this, the fees are lower than Portfolio IQ.

    That’s my take on it, There’s my my 3 cents worth !



  6. Kyle on January 19, 2017 at 11:50 am

    Hey John,

    It’s not diversification suicide at all. You have to look at how an ETF is made up. If it were 80% of my portfolio in a single stock I would agree, but by putting money in this ETF I am effectively buying thousands of stocks from all around the world! Wealthsimple does pride iteself on an easy to use site – make sure to snag our special Young and Thrifty discount eh? Most people who talk to Wealthbar really enjoy their customer service aspects as well, so I’m not surprised to hear that. Sounds like you’re well on you’re well on your way. Thanks for providing us with your two cents! I’m interested to see which robo eventually earns your long term business a few months from now. Just keep in mind that more ETFs does not equal more diversification!



  7. Kyle on January 19, 2017 at 11:51 am

    Definitely Edgar. Check back in a couple of weeks, we’re just putting the finishing touches on it!



  8. John McKay on January 19, 2017 at 11:52 pm

    Hi Kyle, perhaps I was a little overly expressive ? (Smile). Maybe it’s not exactly suicide. ….. then again maybe it is. Let the readers decide. I looked at about 13 of the competitors and then shortlisted to about 6 . Pretty well all of them split up the funding into a lot more than 3 ETF’s. All in all, I am just not a fan of loading up on a single Questrade ETF, it might work for some but it’s not what I signed up for. The Questrade QGE ETF is for sure packed with dynamite, plenty of different investments within, doing all the great things a sector ETF is supposed to do ……. and one might say it’s the only one you would ever need, although it feels more like a heavily weighted sector potatoe. Here’s the bottom line, 80 %, yuk. I didn’t like it, and I would expect that most people would not like it, because it’s a red flag. I was a portfolio IQ customer and I left. When your customers leave it means something went wrong. For me it’s plain and obvious, the competitor systems are miles ahead. I gave portfolio IQ a good run, it wasn’t bad but it certainly wasn’t good. I had to change. Thank you for your encouragement, you guys are great. I love the opinions (and especially the postings) good, bad, and ugly, if I’ve learnt anything in my life it’s know your investment vehicles, have an objective, and think for yourself. When you need to change, don’t delay. Speaking of money, the good people at wealthbar are definitely helping me along …… thanks for the Y&T value added ! Last post for me on this subject, would love to hear what others have experienced. All smiles here.



  9. Jon on January 20, 2017 at 1:36 pm

    0.7% MER plus the 0.3-0.8% MER of ETFs means it’s 1% to 1.5% MER for a Portfolio IQ. Tangerine’s mutual funds are 1.07% MER. It seems a bit backward. I’d retire 30% wealthier by going with a mutual fund.



  10. Kyle on January 22, 2017 at 10:53 am

    Actually your numbers are a bit off there Jon. Admittedly they aren’t the cheapest option in the market, but the overall MER is going to be 1% or lower for almost everyone. First off, hopefully you break the 100K investments fairly early in the retirement savings game – that gives you an MER of .6%. I highly doubt they’re using any ETF with a .8% MER. My guess would be it averages out at below .4%. That gives you an all-in max of maaaaybe 1.1%, probably closer to .9% over the entire span of your investing life. There aren’t many mutual funds in Canada that hit that low MER, plus you have to factor in the fact that active management almost ALWAYS gets killed by passive management (just Google Warren Buffet vs hedge fund managers index bet). That being said, if you’re 80% in their global equity fund with that high MER you were referring to, then I agree – not enough value there compared to Robo brethren!



  11. Kyle on January 22, 2017 at 10:59 am

    Good to hear that Wealthbar is providing excellent customer service John, that’s what they tend to hang their hat on! While I still think it’s key to understand that you can have very good diversification with only 3 ETFs, I agree that 80% in QGE isn’t a good idea – mostly because of the high MER! Good luck going forward and thanks for keeping us updated!



  12. mark on February 26, 2017 at 8:36 am

    In response to Kyle : The overall MER fee can be as high as Jon stated. For instance, in the income portfolio they will put your money into QGE which has a MER of .85. Add the .7 of the portfolio IQ and you have a total MER of 1.55 %. They put the rest into xbb and xsb which will bring your MER over 1% for holding those stocks. The yield on xbb and xsb is only around 2.25-2.5% of which you’re giving .7 to Questrade, so net yield is under 1.5-1.75%. You’d be better off buying a GIC.



  13. Kyle on February 28, 2017 at 10:25 am

    Yeah… I see that now Mark. They’ll definitely have to change those portfolio building blocks if they want to remain competitive. There is just no denying that basic math.



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