What is A Robo Advisor? Here's a Guide to Some of The Best in Canada

Posted on March 10, 2021

Did you know that, according to Traders Magazine, the fifth-largest robo-advisory market on the planet in 2020 was Canada?

So what exactly is a Robo Advisor in Canada? Simply put, it’s a digital robotic platform that allows for financial trading. It’s a fully automated, non-human, highly intelligent financial advisor. They allow for trading across both high and low risk options, depending on what your appetite for risk is.

If you’re thinking of using a robo advisor in Canada, then you might be asking yourself questions such as:

“What robo advisors are available in Canada?”

“How do the best robo advisors in Canada compare?”

“Which robo advisor is best for me?”

“How do their investment approaches vary?”

After all, you want to find an easy way to invest using this modern technology. But if you don’t know how to compare them and find the best one for you, you can’t start investing and making money.

We've created this article to arm with you with all of the information you need to begin your exciting new investing journey.

Wealthsimple

Wealthsimple is the largest robo advisor in Canada.  It is also the most well-known. This robo advisor has over $5 billion in assets which are under management.

Wealthsimple is based in Toronto. In terms of use, it’s easy to track its performance and the interface is sleek and easy to use.

This company started to make it easier for you to invest in a multitude of ways in 2019.

They launched Wealthsimple Trade in May 2019. With this trading platform, they offered a DIY way for customers to buy stocks. In January 2019, they launched Wealthsimple Cash, their own type of chequing account.

Wealthsimple is 89% owned by Power Corp., a Canadian financial firm that is one of the largest in the country.

Investment Approach

When you use Wealthsimple, they put your money into different popular ETFs. These come from Powershares, BMO, VanEck, WisdomTree, Vanguard, and iShares. They have three main portfolios. These include growth, balanced, and conservative portfolios.

They have additional portfolios, such as the Halal portfolio and a socially responsible portfolio.

Halal investing is investing in companies which are in line with the Islamic principles.  It prohibits profiting from companies which sell pork, tobacco, alcohol, pork and gambling.

The socially responsible portfolio makes it possible for you to invest in such a way that you’re focusing on low carbon and clean tech.

You don’t get to choose your portfolio. They’ll choose for you once you’ve filled out a survey when you sign up.

At Wealthsimple, you have many account options. These include LIRA, RRIF, RESP, TFSA, RRSP's, and more. Additionally, if you’re a business owner, they have an account just for you.

The Details

This is the best robo-advisor in Canada for investors who prefer simplicity. You also get to access Wealthsimple Black if you have over $100,000 in assets you can invest. This gives you airport lounge access worldwide, a meeting with a human financial advisor, and a reduced fee.

You can also enjoy access to the Wealthsimple Generation service tier if you deposit $500,000.

Let’s review the fees. For the first $99,999 you invest, you’re charged 0.5%. If you invest over $100,000, you’re charged 0.4%.

The first year you invest $10,000, your fees are waived. As for minimum account size, there isn’t one.

If you’re looking for an equivalent of Betterment in Canada, Wealthsimple is an option to consider. This is according to a current Reddit thread.

TD GoalAssist App

If you’re looking for a TD robo-advisor in Canada, then the closest thing you would get to this is the TD GoalAssist

App. Basically, you set up an account with TD, where you create an online profile and enter your life and or investment goals.

Then, the app will keep you on track so that you accomplish these goals. It works a bit like guardrails, moving you toward those financial goals.

When you’re using the GoalAssist App, you can trade ETFs on important North American exchanges. Additionally, you do this with zero commissions.

How It’s Like a Robo-Advisor

Even though the TD GoalAssist App isn’t a robo-advisor in Canada, it works like one. Here’s how. Once you’ve completed your investor profile, you can move into comprehensive asset allocation ETFs. These are called the TD One-Click Portfolios.

You have three options when it comes to these portfolios, which come in three different risk levels.

The Management Expense Ratio (MER) fees are very cheap compared to even the best robo-advisor in Canada, at only .25%. However, it doesn’t occur automatically. This is because you have to press a buy button.

With robo-advisors, everything is done for you automatically.

This isn’t the case with the TD GoalAssist App. Note that, if you’re looking for a CIBC robo-advisor, they have a similar service to this one. It’s called the CIBC Goal Planner.

Questwealth Portfolios

When you’re looking for the best robo-advisor in Canada, you should also consider Questwealth Portfolios. These are available through Questrade. This company is most well-known in Canada for its discount brokerage, which is the largest independent one in the country.

Now that Questrade has a robo-advisor option, many people are wondering about the Questrade vs. the Wealthsimple robo-advisor.

Let’s review this option so you can make a comparison for yourself.

In 2018, Questrade rebranded its robo-advisor option, no longer calling it Portfolio IQ and instead calling it Questwealth Portfolios.

When rebranding, they also reduced the fees associated with this option.

The biggest benefit of using Questwealth Portfolios is that you can use both its discount brokerage and robo service. So if you want a robust experience with investing, this might be the right option for you.

Investment Approach

Here’s how the investment approach with Questwealth Portfolios works. You have a choice of five ETF portfolios that are actively managed. These options start with the conservative portfolio and end with the aggressive portfolio.

There are several brand name investments held in the fund.

These include iShares, Wisdom Tree, and SPDR. There are also many account types available, more than with many robo options.

These account types are LIRAs, RESPs, TFSAs, spousal RRSPs, RRSPs, and more.

The Details

If you’re a Canadian who wants a discount brokerage so you can do individual stock picking, but you also want to have a robo-advisor for your core holdings, then this is a great option.

Questrade has a history of serving people who are a little more DIY with their investments. So if you prefer investing on your own, this company will be a better fit for you.

This is the most important difference when thinking about the Questrade vs. Wealthsimple robo-advisor.

Now let’s review the fees. When you invest between $1,000 and $99,999, you’re charged 0.25%. When you invest $100,000 or more, you’re charged 0.2%. As for the minimum account size, it’s $1,000.

BMO SmartFolio

Another best robo-advisor is BMO SmartFolio. With SmartFolio, you get ETF options. Additionally, the portfolios are designed by real-life fund managers. They get these fund managers from their large investing arm, BMO Global Asset Management.

Anyone can use the BMO SmartFolio. However, most people who use it currently are people who are already banking clients at BMO.

Investment Approach

With BMO SmartFolio, you have five portfolio options available to you. These vary greatly. For example, if you get the Equity Choice Option, it’s 10% bonds and 90% stocks. However, if you get the BMO capital preservation portfolio, it’s 90% allocated to fixed income and 10% allocated to equities.

Each portfolio available is made up of a mix of funds. These are all BMO ETFs.

If you have a big life change—for example, you get married, get a new job, or have kids—then changing your asset mix is easy.

Additionally, if managers think a change is necessary for another reason, they’ll also shift things around.

The Details

If you want a combination of both active and passive, this is the best robo-advisor in Canada for you. You’re also a bit safer when it comes to your investments. After all, if there’s a big shift in the market, managers will shift things around for you.

There’s also a lot of availability when it comes to customer service. If you want to speak to advisors, you can contact them through phone, email, or live chat.

Now, let’s review the fees. For the first $100,000 you invest, you’re charged 0.7%. For the next $150,000 you invest, you’re charged 0.6%. For the next $250,000 you invest, you’re charged 0.5%.

Finally, if you invest more than $500,000, you’re charged 0.4%.

CI Direct Investing

CI Direct Investing was started by Tea and Chris Nicola, the daughter-in-law and son of the famed money manager John Nicola, who started Nicola Wealth Management in Vancouver. CI Direct Investing used to be called WealthBar.

When CI Group became a majority owner, they suddenly had the opportunity to have new investment opportunities.

This is why they started to offer a robo-advisor option in Canada.

One of the aspects that makes CI Direct Investing’s robo-advisor option different is that you get a bigger focus on financial advice. As a result, they have a model that’s a hybrid between the active and passive models.

Portfolio managers are the ones who construct the funds. These funds are based mostly on ETFs.

Investment Approach

As for their investment approach, CI Direct Investment has two portfolio options available. One is the low-cost ETF Portfolio. The other option is private investment portfolios. With the low-cost ETF Portfolio, you get an option that’s similar to what’s available with the other companies listed here.

There are five options when it comes to the low-cost ETF Portfolio.

The range covers conservative, aggressive, and everything in-between. They include CI First Asset, BMO, iShares, Vanguard, ETFs, and ETFs from Horizons.

With CI First Asset, there are three portfolio options available. These all include Nicola Wealth Management mutual funds.

These are invested in traditional investments like mortgages, private equity, and alternative strategies, as well as non-traditional investments.

The Details

If you want a large number of choices and to diversify your portfolios, then CI Direct Investing is the best robo-advisor in Canada for you. There are many types of asset classes within their portfolios precisely because CI Direct values diversification.

There’s even some real estate within the ETF portfolios.

If you have a preference for traditional investing but are also curious about robo-advisor options, this is the perfect fit for you.

After all, you get access to Nicola Wealth strategies, Nicola Wealth advisors, and active management.

Now, let’s review the fees. When you invest the first $150,000, the fee is 0.6%. When you invest the next $350,000, the fee is 0.4%. When you invest more than $500,000, the fee is 0.35%.

Keep in mind that, when you sign up and add funds your account,  you also receive free management for up to $10,000 of the money you’ve invested.

Additionally, there’s a minimum account size of $1,000.

Choosing the Right Robo-Advisor in Canada

Now that you’ve learned about the different robo-advisors in Canada , you might need help choosing the right one. Maybe you want to sit down with someone to review your financial assets before making your choice.  This is always a good option, especially in this day and age. 

We recommend arming yourself with as much information as possible beforehand in order to be able to ask the right questions.  Check out the rest of Insurdinary's blog on finances.  There's a wealth of information throughout the site.   

As one of Canada's top financial comparison platforms, they can also assist you with a plethora of other services such as insurance, loans, mortgages, bank accounts and credit cards.  Reach out today! One of their highly experienced advisors is looking forward to working with you.

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