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Robo-advisors have grown steadfast in their popularity among Canadians over the last decade. After all, the service provides a hands-off, inexpensive means to wealth management. Today, there are several platforms available but what are the best robo-advisors for Canadians?
WealthRocket to the rescue! We’ll answer some general questions about the semi-novel wealth management platform, such as what a robo-advisor is, how to choose the right one, and additional inquiries that can help you make the best decision for your future.
While still a relatively new service, there’s no shortage of reputable, trustworthy, and effective robo-advisor options available to Canadians.
Below, you’ll find a summary and review of the best robo-advisors for Canadians. Each section provides details for every provider, which will guide you in finding the right fit for your financial future.
Summary: You may have already heard of Wealthsimple. The Toronto-based wealth management firm is currently the largest and most well-reputable robo-advisor in Canada.
Wealthsimple debuted onto the fintech scene in 2014 exclusively as a Canadian robo-advisor and have evolved immensely since.
Today, Wealthsimple offers a variety of exciting products, including an online brokerage (known as Wealthsimple Invest), a hybrid bank account (known as Wealthsimple Cash), an automated tax-filing service (known as SimpleTax), and, as of recent, the introduction of a Cryptocurrency trading platform (known as Wealthsimple Crypto).
Wealthsimple* Invest, it’s robo-advising service and staple product, offers a wide variety of unique investing options for people seeking the hands-off investing experience.
Upon sign-up, Wealthsimple customers must fill out a brief questionnaire about their financial goals and risk tolerance. The wizard will ask questions concerning risk capacity and financial goals, determining the types of investments that go into the ETF.
Wealthsimple has some of the most competitive fees in the robo-advisor game, with a tiered MER at 0.40% to 0.50%.
The wealth management platform currently offers three tiers for investing: Basic, Black, and Generation, all of which come with a unique set of advantages and perks, including airport lounge access and healthcare benefits.
Additionally, Wealthsimple offers Roundup and Overflow, two settings that grant investors more opportunities to invest.
Roundup withdraws spare change from debit purchases, rounds them up to the nearest dollar, and invests. Overflow automatically withdraws excess funds for a customer’s chequing account at the investor’s discretion.
Wealthsimple also offers Socially Responsible Investing (SRI), which grants investors the opportunity to fund sustainable companies. They also provide Halal Investing, which invests in options that coincide with Islamic practices.
A minimum investment of $1 is required to open a Wealthsimple Invest account.
Wealthsimple at a glance:
Summary: Questwealth Portfolios is the robo-advising product provided by Questrade, Canada’s largest independent online brokerage, operating since 1999.
A Toronto-based, digital wealth management firm, Questwealth Portfolios offers Canada’s most competitive fees, proven to be popular with Canadian investors.
Annual fees are among Canada’s lowest, with 0.25% for balances of $1,000 to $99,999 and 0.20% for investment balances over $100,000 costs.
MER fees are also the lowest among the best robo-advisors for Canadians, ranging from 0.11% to 0.35%.
Account options with Questwealth Portfolios are fruitful, offering various registered and non-registered accounts such as TFSAs, RRSPs, RESPs, RIFs, LIFs, and cash accounts, to name a few.
Portfolios come with various risk tolerance options, including Conservative, Balanced, Income, Growth, and Aggressive, with Socially Responsible Investing (SRI) portfolios available.
A minimum deposit of $1,000 is required to open a Questrade Portfolios account.
Questwealth Portfolios at a glance
Summary: CI Direct Investing is a digital financial advisor and Canadian investing platform operating in Vancouver, British Columbia since 2013.
CI Direct Investing offers tiered investing prices for Canadians from all economic backgrounds, making it a Canadian robo option accessible to most investors.
CI Direct Investing offers ETF portfolios and private investments. Annual fees come at flat-rates, tiered depending on the investment balance.
Fees are where CI Direct Investing truly shines as they merge Management fees and MER rates into one monthly payment. The rates vary between 0.38% to 0.60%. The MER ranges from 0.18% to 0.25%, depending on the customer select’s ETF portfolio. Private Investing MER rates range from 1.00% to 1.55%.
Clients also have access to a dedicated financial advisor to help them with any inquiries, including online chat and telephone service.
There is a minimum investment requirement of $1,000 to open a WealthBar account.
WealthBar at a glance
Summary: Justwealth has a reputable name in Canada’s financial advising space. Since 2016, the Toronto-based investment firm has offered competitive rates and exceptional customer service.
Justwealth’s tiered MER currently sits at 0.50% for accounts under $500,000 and 0.40% all balances over. There is a minimum management fee of $4.99 per month for all accounts, excluding RESP accounts, which comes with a minimum $2.99 fee per month.
Canadian investors can take advantage of non-registered accounts, including LIRA and LIF accounts. Registered accounts include TFSAs, RRSPs (both traditional and spousal), RRIFs, and RESPs.
Each account comes with personal portfolio management, monitored by a small, dedicated team of experts with a proven track record in Canadian finance.
A minimum investment of $5,000 is required to open a Justwealth account. This fee excludes RESPs, which do not have a minimum deposit requirement.
Justwealth at a glance
Summary: Nest Wealth is a Toronto-based digital wealth management platform founded in 2014.
As a robo-advisor, they are renowned for their transparency and fixed-pricing tiers, along with the personal touch that they add to custom portfolios.
Nest Wealth automated wizard guides investors through the sign-up process, which eventually leads to building a portfolio.
The tailored-process asks new customers their age, how much they’ll invest, and the timespan of their savings goals, such as saving for retirement or a down payment.
Nest Wealth’s approach to pricing is different than its competition. The platform provides fixed-pricing at various tiers. It’s one of the only robo-advisors in Canada that offers monthly, flat-rate pricing.
Prices range. Investments below $75,000 cost $20, investments between $75,000 to $150,000 cost $40, and any amount over $150,000 cost $80 a month.
There is a minimum investment requirement of $100 to open a Nest Wealth account.
Nest Wealth at a glance
Summary: While Bank of Montreal (BMO) is Canada’s oldest operating major bank, the financial institution is hip to automated wealth management. In fact, in 2016, BMO SmartFolio became the first robo-advising platform offered by Canada’s “Big Five” banks.
BMO Smartfolio offers various non-registered and registered account options, including TFSAs, RRSPs, RRIFs, and RESPs.
Robo-advisors are known for automated management of clients’ investments. BMO Investorline merges this principal with active account managers. They also offer a sizable customer service team, ready to provide advice and help at a moment’s notice.
MER (Management Expense Ratio) fees range from 0.40% to 0.70%, with additional account management fees ranging from 0.40% to 0.70%.
There is also a minimum deposit requirement of $1,000 to open a BMO SmartFolio account.
The financial institution also offers a multitude of banking and investing products, making it suitable for customers who like keeping all of their banking and investing needs in one place.
BMO SmartFolio at a glance:
Summary: The Royal Bank of Canada (RBC) is another major financial institution that isn’t shy about automated investing platforms.
RBC InvestEase is RBC’s robo-advisor. It offers reliable and secure investing, with the lavish customer service and financial product options that make major banks so attractive to Canadian investors.
RBC InvestEase offers two types of ETF investing portfolios: Standard and Responsible.
Standard, their traditional ETF portfolio, comes with a MER of 0.11% to 0.22%. Responsible, the socially conscious ETF portfolio, comes with a MER rate of 0.18% to 0.30%. Both investment portfolios come with an additional yearly management fee of 0.5%.
InvestEase certainly comes with higher investing fees. However, RBC’s team of investment advisors are available at their customers’ needs.
RBC InvestEase requires a minimum of $1,000 to start investing.
RBC InvestEase at a glance
Summary: ModernAdvisor is a smaller player in the robo-advising space but works with its customers in a big way. The Vancouver, British Columbia-based investment firm offers all of the perks that make robo-advisors such an attractive investing platform — with commission rates suitable for any customer.
MordernAdvisor operates both as a robo-advisor (ModernAdvisor Digital) and a financial advising firm (Modern Advisor Personal). The latter service comes with a dedicated personal advisor and other financial products, such as mortgages and loan options.
ModernAdvisor prides itself on putting simplicity and low-cost investing at the forefront of its business model.
MER fees range from 0.50% to 0.75%, depending on the ETF portfolios. The additional annual fee for investors is tiered. Investments under $10,000 come with no annual cost, a suitable option for new investors. Deposits between $10,000 and $100,000 cost 0.50% each year in fees, while over $100,000 and under $500,000 cost 0.40% annually. Any amount over $500,000 costs 0.35% annually in fees.
ModernAdvisor also offers Socially Responsible Investing (SRI) options that comply with the Environmental, Social, and Governance (ESG) Mandate.
ModernAdvisor provides on-demand customer service to all customers with no appointment requirements.
Uniquely, ModernAdvisor offers a no-risk mock investing platform that allows investors to get a glimpse of what investing with them is like, without depositing or using real money.
A minimum investment of $1,000 is required to open an investing account with Modern Advisor.
ModernAdvisor at a glance
A robo-advisor is a wealth management platform that directs investments using algorithms on behalf of its clients. Traditionally, there is little-to-no human monitoring of the investments, hence its name.
Other investments, such as stock or mutual funds, require supervision by a financial advisor, meaning that they cost more in fees and commissions, which adds up over a lifetime of investing.
With the first launch of a robo-advisor in 2010, the wealth management platform has risen steadfastly in popularity over the last decade.
Because robo-advisors are operating online and do not require constant monitoring, fees are lower, and prior investing knowledge isn’t required.
Robo-advisors deal primarily with Exchange-Traded Funds (ETFs), which are diversified baskets containing stocks, bonds, and other investments.
Financial advisors are professional advisors that manage an investment portfolio on behalf of a client or several clients.
Financial advisors actively monitor investments and make trading decisions on behalf of their customers, to maximize their potential earnings and returns.
Since a human—with a professional background in wealth management—monitors and controls your investments and other clients’ portfolios, financial advisors generally charge more in portfolio management fees. The human touch comes at a price, which is worth it for certain investors.
Robo-advisors are run by an algorithm, which means all the heavy lifting of the job is automatic and completed by computers. While robo-advisors may have a financial advisor monitoring or managing investments, the operation cost is much lower.
Choosing a robo-advisor comes with a handful of things to consider. After all, there’s a high likelihood that potential investors will use one to manage their finances over several years or, in some cases, throughout a lifetime. It’s essential to look at what’s important and why it’s important through a long-term financial scope.
Below, we’ll look at what to consider when choosing the best-suited robo-advisor for you.
Primarily, fees are the most crucial aspect when shopping around for robo-advisors. After all, robo-advisors are supposed to undercut the higher fees that human financial advisors charge.
There are two types of fees to consider: the Management Expense Ratio (MER) and additional management fees charged by the robo-advising service.
Wondering what the difference is between a MER and a management fee? A MER is a percentage attributed to expenses that come with managing a portfolio. The additional management fee goes to the fund manager who supervises the account and makes the decisions.
Comparative to mutual funds, robo-advisors are much more affordable, as the average MER for mutual funds typically exceeds 2%.
When fees are higher, there are typically (but not always) more services available. Remember that major financial institutions have higher expenses, which means more overhead for them (and yourself.)
Knowing the minimum investment requirement before choosing a robo-advisor to determine if you qualify as a customer. Moreover, it will also help determine if it’s a suitable fit and can also determine how much you’ll have to pay in fees.
Many robo-advisors provide affordable options for those investing lower amounts. Consider working with a Canadian robo that helps you get the ball rolling with a lower minimum investment requirement.
Knowing the right account to invest in is a major component of choosing an investing service.
For instance, if you haven’t maxed out your Tax-Free Savings Account (TFSA) or Registered Retirement Savings Account (RRSP), it’s best to take full advantage of tax-sheltered accounts before investing in a non-registered account.
Fortunately, most investing services provide some most of the registered and non-registered accounts available to Canadians.
Customer service is also an important factor when choosing a digital advisor.
Considering online investing is still a foreign concept to many Canadians, having support on hand is a major factor, especially when considering it will deal with your money, and subsequently, your future.
Most, if not all, investment firms provide a customer support team that can help you with questions and sometimes financial advice via email, telephone, and online chat.
Since hands-off investing operates online, you’ll only have access and monitor your investments via your mobile phone or internet browser.
Ensuring that the right options are available for you is an important component of choosing a robo-advisor.
While all robos offer online access, not all robo-advisors offer mobile apps.
It might seem a little odd to put thousands of dollars into an account managed by an algorithm, with no physical branches or offices. Rest assured, however, all robo-advisors on the list above are safe.
Robo-advisors manage funds using an algorithm that replicates market performance, with many professionals financial experts on staff that aim to help provide support as needed.
Many financial management services are members of the Canadian Investor Protection Fund (CIPF) or the Investment Industry Regulatory Organization of Canada (IIROC).
These two non-profit companies help Canadian investors. The CIPF ensures your money up to $1,000,000 in the event your robo-advisor goes out of business. It does not protect you against negative changes in the market.
The IIROC, on the other hand, regulates robo-advisors and other investment services and firms to ensure that they are following laws and best practices.
You can find either of these emblems on your robo-advisors’ website.
Robo-advisors are an excellent means of wealth management for those who want to approach investing without needing to constantly monitor their investments or make their own trading decisions.
Robo-investors are also a more affordable method of investing than mutual funds and provide higher returns than Guaranteed Investment Certificates (GICs).
Unlike financial advisors, robo-advisors charge much lower management fees, and unlike individual stocks, they do not require hours of research and decision-making before purchase.
Robo-advisors are a great gateway for new investors who want to try their hand at investing. It’s very easy to start making your money work harder for you!
Whether a robo-investor is worth using depends on the investor. However, there are many beneficial aspects in plain sight that make robo-investors an incredibly suitable means of investing.
Robo-advisors come with lower fees than almost all the other methods of investing. Since a (human) financial advisor isn’t constantly managing investments, fees are much lower than other hands-off investments, such as mutual funds, for example.
Since robo-investors do not require much knowledge from the person investing. This can both be an advantage and a disadvantage.
The advantage is that, for a small fee, investors can have their investments actively managed by a robo on their behalf.
The downside is that investments might not earn as much as other investing methods, like the stock market, would. That said, susceptibility to losses are much lower as well.
Robo-advisors are beneficial to beginners looking to increase their wealth over a lifetime of investing because they offer a hands-off, jargon-free approach to investing. They build custom investing portfolios on behalf of the investor’s risk tolerance profile.
For example, different investing methods, such as stock trading, require in-depth knowledge, constant monitoring, and intensive research. Stock market investment also requires the investor to choose the companies they’d like to invest with.
Robo-advisors bridge this gap by assessing a novice investor’s financial goals and investing on their behalf with less risk.
Robo-advisors are also a viable alternative for amateur investors because investing selections coincide according to their risk tolerance.
Risk tolerance allows the investor to calculate their risk according to what they are willing to gain or lose.
Most robos also do not require a large minimum investment, making it suitable for any Canadian to start earning more wealth and making their money work harder.
Most forms of investing come with some risk and robo-advisors are no different.
Robo-advisors allow clients to calculate how much money they would like to invest and how much money they would like to risk before building a portfolio.
Financial markets are always susceptible to change. Fortunately, each robo-advisor in Canada has a dedicated team of professionals working behind the curtains—or in this case, behind the computer—to ensure your investments are protected.
