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Nest Wealth Review

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Founded in 2014, Nest Wealth is Canada’s first robo-advisor. Six years and counting later, the company and its offer look a lot different from when it first began.

Does Nest Wealth still lead the way in digital investing for Canadians, or should you look to one of the many others that followed in its footsteps?

In this Nest Wealth review, we’ll answer this question while providing insight into the robo-advising platform.

Nest Wealth Review 2022: Portfolios, Fees, and Much More

The first thing you’ll see when you land on Nest Wealth’s home page is the slogan “Digital Wealth Solutions for Everyone,” which doesn’t exactly conjure up a clear and relatable image.

However, do a bit of digging, and you’ll find that what Nest Wealth offers is a really easy way for Canadians to invest their money.

While many other automated investing platforms that do the same thing focus mainly on consumers (everyday people like you and me), Nest Wealth appears to differentiate itself by offering tools to businesses as well.

Nest Wealth offers:

  • A platform for financial institutions (like banks and portfolio management firms) that helps them digitize and automate some of the investment services they sell to their customers,
  • A group Registered Retirement Savings Plan (RRSP) that allows small and medium-sized businesses to offer employees a benefit that was once the exclusive domain of giant companies,
  • A technology solution that financial planners and financial advisors can use to manage their clients’ investments, and
  • A platform for Canadians to invest their money that automates much of the work that has traditionally been done by financial advisors.

Because of these options, there’s a good chance that Nest Wealth is already helping you invest your money, and you don’t even know it. That’s because you’re using a middleman (or middleperson, or, quite possibly, even a middlemachine).

You still have the option to invest your money directly with Nest Wealth, however. And that’s the part of their business we’re going to take a close look at now.

Nest Wealth: Sign-Up Process

Nest Wealth is an online service that makes it easy to invest your money by taking care of the small details and decision making on your behalf.

When you decide to open a Nest Wealth account, you’ll first answer a brief questionnaire that asks basic questions about your financial goals.

From there, you’ll go to a much more detailed questionnaire, which will require information like a copy of your photo ID and banking information.

Within a couple of business days, Nest Wealth opens your account, where you’ll be able to begin moving money into your account.

Through the sign-up process, Nest Wealth will determine your tolerance to risk and propose a diversified portfolio designed to grow capital (that means increasing in value over time), generate income (earning cash that you can choose to reinvest), or protect capital (keep you from losing money).

Over time, Nest Wealth will automatically buy and sell investments on your behalf to keep your portfolio balanced.

The primary investment tool Nest Wealth uses to do this are Exchange Traded Funds (ETFs).

Rather than picking individual stocks, ETFs allow you to invest in entire markets. And unlike mutual funds, which are actively managed by human beings to beat the market, ETFs are managed according to a strict set of rules set up upon creation.

The result is that each ETF represents a well-diversified (but closely linked) group of investments. And because their management is very simple, they cost substantially less than mutual funds and other actively managed investments.

Nest Wealth: Fees and Commissions

Unlike most robo-advisors, who charge a percentage known as a Management Expense Ratio (MER), Nest Wealth charges a flat monthly fee between $20 to $80, based on the amount you have invested with them.

The ETFs you invest in charge a small fee, averaging $1.30 annually for every $1,000 you invest. The biggest in this category revolve around its pricing structure.

Nest Wealth claims to have the “lowest portfolio management fees in Canada,” and while that may be true, it’s far from the best deal in its space.

While many robo advisors charge an all-inclusive management fee, Nest Wealth offsets its lower management fee with some nickel-and-dime-type charges that are a bit confusing to navigate.

The first is trading fees, which are between $7.99 to $9.99 per trade, capped at $100 per year per account. If, for argument’s sake, you have a non-registered investment account, an RRSP, a TFSA, and an RESP for each of your two children, you’ll pay up to $500 per year in trading fees on those accounts.

Additionally, Nest Wealth charges an annual account fee ranging from $25 to $100 depending on the type of account and which custodian (a third-party financial institution) holds your investments.

They’ll waive this fee on your first account. Following the above example and assuming Nest Wealth will pair you with an expensive custodian, your account fees will total an additional $400 per year.

Continuing with the abovementioned example of 5 accounts, this means that, with a healthy portfolio of $150,000, your total yearly cost for using Nest Wealth could be as much as $1,860 or 1.24%.

For reference, Nest Wealth’s competitor WealthSimple charges an all-inclusive management fee of 0.4% for a similarly sized portfolio.

Because Nest Wealth’s fees are all capped, the more you have invested, the more this structure works in your favour. The management expense falls under a competitor’s rate of 0.4% annually for Nest Wealth clients with over $500,000 invested.

Nest Wealth: Account Options

As Canadians, we have access to a few different programs that protect your investment income from taxation. These programs include:

  • The Registered Retirement Savings Plan (RRSP), which lets you defer income tax on the money you invest until the time you withdraw it,
  • The Tax-Free Savings Account (TFSA), which lets you earn investment income on a wide variety of investments without having to pay tax, and
  • The Registered Education Savings Plan (RESP) which lets you save money for a child’s education and gain access to valuable government grants.

Nest Wealth lets you open all of these. The only registered account you can’t open with Nest Wealth is a Registered Disabilities Savings Plan (RDSP).

Nest Wealth Portfolios

If you don’t know much about investing, or the idea of choosing a bunch of different stocks and funds gives you a headache, Nest Wealth does the heavy lifting for you.

Based on your goals and risk profile, Nest Wealth will put together a customized ETF portfolio that’s well-diversified and makes changes on its own.

Nest Wealth only participates in 7 ETFs, so your decisions are less about what to invest in and more about how much to invest in each.

ETFs are well diversified in and of themselves; they’re designed to track the markets.

Still, there are many many ETFs out there to choose from and Nest Wealth only gives you access to 7 of them, whereas other robo advisors participate in 10 or more ETFs.

Another downside to Nest Wealth’s investment options is they don’t include any socially responsible investments (SRIs). Some of Nest Wealth’s competitors let you choose investments like clean technology to do some good for the Earth while earning you money.

Nest Wealth Mobile App

Nest Wealth doesn’t let you check in on your investments using a mobile app, forcing you to log on using your desktop computer like it’s time to chat on MSN Messenger with your crush in the year 2003.

It has all the anticipation and excitement of that retro experience. Still, at a time in history where there are more than one options calling themselves “a bank account in an app,” this seems like a miss for a technology-first portfolio manager like Nest Wealth.

Nest Wealth Pros & Cons

Nest Wealth doesn’t let you check in on your investments using a mobile app, forcing you to log on using your desktop computer like it’s time to chat on MSN Messenger with your crush in the year 2003.

It has all the anticipation and excitement of that retro experience. Still, at a time in history where there are more than one options calling themselves “a bank account in an app,” this seems like a miss for a technology-first portfolio manager like Nest Wealth.

Pros: The Good Stuff

  • The fee structure works out in your favour if you’ve got a lot of money

  • You can keep your investments in all the best Canadian tax shelters

  • Really simple portfolios

Cons: The Not So Good Stuff

  • No mobile app

  • Confusing fee structure and hidden costs

  • Less diversification choices than competitors

  • Need to email for withdrawals

Our Final Thoughts

If you’re an individual looking to use a robo advisor for investing, Nest Wealth may be a good option for you. This is especially true if you have a lot of money to invest ($500,000 or more), are planning to stay invested for the long term, and value simplicity.

If you don’t have a half-million dollars, you will likely find other options that are more cost-effective. And if you want to have more choice in how a robo-advisor handles your money, you’ll find that many of Nest Wealth’s competitors will serve that need better.

Overall, Nest Wealth appears to have transitioned away from serving average Canadians in favour of serving businesses, financial institutions, and high net worth investors. There may be a niche that Nest Wealth serves well, but overall you’re likely to find a better mix of value and features by choosing another option.

Frequently Asked Questions

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