Top Canadian Robo Advisors 2020: Which One is Right for you?

Now, you might be thinking….”What is a robo advisor?”

“Do I really want to be leaving my hard-earned savings in the hands of a robot? What happens in 20 years when they take over the world? I don’t want some robot spending my RRSP on circuits and accessories.”

But, I digress.

A robo advisor creates and manages your investment portfolio using the combination of a computer algorithm and human advisors. When you create an account, you determine your risk tolerance and the advisor uses exchange traded funds (ETFs) to assemble a portfolio for you. You have the option of holding your investment as an RRSP, TFSA, RESP, and more, depending on the robo advisor.

In this article you will learn if a robo advisor is right for you and what features to look for when choosing a Canadian robo advisor. As well, we’ll look at the best robo advisors in Canada and conduct a robo advisor comparison. By the end, you’ll be able to decide which of the top Canadian robo advisors to invest with, and how robo investing in Canada works.

And, don’t worry, there is still a living, breathing human overseeing your money.

Is A Robo Advisor Right For You?

A robo advisor is the passive investor’s friend. They make investing more efficient by automating the investment process and cutting the costs. If you don’t want to pick individual stocks and bonds yourself, and you want to pay lower management fees,…a robo advisor could be for you.

You could open an online discount brokerage account – buy stocks and ETFs to create your own portfolio. Then you’d have to re-balance your portfolio 2 to 4 times a year and check that your assets are allocated correctly.

Of course you could do it…but, would you? There is a lot of time and research involved, and most of us are just plain too busy.

A robo advisor takes care of all of that for you.

Read Simple Steps for Getting Started With a Robo Advisor. This is the process I followed when I moved my RRSP account from a bank to Wealthsimple. Wealthsimple is one of the best Canadian robo advisors in the business.

What to Look For When Choosing a Robo Advisor

1. Fees

My top reason for investing with a robo advisor is the low fees.

These include:

1. A percentage fee based upon how much money you have invested or a flat monthly fee
2. Management Expense Ratios (MERs) – another management fee
3. There could be a minimum investment amount that you need to get started

No matter which robo advisor you choose, the fees will be much lower than investing with a financial advisor. For example, I paid 1.9% in fees to have my RRSP mutual funds account managed at a bank. I now pay about 0.7% investing with Wealthsimple.

2. Investment Options

If you are saving for retirement, look for Registered Retirement Savings Plan (RRSP) and Tax Free Savings Account (TFSA) portfolio options. Maybe you want to save for your kid’s university tuition and need a Registered Education Savings Plan (RESP).  

Questions to ask yourself:

What do their portfolio’s look like?

What types of funds do they have?

Where will your money be invested?

3. User Friendly

Do you like the website interface? Is it easy to understand and track how your money is growing?

Also, do they have good customer service? Most robo advisors in Canada are moving towards a hybrid approach to investing. Meaning you have the opportunity to speak to a human and there are people managing your money behind the scenes.

How does a robo advisor compare to other investment strategies? See my post on investment options for beginners.

Now let’s look at the best robo advisors in Canada.

Top Canadian robo Advisors in 2020

Wealthsimple – Largest and Well Known

Wealthsimple is the largest robo advisor in Canada. In fact, they are operating with offices across North America and Europe. They work with some major investment firms and manage over $5 billion in assets around the world.

Anyone can open an account and there is no minimum amount of money you need to invest to get started. You choose your risk tolerance and they match you with a portfolio tailored to your needs. Your money is invested in Exchange Traded Funds (ETFs) from around the globe.

Read more about ETFs here.

They also offer socially responsible funds.

Their online platform is very user-friendly and if you have questions you have access to a human advisor.

Their fees are reasonable compared with other robo advisors:

Basic: 0.5% for deposits up to $100,000

Black: 0.4% for deposits $100,000 – $500,000

Generation: 0.4% with extra features for deposits over $500,000

Add on another approximately 0.24% in Management Expense Ratios (MERs) for the ETFs. MERs are another fee added on as part of the cost of managing your account.

Click here for a complete Wealthsimple review.

Read: How To Invest Money In The Stock Market

Questwealth Portfolios – Lowest fees

Questwealth is a part of Questrade Wealth Management, the online discount brokerage.

In addition to being a robo advisor, there are human advisors who manage your portfolio based on stock market fluctuations.

Like the other advisors, when you sign-up you’ll be matched with a portfolio based upon your risk tolerance – Conservative through to Aggressive investor.

There is $1000 minimum to open an investment account.

Questwealth has very competitive fees, ranging from 0.2% to 0.25%. Add on another approximately 0.2% in MERs.

They have a wide variety of funds, including socially responsible options.

Your first $10,000 is managed for free for a year.

Read more about Questwealth here.

Nest Wealth – For affluent investors and those closer to retirement

Nest Wealth is great for mature investors who are looking for a more conservative portfolio. Instead of charging a percentage, they charge you a monthly fee ranging from $20 to $40 per month.

On top of that are the MERs for the ETFs at around 0.13% for a balanced portfolio. This fee model makes Nest Wealth a better option for individuals with larger portfolios.

There is no minimum investment amount. As well, your trades are done monthly and are based upon an algorithm. So if you are looking for more human involvement, Nest Wealth might not be the best fit.

Read here for an in-depth review of Nest Wealth.

Read: Top Tax Return Software For Canadian – File For Free

BMO Smartfolio – Backed by the Bank of Montreal

BMO Smartfolio is offered by the Bank of Montreal so you have the benefit of their established team of advisors and ETF offerings.

They also use a combination robo advisor/human approach to managing your investments. Their advisors track your portfolio and make adjustments if needed.

There is a minimum $1000 investment.

Fees range from 0.4% to 0.7% plus MERs of the ETFS from 0.2% to 0.35%

Read more about BMO Smartfolio here.

CI Direct Investing (formerly WealthBar) – Private Portfolio Option

WealthBar was Canada’s first robo advisor. They manage more than $275 million in assets.

They offer a wide variety of investment options, including private portfolios. You also get unlimited access to help from human advisors. They require a minimum of $1000 to open an account.

There is a tiered pricing structure as follows:

First $150,000: 0.6% per year

Between $150,000 and $500,000: 0.4% per year

Over $500,000: 0.35% per year

The MERs for ETFs range from 0.19% to 0.26%. Slightly higher if you choose the private portfolio option.

Click here for more on CI Direct Investing.

Justwealth – Large selection of portfolios & ‘target-date” RESPs

Justwealth has 70 different portfolios and 40 ETFs to choose from.

There is a minimum investment of $5000 to start an account, except if you open a RESP where there is no minimum.

You’ll get a portfolio manager who will manage your investments, with the option of adding other services like financial planning and portfolio reviews (with an extra cost involved).

The fees are as follows:                 

Under $500,000: 0.5%

Over $500,000: 0.4%

Less than $12,000: a monthly fee of $4.99

The MERs average to 0.25%

If you want to open an RESP for your child, Justwealth has what’s called target-date portfolios. These are portfolios that “mature” at the time your son or daughter is set to head off towards post-secondary education. This makes them a unique option for parents.

Read a Justwealth review here.

Read: Smart Money Ideas For Women At Every Age, Eh!

Other Solid canadian robo advisors:

ModernAdvisor

RBC InvestEase

Invisor

Best Canadian Robo Advisors: Comparison Chart

Robo Advisor	Fees	Pros	Cons
Wealthsimple	Basic Fee 0.5%. ETF MERs fee of 0.2%. Total of about 0.7%	Biggest one in Canada. No minimum investment amount. Will pay up to $150 in transfer fees charged by my bank. (Note – most firms will cover some of these transfer costs) Socially responsible funds. Easy to use.	Not the least expensive option. Less portfolio options than other robo-advisors.
Nest Wealth	Basic Fee $20 – $80 per month ETF MERs 0.13% Plus $100 trading fee per year	Good fee structure for larger investment deposits. No minimum contribution. Customized portfolios	Not many options for high-risk investors. More costly fees for smaller accounts
Questwealth Portfolios	Basic Fee 0.2 – 0.25%. ETF MERs around 0.2%. Total: 0.45% approx.	Low fees. A wide variety of portfolio options. First $10,000 managed free for new customers. Choice of socially responsible funds.	$1000 minimum to open an investment account.
WealthBar	Basic Fee 0.6% if under $150,000 (tiered pricing). ETF MERs 0.19% – 0.26%. Total approx 0.8%	Unlimited access to human advice. Many investment options. Been around for awhile.	$1000 minimum to start. Higher fees.
BMO SmartFolio	Basic fee 0.4% to 0.7%. ETF MERs 0.24%. Total: approx 0.8%	Bank of Montreal backed. Invest in BMO Exchange Traded Funds.	Minimum of $1000. Higher fees
Justwealth	Basic Fee 0.5% for under $500,000 (tiered approach). ETF MERs 0.25%. Total: approx 0.75%	Dozens of portfolio options. You get a portfolio manager for your accounts.	Minimum account size of $5000 (0 for RESPs).

is a Robo Advisor Safe?

There is a certain risk associated with investing in the stock market. But, yes, robo advisors are safe. In fact, by taking out much of the human error associated with investing, they become even safer. Many do-it-yourself investors make the mistake of panicking when the market has a downturn. They sell-off their assets and lose money.

Most Canadian robo advisors use index ETFs. That means they cover a broad range of the market. As the market improves over time, then so will your portfolio. There will be times of downturn, but over decades you’ll see a smooth line of growth.

If you open an account with a robo advisor, look for a fiduciary standard in the management agreement. It means the company puts your interests first when making decisions about your portofolio.

Top Canadian Robo Advisors 2020: Conclusion

In conclusion, a robo advisor is doing what investment managers have been doing for decades. They are using methods of investment that have proven successful over time. By removing the role of an active, in-person, fund manager, they are saving you fees – money that, added up over years, equals a large chunk out of your savings.

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