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To fairly compare the cost of portfolio management that is online, at least partially automatic, and with no or very low account minimums
Investing is important; it's what helps your money grow, which helps you meet your retirement and other goals in life. Money management costs should never significantly bite into into your investment profile or make a substantial impact on your saving. Not in 2017, anyhow, if you were to carefully follow our guidance about robo investing in Canada.
There are lots of ways to invest, from doing it yourself to having a full-service financial advisory practice do for you. Traditionally your options were limited by the amount of money you had available to invest (full-service advisors usually have high account minimums) and where you lived (big-city folks had lots of options to choose from; small-town folks had far fewer, if any).
If you didn't want to manage your own portfolio, didn't have enough money or didn't live in the right town, your default option was the bank or a door-to-door salesperson offering high-cost mutual funds.
Technology has created middle options that allow Canadians with any amount of capital to access low-cost, professional portfolio management from almost anywhere, and we want to help you get enough information to choose the best fit for you.
The various robo advisor providers all use different pricing schemes, so comparing the costs can be pretty difficult without computer assistance, and there isn't a simple “winner” — the costs of each will vary according to your situation. Moreover, cost is just a starting point: there are differences in what they provide beyond just “investing”, and the advanced tab will let you filter the selection of services available to better find one that fits your needs.
Because there is more to the services, cost is not the only thing you should consider — the calculator will help you find the cheapest, but that's not to say that it will be the best for you. Look at the offerings of a few and see what will fit your needs best.
There are a lot of moving parts to a comparison like this (which is why we think it’s helpful to make them) and we worked with the service providers to incorporate as many factors as possible, as accurately as possible.
Fair disclosure: we generate affiliate commission when we introduce clients to some of the companies featured on this robo advisor guide. In spite of that, our recommendations are still 100% objective and fair. This is how we are able to support the continued development associated with this free robo advisor comparison tool.
We have included as many factors as accurately as possible, retaining as much detail as possible. However, a few simplifications were made. In our opinion and testing these will be of no material consequence to the final result.
For example, some providers have different model portfolio costs for non-registered, TFSA, and RRSP accounts, though the difference may be as small as a single basis point (0.01%). Some may also have different account minimums for an RESP or RRSP than a non-registered or TFSA. A single portfolio and account minimum was used for the comparison.
We collected detailed information from service providers through a survey, and validated the data with follow-up emails, meetings, and checking the information provided on their websites. Although we have worked hard to get the data right, we can’t guarantee that it’s completely free from error. Please make sure to to verify the actual fees you’ll pay if you decide to invest with any of the providers listed.
If you were to make any decisions based on our tool, it is utterly and completely up to you, and we shall not be held responsible.
While the providers readily disclose their management fees on their websites, the fees of the ETFs and mutual funds used to build your portfolio are generally not readily available.
To enable apples-to-apples comparisons, we had each provider give us the costs for three generic portfolios: a “conservative” one (70% fixed income/30% equity), a “balanced” one (40% fixed income/60% equity), and a “growth” portfolio (20% fixed income/80% equity). Your specific portfolio will vary from these archetypes, but they serve as useful references for a fair comparison.
We try to stay as up-to-date as possible with changes that affect calculator results, but can’t guarantee that we’ll catch everything. We rely on service providers to inform us when significant changes are made to availability and costs, and users like you who let us know when things change. Please use the contact form at the bottom of this page to make suggestions or ask questions.
This guide is currently updated for 2017 with most up-to-date data we have managed to collect. It is only valid for Canadians at this stage.
Many firms offer advice as part of their service, but investment advice is not the same as financial planning advice. We broke the advice offered into five categories according to the ability to answer several key questions, to help you determine the kind of advice each firm offers:
- Portfolio suitability advice (“Does this portfolio suit my financial circumstances and risk tolerance?”)
- Saving advice (“How much do I need to save for my kids' education?”)
- Asset location advice (“What kind of investments should I hold in my RRSP vs. my non-registered account?”)
- Goal setting advice (“Should I prioritized paying off my mortgage or saving for retirement?”)
- Retirement planning advice (“When should I apply for CPP, how much can I spend, and which accounts should I withdraw from?”)
Additionally, we made sure the robo advisor companies featured on our tool are completely safe and follow up on regulatory requirements to facilitate not only a cheap investment option, but a safe one as well. Be sure to read our individual online financial advisor reviews.
Stuff People Ask Us
Why isn't a DIY portfolio included as one of the comparisons?
We flirted with the idea, even going so far as programming a couch-potato style DIY portfolio into the calculator, but ultimately decided against it, because the DIY option is hands-down the cheapest across almost all cases, and we didn’t want to waste all of the time and effort we put into building the calculator for it to always and forever return a DIY portfolio as the result. For comparison purposes, a DIY ETF portfolio would cost approx. 0.15%, and a DIY TD e-series portfolio would cost approx. 0.44%, depending on the asset mix.
Why is Steadyhand included/Why is Mawer or Leith Wheeler not included?
We want to offer a low-cost, active alternative to the robo-advisors, but don’t feel as though we need to include every low-cost, active alternative. We are familiar with and like Steadyhand’s low-cost “undexing” philosophy, appreciate their tenure discounts for clients who stay with them for for years, and are fans of the low minimum threshold to invest directly with them instead of buying their funds through a discount brokerage.
What are these “Bank Funds” you’re comparing to?
You might know them as “fund-of-funds”, “wrap funds”, “asset allocation funds”, or “managed portfolios”. Every bank offering includes a family of funds that are meant to operate as a standalone portfolio, with a target asset allocation and automatic rebalancing to that target, available to retail investors through the branch mutual fund sales force. We aggregated the fund data from RBC, TD, CIBC, Scotia, and BMO for each portfolio type represented in the calculator and used the average MER.
You might not be paying the amount we’ve used to compare. Ask your bank or mutual fund salesperson how much you’re actually paying if you’re unsure. (Hopefully they know and are willing to tell you.)
These robo advisors are pretty new. Is my money safe?
Investing involves risks, and that underlying risk (that your investments themselves may decline in value) is the same no matter how you get access to investments — through a robo-advisor, full-service advisor, or fund you purchase yourself.
What happens if a firm goes out of business? Then the underlying investments — which are held at a “custodian” — can be transferred to another broker on your behalf. You can ask each firm about the details of their custodian arrangement, but as far as we were able to determine, every firm listed holds your investments at a custodian that is a member of IIROC.
So, aside from the usual risk of the investments themselves and completely unforseen events, investing with the relatively new robo-advisors should be no more risky than traditional means.
Be sure to read through out online robo advisor reviews featured on this page to make specific brand-specific judgement on any company you are contemplating investing with.
What do you mean by recommended?
While our calculator seeks to show you the exact cost comparison of the robo advisors, we felt it was necessary to also make a recommendation based on which robo advisor excels in areas such as ease of sign up (a significant barrier to entry) and compatibility with the Mint App, as well as the fact that a company such as Wealthsimple has been recognized as a market leader by winning the Webby Award for Top Financial Services Website in the world, and has attracted over $100 Million worth of investment from Power Financial – one of Canada's Financial Titans. Consequently, we want to present consumers with a choice between our pick for best overall robo advisor at specific investment dollar points versus the lowest-cost option.
Financial Author and Personal Finance Teacher
Kyle Prevost is a high school business teacher who identifies more as a curious lifelong learner. When not trying to make compound interest cool and relevant (“Lit”?) in his classroom, you can find him writing on YoungandThrifty.ca, or limping around a boxing ring trying to recapture something he likely never had in the first place. Kyle likes recommending robo advisors because of their simplicity in both use and investment style.
Owner of YoungandThrifty.ca (Canada's #1 Personal Finance Blog)
During the day Justin Bouchard is a humble academic advisor who tries to keep students from screwing up their futures too badly at the University of Manitoba. By night, he dons a cape and tries to use his I.T. superpowers to keep Kyle from destroying the internet. Justin is an avid user of robo advisors and enjoys their ease of use, as well as the fact that they allow him to concentrate on more pressing issues – such as whatever Kyle just broke.
Fee-for-service Financial Planner
Sandi Martin is an ex-banker turned fee-for-service financial planner at Spring Personal Finance who works with clients across the country from her home base in Gravenhurst. She built the original spreadsheet-based version of this calculator to win an argument with someone about whether you could categorically declare any robo-advisor “the best”. That probably tells you quite a lot about her.
PhD | Author of Value of Simple
John Robertson, PhD, is a scientist who translates medical jargon into normal people language for a living. He is the author of a personal finance guide to DIY investing called The Value of Simple, and teaches regular people how to become DIY investors through his online course Practical Index Investing for Canadians. He also investigates (and sometimes rants about) deep money questions on his blog HolyPotato.net.
For in-depth reviews of several of Canada’s leading Robo Advisors, please click below.
I am glad I took the time to review my options properly. Investing goes beyond costs, or even returns. These Canada-oriented robo advisor reviews have really helped me get an idea who's behind these firms, and what's on their agenda. Reading 20 minutes of reviews have distilled different kind of confidence in me, and helped me make the transition from an expensive personal advisor towards a low-cost robo advisor.John L.
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