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GLOBE INVESTOR

2017 ROBO-ADVISER GUIDE

Find out which firms deserve your business


It’s time to stop treating robo-advisers as a novelty and start considering them as a smart option for people seeking help in building an investment portfolio.

Robo-advisers fill the middle ground between the rock bottom costs of do-it-yourself investing and the premium cost of having an adviser at an investment firm. Robos serve clients online mainly (but not exclusively) – hence the catchy name.

Robos are still a comparatively new category for investors, but some have been around for as many as three to four years. Among the players in this line of business are big names like Bank of Montreal, through BMO SmartFolio; and Power Financial Corp., through an interest in Wealthsimple.

With more than a dozen players in total, there are many variations in portfolio design, fees and features. The Globe and Mail Robo-adviser Guide is designed to help investors easily compare firms to find the most suitable choice.

Launch date

Helps you distinguish between the old guard and new entrants such as VirtualWealth and Virtual Brokers Wealth Management.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

Ownership

Many robo-advisers are independent firms with no ties to industry giants.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

Provinces and territories served

A growing number of firms are doing business across Canada, but some are available in just a few provinces.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

Minimum account size

If you’re just starting out as an investor, mind the widely varying minimum upfront investment requirements. Only a few firms will build portfolios for people with less than $2,000.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

Does the firm have a conversation with all new clients?

Some firms have a policy of only opening accounts after a conversation with the client, while others will allow a fully automated account set-up. If you’re busy and comfortable with technology and investing, you may prefer the latter. It’s standard to provide human contact if that’s what you prefer when opening an account.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

Investment approach

Most robo-advisers decide on a personalized mix of stocks and bonds for you and then fill your portfolio with low-cost, index-tracking exchange-traded funds, which are considered passive investments. A passive-active hybrid or active approach suggests that actively managed ETFs or mutual funds (run by a portfolio manager who chooses securities) are also used, or that the ETF holdings in client portfolios may be adjusted according to financial market conditions or to capitalize on markets perceived as undervalued. A strictly passive portfolio would leave your portfolio alone, aside from periodic rebalancing (selling holdings that have risen in value and buying more of things that have fallen in value).

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

Percentage of accounts built with ETFs and other securities

ETFs have much lower fees than mutual funds and pooled funds.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

ETF companies used to build client portfolios

BlackRock’s iShares division, BMO and Vanguard are well-established, low-fee ETF providers.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

Average number of funds in client portfolios

You can have a diversified portfolio with as few as four core-market ETFs, which tend to have the lowest fees.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

Asset-weighted average management expense ratio for the ETF portfolios built for clients

Lower fees mean more returns left over for investors. Asset-weighted means the funds with the biggest footprint in client accounts have the most influence on the average fee calculation. Combine ETF costs with the advice fee (see below) to get an overall cost of dealing with a robo-adviser.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

Advice fees

Robo-advisers are generally far cheaper than traditional investment advisers, but their fees do vary for both small and large accounts. The fee is typically withdrawn monthly or quarterly from client accounts.

Compare advice percentage costs
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories
Compare advice dollar costs
Annual dollar costs for advice for accounts of $5K, $50K, $100K and $500K
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

Are trading commissions included in the advice fee? If not, how much are they?

Most firms include the brokerage commissions for buying and selling ETFs in their advice fees.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

Business relationships robo-advisers have with ETF companies

A few firms have ties to ETF companies and may use their products in portfolios. This is useful background for understanding what’s in your portfolio.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

Is there a responsible investing (RI) option?

Millennials in particular seem to be increasingly interested in investments that focus on companies with a good social, environmental and governance record.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

What returns should you expect over the long term after fees?

Very rough guidance here on how robo-advisers are managing investor expectations. Projected returns are annualized and vary by portfolio type. These are total returns – price changes plus dividends and bond interest. Some firms declined to answer.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

Ways clients can interact with a firm, besides the website

Most firms are very flexible – phone, Skype, online chat, e-mail – and some even offer in-person service.

Compare firms
BMO SmartFoilio
Yes: All provinces
Invisor
Yes: Ontario, Manitoba, Saskatchewan, Alberta, B.C.
Justwealth Financial
Yes: All provinces
ModernAdvisor
Yes: All provinces and NWT
Nest Wealth
Yes: PEI, Ontario, Manitoba, Alberta, B.C.
Portfolio IQ
Yes: All provinces and territories
Responsive Capital Mgt
Yes: Ontario, Alberta, BC
RoboAdvisors+
Licensed as an investment dealer in Quebec, Ontario, Manitoba, Alberta and B.C.
Smart Money Capital Management
Yes: Alberta, Ontario, Quebec
WealthBar
Yes: all provinces
Wealthsimple
Yes: all provinces and territories

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