The popularity of Robo Advisors was initially felt in the United States, but it is now becoming the service of choice for investors from around the globe – notably in Canada.
Canadian investors are switching to Robo Advisors for the same reason why the service was so popular in the United States in the first place: Robo Advisors are cheaper than human advisors, and they help small investors gain access to premium wealth management services.
Did you know that Canadian management investment companies will only consider investors with more than C$250,000 of assets, and those that accept smaller investments will only hold high-cost mutual funds? Well, that is about to change.
Since 2015, there were around 10 Canadian-based Robo Advisors that came into existence. These new entrants now offer improved services and greater accessibility to management services. Here is our brief guide into 4 of the main 2017 Robo Advisors that Canada-based investors can use:
ShareOwner was the first Canadian Robo Advisor to hit the market, and it remains to be one of the best Robo Advisors that Canada-based investors can use.
ShareOwner has no minimum deposit, and new users can sign up and open an account in minutes. You can start using the service by selecting 1 of 5 model portfolios, or you can build your own from a list of around 50 available ETFs. After selecting your portfolio, you simply set your target allocations and rebalancing thresholds for each ETF, and the service will automatically rebalance your portfolio and reinvest dividends on a monthly basis.
The ShareOwner Robo Advisor will charge a fee of 0.50% for account balances up to C$100,000, or charge a flat fee of C$40 per month for more valuable portfolios. If you are the type of investor who likes to trade then there is a C$40 commission applied per trade.
Nest Wealth Review
Nest Wealth is also one of the most established Robo Advisors in Canada. The service is easy to access and is easy to understand as well, even if you are new to investing. You can quickly sign up by answering questions about your age, investment amount, financial goals and risk tolerance. After that, the Nest Wealth Robo Advisor will build a customized portfolio of at least 7 asset classes made up of low-cost ETFs.
Your portfolio will benefit from automatic rebalancing and dividend reinvestment to maintain the optimal potential for profit. There is no percentage-based fee. Nest Wealth will charge a flat fee based on the amount of your investment. If your account is worth less than C$75,000 the fee is C$20 per month. Portfolios between C$75,000 and C$150,000 will be charged C$40 per month, while accounts higher than C$150,000 will be charged C$80 per month.
Wealthsimple is the largest Robo Advisor in Canada, managing over C$400 million worth of assets. It is also the definitive Robo Advisor for Canada-based investors, especially those who are new to the investing world.
You simply need to sign up and answer a few questions regarding your financial circumstances. Wealthsimple will then proceed to construct a customized and diversified portfolio of low-fee funds. The service is fully-automated, and each portfolio will benefit from premium management features such as ongoing automatic rebalancing, automated dividend reinvestment and efficient tax strategies when applicable.
The minimum deposit is C$5,000, and each account is subjected to a monthly fee which is determined via a sliding-scale depending on the account balance. There are no fees for accounts less than C$5,000 but you pay C$290 per month if your account is worth C$1,000,000.
BMO SmartFolio Review
BMO SmartFolio is still relatively new. In fact, this Robo Advisor was first introduced in January 2017 but it is still a top choice for investors based in Canada. This service is powered by the Bank of Montreal, and is the first Robo Advisor in Canada to be offered by a major banking institution.
This Canadian Robo Advisor only offers the Bank of Montreal’s own ETFs for investments, and provides a choice of 5 portfolios constructed from those ETFs (each with an average of between 6 and 10 different funds). The account minimum for the BMO SmartFolio service is a comparatively low C$5,000. The advisory fee is based on a percentage rate that equates to roughly C$60 annually for a minimum portfolio of C$5,000.
In our opinion, these are the best 2017 Robo Advisors for investors based in Canada. If you live in the United States, you should check out our best Robo Advisor reviews so you can choose the best automated service before signing up.