Robo Advisors first became popular in the United States, and they are now becoming the service of choice for investors 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 from the comforts of their home or office.
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.
Here is our guide to four of the best Robo Advisors that investors from Canada can use:
Digital Wealth Management
Nest Wealth is the first subscription-based investment firm in Canada. The service is easy to access and is easy to understand as well, even if you are practically new to investing. You can quickly sign up by answering questions about your age, investment amount, unique financial situation 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. Instead, 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.
Overall, we think Nest Wealth is best suited for Canadians with over C$150,000 to invest.
Investing on Autopilot
Wealthsimple is the largest Robo Advisor in Canada, with over C$1.9 billion of assets under management (AUM). It is also the definitive Robo Advisor for Canadian investors, especially those who are new to the investing world.
Wealthsimple will construct a customized and diversified portfolio of low-fee funds after you sign up and answer a few questions regarding your financial situation. It’s fully automated, and all portfolios will benefit from premium features such as automatic rebalancing, automated dividend reinvestment, and efficient tax strategies.
Wealthsimple offers two types of investment services: Wealthsimple Basic offers no minimum deposit and the fees are 0.50% for accounts worth up to C$100,000. The first C$5,000 are managed for free. Wealthsimple Black is ideal for big investors, with a C$100,000 minimum balance and a 0.40% fee. Also offered is a Wealthsimple Generation account for even bigger investors with at least C$500,000 to invest. Generation customers get all the Black features, plus in-depth financial planning, a team of advisors, individualized portfolios, 50% off Medcan health plans, and more.
Wall Street investing for Main Street Canadians
WealthBar was one of the first robo advisors in Canada. The service was established in 2013 and offers a unique type of automated investment service. WealthBar is also the only Canadian robo advisor that offers access to private investment pools.
WealthBar is an easy-to-use hybrid robo advisor combining automated investments with a human financial advisor. The minimum investment is only $1,000 and the annual fees of 0.35% to 0.60% are among the lowest in the world of robo advisors.
Flexibility is one of the strongest attributes of WealthBar. You can start with low-cost ETFs and move your way towards private investment portfolios. If you want private investments with lower volatility, you can’t go wrong with WealthBar.
Portfolio Building Service
ShareOwner is Canada’s first ETF Robo Advisor and the first Canadian Robo Advisor to hit the market. ShareOwner is popular among dividend stock investors and remains to be one of the best Robo Advisors that Canadian investors can use.
ShareOwner has no minimum deposit. New users can sign up and open an account in minutes. You can start using the service by selecting 5, 10, 20, or more stocks in a single transaction. You pay a flat fee of C$40 per order. 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. There are no minimum account size and no administrative fees.
The ShareOwner Robo Advisor charges a 0.50% fee for accounts up to C$100,000, or a flat fee of C$40 per month for larger portfolios. If you are the type of investor who likes to trade then there is a C$40 commission applied per trade.
Invest online. Not alone.
BMO SmartFolio is still relatively new. In fact, this Robo Advisor was first introduced in January 2016 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 offers affordable ETF portfolios that can be customized depending on your individual needs. Your BMO portfolio will allow you to track your progress so you can plan ahead and reach your financial goals.
The portfolios are managed by a team of wealth managers for an easier and hands-free investing experience. The account minimum for the BMO SmartFolio service is a comparatively low C$1,000. The advisory fee is also somewhat low – 0.7% for assets up to C$100,000, and the rates drop to as low as 0.4% the more you invest.