Nest Wealth Review 2021

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by Enoch Omololu

Updated

Advertiser Disclosure

Nest Wealth is a robo-advisor in Canada offering online professional portfolio management services to investors who want to minimize their investment fees while maximizing their returns.

By automating part of the investment process, using passive investing strategies, and lowering fees, robo-advisors not only minimize the exposure of your portfolio to ‘harmful’ behavioural biases, the evidence shows that in the long-term, they could also increase your chances of beating the returns achieved by actively-managed mutual funds.

Even better, robo-advisors like Nest Wealth and Wealthsimple provide everyday investors (with relatively smaller accounts) access to professional wealth management and at a lower fee.

About Nest Wealth

Nest Wealth was one of the first robo-advisors in Canada and was launched in 2014 by its founder and CEO, Randy Cass.

Managing your money at Nest Wealth is a team effort, and Randy has put together an excellent team of financial experts, techies, and engineers to do just that. As you can imagine, it takes a lot of brains to put together a leading financial technology company!

Their partners include Metroland Media and National Bank who both have a minority stake in the company.

The investing strategy used at Nest Wealth is similar to the general idea and success behind robo-advisors i.e. the use of low-cost globally diversified ETF portfolios that are put together based on the Modern Portfolio Theory.

By harnessing the investing power of low-cost ETFs – including their low fees, diversification, and tax efficiency; minimizing transaction fees through passive strategies, and re-balancing when needed, the average investor can increase their chances of investing success in the long term.

RelatedWealthsimple Review – Canada’s Best Robo-Advisor

Nest Wealth Accounts

nest wealth logo

You can open a variety of common investment accounts with Nest Wealth, including:

  • TFSA
  • RRSP
  • Spousal RRSP
  • LIRA
  • RESP
  • RRIF
  • Spousal RRIF
  • Joint Ownership Account
  • Corporate Account
  • Trust Account
  • Cash Account

How To Open a Nest Wealth Account

As a fin-tech company, Nest Wealth prides itself on making your onboarding process really smooth. The sign-up process should take you no more than 10 minutes or so.

Step 1: Gather your documents including SIN and electronic copies (photos/scan) of your driver’s license and a void cheque.

Step 2: Enter your details and upload the required documents.

Step 3: They will review your submissions and open an account for you with their custodians – either at National Bank Independent Network (NBIN) which is a subsidiary of National Bank or at Fidelity Clearing Canada ULC (FCC). This is where your funds are held. Both custodians charge a flat rate per trade. NBIN charges $9.99 and FCC charges $7.99.

Clients joining Nest Wealth directly as of November 5, 2018, and onwards are onboarded using Fidelity Clearing Canada (FCC) as the custodian. Clients who joined prior to November 5, 2018, had National Bank Independent Network (NBIN) as their custodian.

Step 4: Fund your account. You are able to speak with a portfolio manager (online or by phone) to ensure all your questions are answered before your funds are put to work. To fund your account, you can do so in three ways:

  • Directly from your bank account
  • Make a cash deposit through Bill Pay
  • Transfer funds from another brokerage account using a transfer form.

Nest Wealth Portfolios

When you open an account with Nest Wealth, they build you a custom portfolio using seven (7) ETFs that represent different asset classes.

These asset classes include international, US, and emerging market equities; government fixed income, real-return bonds, real estate, and cash.

The 7 ETFs they use to design your portfolio are:

  1. Vanguard Canadian Short-term Bond Index ETF (VSB): MER of 0.11%
  2. BMO Aggregate Bond Index ETF (ZAG): MER 0.09%
  3. iShares Canadian Real Return Bond Index ETF (XRB): MER 0.39%
  4. iShares Core S&P/TSX Capped Composite Index ETF (XIC): MER 0.05%
  5. iShares Core S&P 500 Index ETF (CAD-Hedged) (XSP): MER 0.10%
  6. iShares MSCI EAFE ETF (IEFA): MER 0.08%
  7. Vanguard REIT ETF (VNQ): MER 0.12%

These ETFs are used to build a diversified portfolio that matches your risk tolerance and investment/return objectives.

Nest Wealth – Account Benefits and Fees

In addition to low-cost ETFs and a diversified portfolio, Nest Wealth also offers the following benefits:

Professional Financial Advice: The good folks at Nest Wealth will offer you personalized financial advice matching your financial circumstances. You get a dedicated portfolio manager who you can call, text, or email.

Automatic Re-balancing: When your portfolio’s asset allocation strays from its preferred targets, it will be automatically rebalanced to ensure it remains in line with your needs.

Investor Protection: Your personal data is secured using bank-level encryption. Your funds are kept separately in an account in your name at FCC or NBIN. Both custodians are members of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF).

This means your assets are protected by the CIPF in the event of insolvency by the custodian for up to $1,000,000 of coverage.

Lower Fees: One main attraction of robo-advisors is lower investment fees. Nest Wealth takes it even further by offering a subscription-based pricing model that means you pay a fixed low fee per month based on your account size category. These fees are as follows:

  • $10,000 to under $75,000: $25 fee per month ($300 per annum)
  • $75,000 to under $150,000: $50 fee per month ($600 per annum)
  • $150,000 to under $325,000: $100 fee per month ($1,200 per annum)
  • $325,000 and over: $150 fee per month ($1,800 per annum)

Accounts under $10,000 pay a minimum of $5 per month in fees.

Unlike the “percentage of account” fee pricing model utilized by most robo-advisors, Nest Wealth’s pricing is unique in that it does not continue to rise linearly and indefinitely as your portfolio assets increase.

Compared to the average of 1.98% in annual management expense ratio (MER) charged by equity mutual funds, Nest Wealth (and other robo-advisors) offer portfolio management at much lower fees.

In addition to the standard management fees, when trades are required to rebalance your portfolio, you may incur transaction fees. These transaction fees are capped at a maximum of $100 per year.

Management fees on ETFs held in your portfolio are charged directly by the ETF providers and average about 0.13% (which is low compared to the industry average).

Nest Wealth vs. Wealthsimple Fees

Because pricing is very important, let us quickly take a look at how the pricing (fees) look like between these two competing Canadian robo-advisors.

Wealthsimple Pricing:

  • Assets between $0 and $100K: 0.50% fee per year
  • Assets $100K and over: 0.40% fee per year

Wealthsimple vs. Nest Wealth, the following annual fees apply for a portfolio with:

  • $50,000 in assets: Wealthsimple = $250; Nest Wealth = $400*
  • $75,000 in assets: Wealthsimple = $375; Nest Wealth = $700*
  • $150,001 in assets: Wealthsimple = $600; Nest Wealth = $1,300*
  • $250,000 in assets; Wealthsimple = $1,000; Nest Wealth = $1,300*
  • $500,000 in assets; Wealthsimple = $2,000; Nest Wealth = $1,900*
  • $1,000,000 in assets; Wealthsimple = $4,000; Nest Wealth = $1,900*

*The numbers for Nest Wealth assume you have enough re-balancing transactions taking place in your account that it incurs the full $100 in additional transaction fees. Your fees stay the same once your assets cross the $150,000 threshold. 

The calculations above also assume you only have one account and do not include ETF MERs. 

As the numbers above show, Nest Wealth and Wealthsimple have some interesting dynamics when it comes to pricing.

Investors with accounts under $325,000 will likely pay lower fees with Wealthsimple, while those with larger portfolios (> $325K) can save a lot in fees with Nest Wealth.

Fees are just one piece of the puzzle when choosing who to use as your online portfolio manager.

In addition to fees, you should also look at the other benefits or services you are getting, including free financial advice, customer support, and a history of portfolio returns.

Canada’s most popular robo-advisor, Wealthsimple, is offering readers of this blog an exclusive $75 cash bonus when you open and fund an account.

Nest Wealth at Work

Nest Wealth at Work is a free program for employers who can use the digital platform to set up Group RRSPs for their employees.

Employees are charged a flat 0.95% fee per year which is much less than the average of 1.98% you can expect to pay on traditional equity mutual funds.

Nest Wealth Pro and Plus

Nest Wealth Pro is a digital wealth platform provided by Nest Wealth to other financial institutions that want to improve their wealth management systems.

Benefits of Nest Wealth Pro include:

  • Reduction in operational costs and risks
  • Increase in advisor capacity
  • Improved client engagement and experience

Nest Wealth Plus targets financial planners, advisors, brokers, and dealers who can use Nest Wealth’s sophisticated digital platform to better serve their own clients.

Is Nest Wealth Right For You?

Nest Wealth offers a much-needed service to Canadians who definitely need cheaper investing solutions and a break from super-expensive mutual funds.

Not everyone is comfortable taking the reins on their investments and going DIY via a self-directed discount brokerage account. Robo-advisors provide a comfortable middle-ground.

Thinking about how much you are paying in fees with your current investments? Use one of the many investment fee calculators and you may be shocked at how much you could save in fees over time when compound interest is brought to bear.

Are you thinking about opening an investment account but are unsure of which robo-advisor to use?

Check out my detailed reviews of Wealthsimple, CI Direct Investing, RBC InvestEase, BMO SmartFolio, Questwealth, and Justwealth before making a decision on who to invest with.

Best Investment Offers This month

Canada's best online investment management platform.

Low management fee of 0.40% to 0.50% compared to mutual funds (up to 2%).

Enjoy automatic rebalancing, dividend reinvesting, and free financial advice.

Invest on autopilot and grow your net worth.

Offers self-directed and professionally managed portfolios.

No trading commissions on ETF purchases.

Low fees to buy stocks starting at $4.95 per transaction.

Free transfers from other banks and $0 inactivity fees.

1.25% savings interest rates.

Earn tax-free interest on every dollar and up to 125x more interest than other banks.

No monthly account fees.

Free withdrawals and CDIC insurance.

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Author

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Enoch Omololu

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch has a passion for helping others win with their personal finances and has been writing about money matters for over a decade. His writing has been featured or quoted in The Globe and Mail, Winnipeg Free Press, Wealthsimple, Financial Post, Toronto Star, Credit Canada, MSN Money, National Post, CIBC, and many other personal finance publications.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

3 thoughts on “Nest Wealth Review 2021”

  1. Hi Enoch
    Thanks for a nicely put together site. Lots of good things for those of us who are not up on the investing world.
    My question: I had thought of putting 75 – 100 thousand into something like Nest Wealth but a run-through on their sign-up page shows that my need to hold the funds available to withdraw at short notice for a possible business venture in the next year or so makes it not worthwhile…. so I will probably put the majority into a high interest savings account.
    But…if I did want to play with $25,000 by putting it into a robo adviser like Nest Wealth in a medium to high risk capacity just to see what it might do would that make sense or are there other low fee options that do not require a lot of personal oversight…..Thanks!

    • Hi ChrisB: Thanks for stopping by. While I do not know your full financial situation and cannot offer specific financial advice, I do think all the major Canadian robo-advisors offer a great service for lowering your investment fees while also removing the need for “lots of personal oversight”…for example, no need for you to re-balance. I agree that commiting funds you need for other purposes in the short term to investing may be overly risky as market action cannot really be predicted.

      To answer your other question, apart from going full DIY and purchasing ETFs/index funds, robo-advisors are the only cheaper option I’m aware of right now. If you would like to compare between all the major robo players in Canada right now, you can check my one page complete list here:

      https://www.savvynewcanadians.com/guide-to-robo-advisors-canada-and-comparison/

      Based on the promos provided to readers of this blog, Nest wealth offers 3 months of free management on any amount, Wealthsimple offers free management on up to $10,000 for 1 year, and Planswell offers a $20,000 free management for 1 year. However, you should still take a look at the pros and cons of each provider before making a decision.

      Cheers,
      Enoch

  2. I would like to know how well the nest wealth funds have produced but they don’t appear to provide this. Can you offer some insight.

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