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

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

 

Nest Wealth Ratings Summary

4.6/5

This is based on assessing several factors including Management Fees, Account Minimum, Investment Options, Value For Money, Ease of Use, and Customer Support Options.

Nest Wealth is one Canada’s leading robo-advisors. To get you started on your investment journey, they are offering readers of Savvy New Canadians 3 months of FREE portfolio management!

 

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. Randy Cass, a CFA, has been in the investing business for over 15 years managing large portfolios , including previously managing portfolios at the Ontario Teachers’ Pension Plan and at Orchard Asset Management. He also hosted Market Sense on the Business News Network (BNN) between 2012 and 2014.

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 in general 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.

Nest Wealth Accounts

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

  • RRSPs (individual and personal)
  • RESPs
  • TFSAs
  • LIRAs
  • RRIFs
  • Non-registered investment accounts

On March 27, 2018, they also announced the introduction of “Nest Wealth at Work,” a group RRSP plan for small-to-medium sized businesses and first of its kind in Canada.

Nest Wealth – How To Open an Account

As a fintech company, Nest Wealth prides itself on making your on-boarding 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: Visit Nest Wealth via this link (this promo link gives you 3 months FREE at Nest Wealth). Enter your details and upload the required documents.

Step 3: They will review your submissions and open an account for you at National Bank Independent Network (NBIN) which is a subsidiary of the large Canadian Bank – National Bank. This is where your funds are held.

Step 4: Fund your account. They will make sure you speak with a portfolio manager 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.

There is no minimum amount to start investing with Nest Wealth.

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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: MER 0.05%
  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 with a third-party (NBIN, a subsidiary of National Bank) which is insured by the Canadian Investor Protection Fund (CIPF). If NBIN goes bankrupt, your funds are protected up to $1 million per account.

Lower Fees: One main attraction of robo-advisors is their lower 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:

  • Portfolios less than $75,000: $20 fee per month ($240 per annum)
  • Portfolios between $75,000 and $150,000: $40 fee per month (or $480 per annum)
  • Portfolios more than $150,000: $80 fee per month ($960 per annum)

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 2.35% 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 0.15% (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 = $340*
  • $75,000 in assets: Wealthsimple = $375; Nest Wealth = $580*
  • $150,001 in assets: Wealthsimple = $600; Nest Wealth = $1,060*
  • $250,000 in assets; Wealthsimple = $1,000; Nest Wealth = $1,060*
  • $500,000 in assets; Wealthsimple = $2,000; Nest Wealth = $1,060*
  • $1,000,000 in assets; Wealthsimple = $4,000; Nest Wealth = $1,060*

*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.

As the numbers above shows, Nest Wealth and Wealthsimple have some interesting dynamics when it comes to pricing. Investors with smaller accounts will potentially pay less fees with Wealthsimple, while those with larger portfolios (> $265K) 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 history of portfolio returns.

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? Check out Nest Wealth’s investment fee calculator 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 on Planswell ($20,000 managed free for one year), Wealthsimple ($5,000 managed free for one year) and Justwealth (up to $500 in sign-up cash bonus) before making a decision on who to invest with.

If you decide to stick with Nest Wealth, this special promo link for readers of Savvy New Canadians offers you FREE portfolio management for 3 months.