One primary reason why robo-advisors have become popular in Canada is the lower management fees they charge compared to what traditional wealth managers and financial advisors charge.
Robo-advisors simplify the investment process using low-cost ETFs. Important parts of the investment puzzle-like diversification, rebalancing, and dividend re-investing, are all automated so that everyday investors do not need to get their hands dirty.
And these conveniences (including free financial planning and investing advice) are made available at a low fee, which could mean significantly improved portfolio returns over time.
Investment fees cut into the real gains you realize in your account at the end of each year. Given the reality that active fund management, more often than not, underperforms passively managed index funds that track the market, it makes sense to limit the fees you pay and to keep things simple.
This post summarizes the investment fees (management fees, ETF fees, and trading fees) you pay to each of Canada’s major robo-advisors.
For more details on their account offerings, investment management approach, portfolio returns, ETFs used, and more, check out my robo-advisors comparison post or read my individual robo-advisor reviews.
Robo-Advisor Fees in Canada
| Features | Wealthsimple | CI Direct Investing | Questwealth | Justwealth |
|---|---|---|---|---|
| Management Fee | <$100K: 0.50%; >$100K: 0.40% | $1K-$150K: 0.60%; $150K-$500K: 0.40%; > $500K: 0.35% | $1K-$100K: 0.25%; >$100K: 0.20% | < $500K: 0.50%; >$500K: 0.40% |
| ETF Fees (MER) | Avg. of 0.20% | 0.19% to 0.26% | 0.17% to 0.22% | Avg. of 0.25% |
| Other Fees | 20 basis pts. per USD transaction. | 100 basis pts. fee per USD transaction. | ||
| Account Minimum | $1 | $1,000 | $1,000 | $5,000 |
| Investment Methodology | Passive (Modern Portfolio Theory) | Passive & Active (Hybrid) | Active | Passive |
| Other Features | Get a $75 cash bonus when you open and fund an account with at least $500; free online brokerage service, Roundup feature to invest spare change, VIP perks for account >$100K, SRI & Halal portfolios. | Actively managed portfolios available. | Invest up to $10K free for 1st year. SRIs available; Actively managed portfolios. | Education Target Date RESP portfolios; Get $50 free on new accounts when you invest at least $5000. |
| Reviews | Read Review | Read Review | Read Review | Read Review |
Most robo-advisors levy a management fee which is a percentage of assets under management (AUM). However, there are a few of them that have introduced fixed price points that may be cheaper depending on how much you invest.
1. Wealthsimple
Overview: Wealthsimple is Canada’s most popular robo-advisor with hundreds of thousands of clients and over $15 billion AUM.
Wealthsimple Fees: Accounts with less than $100,000 pay a 0.50% annual management fee. This fee is reduced to 0.40% when your portfolio exceeds $100K.
In addition, ETF Management Expense Ratio (MER) fees of approximately 0.20% are indirectly charged to your portfolio by managers of the underlying ETFs. ETF MER fees apply even if you buy them directly using an online brokerage account.
There is a 20 basis point fee on USD currency conversions when U.S. securities are traded in your account.
Highlights: Wealthsimple offers socially responsible investing (SRI) and Halal portfolios for those who desire them. Clients have access to a Roundup feature that automatically invests spare change, and you can use their free brokerage platform (Wealthsimple Trade) to buy and sell stocks and ETFs for free. They also have a high-interest savings account.
Additional benefits accrue to accounts with assets over $100,000, including tax-loss harvesting and a 50% discount off a Medcan comprehensive health plan. The minimum account balance is $1.
2. Questwealth
Overview: Questwealth Portfolios is owned by the popular wealth management company, Questrade, which manages over $8 billion in AUM. Questwealth was formerly referred to as Portfolio IQ.
Questwealth Fees: Questwealth has arguably the lowest management fees for a robo-advisor in Canada. You can expect to pay:
- $1,000 – $99,999: 0.25%
- $100,000 or more: 0.20%
Regular built-in ETF fees cost an additional 0.17% to 0.22%. When ETFs are traded in US dollars within your account, a 100 basis points fee applies (somewhat high and can add up to become significant depending on how many USD transactions occur in your account).
The minimum account size is $1,000.
Highlights: Questwealth diverges away from the traditional robo-advisor investment strategy in that it uses an active management approach, similar to traditional mutual funds. It also offers socially responsible investment portfolios, which may be slightly more expensive.
Our readers can invest their first $10,000 free with Questwealth for one year.
3. Justwealth
Overview: Justwealth is a popular digital wealth manager in Canada, founded in 2016.
Juswealth Fees: It charges a low annual management fee as follows:
- First $500,000: 0.50%
- > $500,000: 0.40%
There are a minimum $4.99/month fee and a minimum account size of $5,000, except for RESP accounts which have a minimum monthly fee of $2.50.
The built-in ETF fee for the ETF providers is 0.25% on average.
Highlights: Justwealth is the only robo-advisor in Canada offering Education target Date Portfolios. This RESP portfolio makes it easier for you to save and plan for your child’s post-secondary education.
4. CI Direct Investing
Overview: CI Direct Investing was founded in 2013 and is a registered portfolio manager in all the provinces and territories in Canada. It has over $275 million in assets under management.
CI Direct Investing Fees: Its sliding scale pricing model is as follows:
- $1,000 – $150,000: 0.60%
- $150,000 – $500,000: 0.40%
- > $500,000: 0.35%
In addition to the management fee, the built-in ETF MER fees across their portfolios range from 0.19% to 0.26%.
Highlights: CI Direct Investing offers socially responsible investing (Cleantech) and some private investment portfolios that are actively managed.
5. Nest Wealth
Overview: Nest Wealth was launched in 2014. Like Wealthsimple and CI Direct Investing, it invests your money using low-cost ETFs.
Nest Wealth Fees: It charges fixed monthly fees as follows:
- < $75,000: $20 per month
- $75,000 – $150,000: $40 per month
- > $150,000: $80 per month
There is a trading fee of up to a maximum of $100 per year and built-in ETF MER fees.
Highlights: Nest Wealth offers Group RRSPs for employers (Nest Wealth at Work), a digital wealth management platform for advisors (Nest Wealth Plus), and firms (Nest Wealth Pro).
Read our Nest Wealth review.
6. ModernAdvisor
Overview: ModernAdvisor is a Canadian robo-advisor founded in 2013.
ModernAdvisor Fees:
- $0 – $10,000: Free
- $10,000 – $100,000: 0.50%
- $100,000 – $500,000: 0.40%
- > $500,000: 0.35%
The average built-in ETF MER is 0.25% per year.
Highlights: ModernAdvisor offers a hybrid investment approach that combines passive and active strategies. They also offer a free 30-day demo account that you can use to test-drive their platform.
Read our ModernAdvisor Review.
7. BMO SmartFolio
Overview: BMO SmartFolio is a robo-advisor owned by a bank – Bank of Montreal.
BMO SmartFolio Fees: these vary depending on your account size:
- First $100,000: 0.70%
- Next $150,000: 0.60%
- Next $250,000: 0.50%
- Above $500,000: 0.40%
MER feed of ETFs inside your portfolio range from 0.20% to 0.35%. Additionally, a spread of up to 1.5% may be charged on foreign currency transactions.
Read this BMO SmartFolio review for more details.
Conclusion on Robo-Advisor Fees
Fees are only a part of the factors you should consider when choosing a robo-advisor. Other factors you should consider are their investment strategies, performance over time, access to free financial advice, and more.
Note that past performance is not always an indicator of the future returns you may realize in your portfolio.
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