One major 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, re-balancing, 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 that could mean significantly improved portfolio returns over time.
Investment fees cut into the real gains that 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) that 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 and/or read my individual robo-advisor reviews.
***The table below scrolls horizontally to the right on smaller mobile screens.
The majority of robo-advisors levy a management fee that is a percentage of assets under management (AUM). However, there are a few of them who have introduced fixed price points that may be cheaper depending on how much you invest.
Overview: Wealthsimple is Canada’s most popular robo-advisor with over 150,000 clients and $4 billion AUM. They operate in Canada, the United States and the United Kingdom.
Wealthsimple Fees: Accounts with assets 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 yourself 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 VIP airline lounge access, tax loss harvesting and 50% discount off a Medcan comprehensive health plan. The minimum account balance is $1.
Overview: WealthBar was founded in 2013 and is a registered portfolio manager in all the provinces and territories in Canada. They have over $275 million in assets under management.
WealthBar Fees: Their 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: WealthBar offers socially responsible investing (Cleantech) and some separate private investment portfolios that are actively managed.
3. Nest Wealth
Overview: Nest Wealth was launched in 2014. Similar to Wealthsimple and WealthBar, they invest your money using low-cost ETFs. They charge some of the lowest management fees by a robo-advisor in Canada.
Nest Wealth Fees: They have an interesting fixed monthly pricing model that makes them highly competitive.
- < $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. Their built-in ETF MER fee is 0.13% for a balanced portfolio.
Highlights: Nest Wealth offers Group RRSPs for employers (Nest Wealth at Work), a digital wealth management platform advisors (Nest Wealth Plus) and firms (Nest Wealth Pro).
Overview: Planswell is a Canadian fintech company founded in 2016. In addition to robo-advisor services, they offer mortgages, insurance and financial planning as an all-in-one package.
- $5,000 – $99,999: 0.50%
- > $100,000: 0.40%
The ETFs used in your portfolio carry an average annual fee of 0.20% and the minimum account size is $5,000.
Highlights: Planswell offers one platform to meet your investment, insurance and borrowing needs. They have a robust resource section on their website with numerous financial calculators including those for budgeting and investment fee comparisons.
Overview: Justwealth is a popular digital wealth manager in Canada that was founded in 2016.
Juswealth Fees: They charge 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 that goes to 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 towards your child’s post-secondary education.
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 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 they utilize an active management approach, similar to traditional mutual funds. They also offer socially responsible investment portfolios which may be slightly more expensive.
Overview: ModernAdvisor is a Canadian robo-advisor founded in 2013.
- $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.
8. 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.
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.