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Choose a Financial Advisor or Robo Advisor…

Choosing a financial advisor requires having the right information. In this short guide, we talk about the role of a financial advisor and delve into robo advisors available in Canada to help you make the right choice for your wealth management strategy.

What Is a Financial Advisor?

A financial advisor helps you manage your money. Designations that go along with Financial advisors include Certified Financial Planner (CFP) or Chartered Professional Accountant (CPA). However, they may refer to themselves as wealth advisors, portfolio managers and other terms.

Your financial advisor can review your existing strategy and create a personalized financial plan. You start by creating financial goals, a budget and a strategy to manage and reduce your debt. Topics discussed with your financial advisor include tax planning, investments and saving for goals such as education and retirement.

Many financial planners also sell insurance and investment vehicles to help you reach your goals. Some financial advisors work at banks, caisses populaires or investment firms, while others set up shop as independent advisors.

Difference Between a Robo-Advisor and Standard Advisor?

A robo advisor is an automated investing platform that uses computer algorithms and human analysts to invest your contributions. You answer a few questions and robo investors create a customized portfolio.

You deposit money and a robo advisor or AI algorithm distributes your funds into predetermined securities. Typically, robo advisors have lower management fees and no account minimums and they handle everything from asset allocation to rebalancing your portfolio.

Since the first robo-advisor launched in Canada in 2014, the industry has grown. Approximately US$8.1 billion is now managed by robo advisors with growth projected at US$16.1 billion by 2023.

What Robo Advisors Are Available in Canada?

Check out the account minimums and investment strategy of robo advisors available in Canada, including the following:

BMO SMARTFOLIO

This online portfolio management service focuses on the human advisors behind its service. It has five funds, which all contain BMO ETFs. You can choose the program that matches your risk tolerance from the low-risk capital preservation fund to the highest risk long term growth and equity options. Fund managers monitor individual accounts, rebalancing them when needed.

  • Management fees: starts at 0.7% for the first $100,000, with declining fees for higher investment totals.
  • Minimum account investment: $1,000.

INVISOR

The company is affiliated with Alliance Insurance & Financial Services Inc. and has seven portfolios for individuals of various risk profiles. It holds a variety of ETFs. Over 50% of assets are U.S. equities, with about 5% Canadian equities and the rest held in international equities. Services include portfolio monitoring and rebalancing and the InvisorGPS goal tracking tool.

  • Management fees: Flat 0.5% fee.
  • Minimum account investment: None, but investments begin when you accrue $1,000.

JUSTWEALTH

Justwealth uses a personalized approach and assigns account managers to individual accounts. You can choose from 70 different portfolios to both grow and preserve wealth. The portfolios mix and match over 40 ETFs from nine providers and the company offers tax loss harvesting to minimize your risk.

  • Management fees: 0.5% (first $500,000) and 0.4% for accounts over that amount.
  • Minimum account investment: $5,000 (excluding RESP accounts which have no minimum)

NEST WEALTH

Nest Wealth serves individuals, employers, and other financial advisors. It invests in seven different ETFs that include Canadian, U.S. and international equities, bonds and real estate. The service monitors and rebalances portfolios automatically.

  • Management fees: $20 per month ($75,000) with additional charge depending on the size of your account
  • Minimum account investment: None.

RBC INVESTEASE

Offered by one of the biggest banks in Canada, RBC InvestEase has a standard and responsible investing portfolio. The responsible portfolio doesn’t invest in companies in certain industries such as tobacco and firearms. A team of advisors answers client questions.

  • Management fees: Flat 0.5% fee.
  • Minimum account investment: No minimum (deposit held until the account reaches $100)

What Should Investors Consider when Choosing Robo Advisors?

For hands-off investing, a robo advisor could work for you. Set your goals before conducting research into the robo advisors above and other popular options for Canadians. Robo advisors still have human financial advisors that can answer your question. So, compare the customer support hours and credentials of the advisors you can reach by phone, email and text.

The platform should be intuitive and easy to navigate, with clear menus, instructions and helpful resources for investors such as blogs and user guides. Check out the portfolio options to find one that aligns with your goals, time frame and ethics to find the robo advisor that’s right for you.

Choose a Financial Advisor or Robo Advisor

When choosing the best financial advisor for you, it’s important to consider the best traditional trading platforms and best robo advisors available online. Choosing a digitally based investing strategy can save you a lot of money compared to paying a personal financial advisor. At the same time, it’s important to choose a platform with highly available, well-qualified customer support staff so that you always have access to answers on your investment journey.

Kris Lamey is a senior financial analyst with 20 years of experience in corporate finance and a long-time freelance writer. She lives in Pennsylvania with her family


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