Tag Archives: robo-advisers

Robo Portfolio Update: One Year Later

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AmanRaina
Aman Raina

By Aman Raina, Sage Investors

Special to the Financial Independence Hub

One year ago I opened up an investment account with one of the new online portfolio management companies that have been taking the financial services landscape by storm. I wanted to see how these type of Robo Adviser services work and more importantly perform. I deposited $5,000 of my own money and decided to track how it performed and capture any notable observations on my blog.

So let’s dive in and check how much money my ROBO made for me this past year. First let’s look at the portfolio returns.

 

My ROBO portfolio lost money last year. 2.15 per cent to be exact. Then again, many stocks and ETFs lost money last year. The learning point here is that  ROBO services can lose money just as well as other portfolio management services. Don’t expect any marketing campaigns to tell you this.  The thing is … it’s OK. To expect ROBO advisers to be perfect and make money on every holding is unrealistic.

In terms of asset allocation of my ROBO portfolio, below is the breakdown at year-end January 28, 2016. Remember, when I setup my account, I answered a series of questions that assessed my risk tolerance and subsequently determine the type of portfolio the Robo Service would create and manage for me. In my case, because I have a high proficiency and literacy about stocks and investing, ROBO proceeded to rate me as a 9 out of 10 on the risk tolerance scale.

 

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BMO’s much rumoured robo-adviser service officially launches

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Cute RobotAs the Hub predicted in October — BMO will be first big bank to enter robo-adviser space — the Bank of Montreal has officially launched a robo-adviser serviced called SmartFolio. According to Canadian Press, a trail run began on December 7th and it is now available to all investors as of Monday of this week.

CP notes that BMO is indeed the first of the big five banks to wade into the robo-adviser space, which shouldn’t come as a surprise, since it had led the banks with its own line of BMO ETFs.  Toronto Dominion Bank is also expected to enter the market shortly.

Focus on Millennials

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Why tech-savvy millennials are automating their investments

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Profile picture_Mike Katchen
Michael Katchen, Wealthsimple

By Michael Katchen

Special to the Financial Independence Hub

When we launched Wealthsimple 12 months ago, investors in Canada had just two options to manage their money: Do it yourself or hire an advisor.

Doing it yourself is low cost, but overwhelming for most investors. It requires a level of knowledge, interest, and confidence to manage your life savings completely solo. Hiring an advisor is easy, but can be expensive and intimidating, even if you have a large enough balance to meet high account minimums.

At Wealthsimple, we’re building a third category: automated investing with on-demand advice. This new category combines the low costs of doing it yourself (DIY) with the real advice and sophisticated approach of a full-service advisor.  We built cutting-edge technology to automate a passive investing approach and digitize the entire account opening and reporting experience. It’s convenient, allowing customers to open an investment account in 10 minutes, with no paperwork or branch visits required. And it’s not just robo-investing or robo-advice, it’s real advice delivered by real Portfolio Managers by phone, email, video chat, or text message.

So who uses an automated investment solution? Definitely not your average investor!.

What an automated investment client looks like

In an industry where 90% of clients are over 50 years old, clients of automated investment services are almost half that age. The average Wealthsimple client is a first-time investor, just starting to put money aside for both short and long-term goals.  Our clients range from 19 to 89, but 80% are under 40 years old and the average is under 30. Continue Reading…

Weekly Wrap: Horizons escalates ETF price war, Questrade expands active ETFs, CSA to review robo advisers

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PRICE WAR red Rubber Stamp over a white background.

Three significant developments in the ETF and robo-adviser space late this week, the full recap of which can be found in my new Weekly Wrap that may run online Fridays in the Financial Post.  You can find the link for the first one here.

Horizons ETFs has rejigged fees on its popular Canadian equity fund, Horizons S&P/TSX 60 Index ETF [ticker HXT,] to just 0.03% or three basis points (plus taxes, down from the previous 0.05%. Previously the low-fee threshold was 0.05%, shared with three other providers.

Meanwhile, Questrade Wealth Management launched two actively managed ETFs, a global equity fund plus a fixed income ETF  subadvised by institutional money manager, Jarislowsy, Fraser Ltd. These expand the lineup of six Questrade Smart ETFs launched in March.

On Thursday, the Canadian Securities Administrators (CSA) issued CSA Staff Notice 31-342 directed at portfolio managers providing online advice, popularly known as robo advisers.   The CSA says it may conduct compliance reviews of online advisors within one or two years following launch, particularly as operations become more complex than the first generation that had basic ETFs or mutual funds as its underlying  investments, and “uncomplicated” asset allocation models.

 

How pairing fee-only planners and robo-advisers can save you money

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Woman meeting financial adviser in officeCute Robot

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

The financial services industry would have you believe that individual investors don’t want to pay upfront for investment advice – in fact, the industry claims that investors prefer to pay for financial advice through fees that are part of their mutual funds.

But we all know mutual funds in Canada cost too much and the relationship between investors and financial advisors is mostly transactional in nature. Embedded commissions and trailer fees might make sense for investors who are just starting out, but over the long term this conflict of interest will be expensive and lead to poorer outcomes for investors.

An unconventional pairing

With the relatively new arrival of fee-only financial planners – advisors who don’t sell products but offer unbiased and objective financial advice for a set fee – and the emergence of robo-advisors – online investment management services – there is an opportunity for Canadians to access a better form of financial advice that costs less than the traditional bank advisor-mutual fund model.

That’s right, pairing a fee-only financial advisor with a robo-advisor (or DIY, if that’s your thing) can actually save you money and lead to better investor outcomes.

Here’s an example Continue Reading…