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I am currently a DYI with BMO Investorline and I am considering moving to BMO Advice Direct. The salesperson at AD, because of the size of my investments, said Fees would be a maximum of $3750/yr, would be paid out of my Investment Account and my 4 other accounts would be free. These fees would be tax deductible. This amounts to approx. .03%, yet I keep reading that fees are 1%. I also receive 160 free trades/yr. Am I missing something?
 

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Yup, it looks like for assets over $500k that is the max.payable: https://www.secure.bmoinvestorline.com/adviceDirect/pdfs/AD_fee_schedule_EN_may.pdf
It looks like advicedirect is primarily driven by your investor profile. Go out of bounds and flags will go up and you'll be hearing from them. Or you can call with a question: https://www.bmo.com/advicedirect/about-advicedirect/online-advice
I guess the question is what that service is worth to you. You say you are DYI (or DIY) now. Why are you considering AD? Is it formulating a financial plan, your portfolio performance, or sticking with your plan that is challenging?
 

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Fees would be a maximum of $3750/yr ... This amounts to approx. .03%, yet I keep reading that fees are 1%. I also receive 160 free trades/yr. Am I missing something?

i believe the fees would be .375% on $1M & could range higher for accounts in the lower end of this tiered level.

on top of that, if the client would be directed to buy ETF products only, there would be the MERs of the ETFs. A client could arrive at a rough overall fee of .70. This is reasonably competitive, somewhere between DIY (assuming ETF MERs averaging .30%) & Mawer balanced or similar (roughly 1%.)

i see that options are not allowed. I assume the client is allowed to buy, hold & sell stocks inside this plan? for $1M, 160 free trades a year would likely be plenty.

onlyMO asks What can this plan do that an investor who has managed to accumulate $1M on his own cannot do for himself? i see an advantage for different classes of investors:

- spice who are suddenly bereaved - usually widows - who have never learned about finance while their husbands were alive

- aging investors who need reminders, or who benefit from reminders

- parties who are transitioning out of mutual funds with a traditional live human being advisor towards - ultimately - pure DIY, might benefit from an interim year or two of robo advisor. Who knows, some of these parties might like robo service so much they will never move away.
 

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The fee schedule seems clear that the maximum fee would be $3750/yr regardless of $1M or $5M. Which is a good deal (can't be too many acccounts though more than $1M wanting to use robo-advisors. It would be interesting though if any CMFers here are using BMO AD and what their recommendations are, and how/if they would recommend a new client to overhaul their portfolio from say, a couch potato of iShares ETFs (or a mix of vendors) to that of BMO ETFs. It could be expensive if the robo-advisor recommended major changes in a non-registered account with large unrealized cap gains.
 

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It would be interesting though if any CMFers here are using BMO AD and what their recommendations are, and how/if they would recommend a new client to overhaul their portfolio from say, a couch potato of iShares ETFs (or a mix of vendors) to that of BMO ETFs. It could be expensive if the robo-advisor recommended major changes in a non-registered account with large unrealized cap gains.


let's hope robo advisor is higher quality than the above concerns! imho it would be shortsighted & self-serving if robo were to insist upon, or even aggressively direct towards, BMO ETFs only. I'm sure most clients would see through that.

is robo advisor equipped to slowly escort clients out of rear-load mutual funds with heavy commissions that are still payable?

is robo capable of discussing which holdings - holdings that it plans to change - will trigger high capital gains if sold?

if not, then there is still something to be said for the old-fashioned advisor who walks around on human legs & speaks in a language one can hear with one's ears .:peach:

it's well-known that BMO has a somewhat elderly clientele. They were one of the first to bring out a robo advisor. We're hearing now that TD is expanding its own family of ETFs & planning to also launch a robo advisor service. Demographics rules, the boomers may be getting forgetful.

with these fairly low fees - for $1M we're looking at .375% to perhaps .75% if the portf consists of ETFs - i think perhaps an aide-memoire such as a friendly robot - one that could be helpful night & day - might be just the right cocktail for some clients.
 

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Yup, it looks like for assets over $500k that is the max.payable: https://www.secure.bmoinvestorline.com/adviceDirect/pdfs/AD_fee_schedule_EN_may.pdf
It looks like advicedirect is primarily driven by your investor profile. Go out of bounds and flags will go up and you'll be hearing from them. Or you can call with a question: https://www.bmo.com/advicedirect/about-advicedirect/online-advice
I guess the question is what that service is worth to you. You say you are DYI (or DIY) now. Why are you considering AD? Is it formulating a financial plan, your portfolio performance, or sticking with your plan that is challenging?
... re the fee schedule - interesting that they're charging for Swaps (between registered/non-registered plans) when it was previously identified as being disallowed or is that a typo? Meh...
 

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let's hope robo advisor is higher quality than the above concerns! imho it would be shortsighted & self-serving if robo were to insist upon, or even aggressively direct towards, BMO ETFs only. I'm sure most clients would see through that.
For sure. I was simply using it as outlier example. It sure would be interesting to hear some real life stories. I suspect at least some DIY folk who might go to AD could have some 'disasterous' portfolios going in, and of course, there is the other extreme too, i.e. someone who has a very effective and efficient DIY portfolio but has tired of managing it.

This robo-advisor trend probably has a limited market and the marketplace will get crowded with players pretty fast. Those who can establish themselves early might have the upper hand, with limited fringe players thereafter. Schwab Intelligent Portfolio is a good example of a US rob-advisor who has captured a leading spot in the market. https://intelligent.schwab.com/
 

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yes, would be interesting to hear from robo clients how they are liking the service.

a robo advisor is valuable for consumers across the entire investment industry, though, because robos appear to be the first to crack below the 1% management fee level with at least a modest offering of personal service.

the 1% fee we've been taking for granted as the low end of managed $$ has now been breached. When one considers that 1% of $1M is $10,000, a flat robo fee of $3750 looks good by comparison.

does an aging successful investor need to pay $10k to be reminded every quarter that his allocation of bonds, preferred shares & common stock is pretty much perfect for his goals & profile? i mean, when a client is 80 surely there can't be very much that a robo has to invent. Prudent investment management with strong custodial services should be the goal. For those kinds of fairly basic recommendations, i do believe that $3750 is an adequate, possibly even a generous, fee.
 

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does an aging successful investor need to pay $10k to be reminded every quarter that his allocation of bonds, preferred shares & common stock is pretty much perfect for his goals & profile? i mean, when a client is 80 surely there can't be very much that a robo has to invent. Prudent investment management with strong custodial services should be the goal. For those kinds of fairly basic recommendations, i do believe that $3750 is an adequate, possibly even a generous, fee.
I agree $3750 should do it for anyone and everyone. As I understand it, some 'fee for service' planners (not % AUM services) are in that neighbourhood and provide estate and tax advice within that as well (once the plan is set up and running). I would prefer DIYers do that over robo-advisors...but the robo-advisory market is very good competition and a good alternative for those that cannot find a satisfactory 'fee for service' planner locally.
 

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I agree $3750 should do it for anyone and everyone. As I understand it, some 'fee for service' planners (not % AUM services) are in that neighbourhood and provide estate and tax advice within that as well (once the plan is set up and running). I would prefer DIYers do that over robo-advisors...but the robo-advisory market is very good competition and a good alternative for those that cannot find a satisfactory 'fee for service' planner locally.

interesting. My understanding is that the fee-for-service planners could charge up to $3-5k, with the latter figure being for a couple or a family with unusual complexity, eg a business or corporation. But my further understanding goes that, once the plan is drawn up, the fee-for-service guys then tack on a hefty annual monitoring service fee.

of course actual fees can easily be very different from posted fees. Still, the point that $3000-$4000 per annum should do it for most 80-year-olds, even those with several million $$, is valid. After all, a bond or a GIC or a share of royal bank is the same for every portf manager, regardless of the size of the holding.
 

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I am currently a DYI with BMO Investorline and I am considering moving to BMO Advice Direct. The salesperson at AD, because of the size of my investments, said Fees would be a maximum of $3750/yr, would be paid out of my Investment Account and my 4 other accounts would be free. These fees would be tax deductible. This amounts to approx. .03%, yet I keep reading that fees are 1%. I also receive 160 free trades/yr. Am I missing something?
1% on money in your account up to maximum of $3750/year
 

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I just added the commissions to all my trades in 2020: $447.75 if I had to pay the full $9.95 per trade. However, through the OSPE special rate, I pay $6.95 per trade. Clearly the $3750 annual fee for 160 free trades is not worth it for me. As for advice, internet research and opinions from other experienced CMF members are serving me well.
 

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I've had an advice direct account didn't really like it.
However, if you have self directed accounts with large mutual fund or GIC balances AD can be a benefit since you can access F Series funds or get an extra 25bps on GICs.
 

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I tried AD for 1 account for about 1 year. I was not making enough trades to justify the account so I went back to Investorline. I personally believe that their system for picking stocks is flawed. It's not that they didn't have some money makers on their list because they did. I simply missed out on a lot of other great ones because they didn't meet the standards which they considered necessary for purchase. Very rarely were Canadian Banks or Canadian railways on their lists.
 

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If we could lump all 6 of our accounts together and just pay the one $3750 fee, the cost would still be a lot higher than our present trading fees. But as an overall percentage, it would still be very low. If I became unable to handle DIY investing, it might make sense because my wife would no doubt need help.

What is not clear to me, is whether all our Taxable, RRIF & TFSA accounts could be combined for the one fee (assuming we have $500k+ in one taxable account)

Maybe there are better alternatives.
 
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