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Are you looking for the easiest possible way to get a diversified investment portfolio, an answer to your investing questions – at a price that keeps most of your money working for you? If you have read a lot about index investing and want to embrace a cost-conscious alternative to expensive mutual funds, but are a bit intimidated by the DIY discount brokerage route – we’ve got you covered.

Robo Advisors are the ideal mid-point between fully managing your own discount brokerage portfolio (the absolute lowest cost way to invest) and the extremely expensive more traditional ways of managing money. Kyle Prevost, Chief Blogger and Editor for YoungAndThrifty.ca, is one of the most recognizable Canadian bloggers out there and had written extensively on the topic.

Below you can find the main takes from his Complete Guide to Canada’s Robo Advisors:


● It is the easiest, lowest-maintenance way of managing your money. Period.
● It is super safe. As members of the IIROC, robo advisors are subject to the same safety standards as everyone else.
● Robo Investing is a growing trend across the globe, and particularly in Canada. There are already billions of dollars under the management of Canadian Robo Advisors.
● Robo Advisors are better regulated and held to a higher legal standard than “financial advisors” in Canada.
● Robo Investing gives you access to an instantly diversified portfolio at a small fraction of the cost of most mutual funds put out there by big banks and investment groups.
● Compare notes on if DIY index investing or robo advisors are a better fit for your unique needs.

Special Promotions with Robo Advisors in Canada:

YoungAndThrifty has also put up several detaield Canadian Robo Advisor reviews in which you can find special offers for the leading robo advisors in the market. Find top offers below.

Wealthsimple: Get $10,000 managed for free - available on the Wealthsimple review
Nest Wealth: Get 3 months free - available on the Nest Wealth review
Justwealth: $50 deposited for free - available on Justwealth review
ModernAdvisor: $50,000 managed for free for one year – available on the ModernAdvisor review



Additional resources:
- Robo Advisor Fee Calculator: Discover the true costs of managing your investment portfolio through a Robo Advisor in Canada.
- The rise of robo advisors: A research by Accenture showing the rise in Robo Advisor popularity across the globe.
 

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Costs

Yes, robo advisors cost you money. Please have a look at the calculator I added at the bottom of my post, and calculate the fees you will pay for your portfolio. Like everything in life it does cost you money but less than what you would have paid for alternatives.
 

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...Like everything in life it does cost you money
But there is where you are wrong. It is easy and inexpensive these days to invest yourself without paying the hand of the grasping middleman, the 'service' that is out there to make money off of your hard-earned dollars.

But I do realize there are enough lazy people in the world for you to make a handsome living off of them.
 

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But there is where you are wrong. It is easy and inexpensive these days to invest yourself without paying the hand of the grasping middleman, the 'service' that is out there to make money off of your hard-earned dollars.

But I do realize there are enough lazy people in the world for you to make a handsome living off of them.

If you would look at the article I've linked to, you can see the recommendation is to DYI investing all the way as long as you got the time and the knowledge to do so. If you don't, you are better off with a Robo Advisor than any mutual fund or financial advisor, that's all I'm saying.
 

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no expert here but AFAIK young & thrifty is a legitimate financial website geared for younger investors. I've looked at it once in a blue moon.

recently i noticed Y&T posting that a number of their youngish readers don't want to go to the trouble of learning even basic investing 101. For them, argues Y&T, a robo advisor is the way to go.

keep in mind that a youngish person normally requires only a fairly simple financial plan. To date, most of the licensed financial planners are charging a fairly hefty $3000-3500 fee. Does a 20 something actually need such a fancy & expensive plan? i for one tend to doubt this.

if this is true - if indeed large armies of young investors are seeking reasonably-priced financial plans for their maiden investment debuts - then a robo-advisor could be an excellent hire for these parties.

of course it's always possible that editor kyle prevost from young & thrifty website recently obtained a hefty subvention from the robo-industry or from its individual members, in return for which he promised to pump the daylights out of robo-advisors on his own website plus every other website he could reach.

who knows, possibly MoneyCanada is actually Editor Kyle in disguise. I would say their language signatures are similar. Both write very well. Happy hallowe'en to all young investors.


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A robo advisor is not a financial plan or financial planner. At best a rudimentary asset allocator.
Asset allocation and investment are only a small portion of a financial plan.

My personal feeling is that robo advisors are way overpriced. Given the technology and with some economies of scale prices could be lowered by 50% and still leave good profit margins.
I suspect this will take some time and perhaps some serious competition, perhaps if say Vanguard or Blackrock or the big banks devide to join the fray.
 

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^^

TD will be joining the fray. They haven't promoted their coming robo marketing yet because the products are still in process of being launched.

the big green will have its own extensive ETF fund family. They've already launched the core 6 ETFs, although they're hard to find on the TD website. They don't seem to trade yet.

no sign yet of the future green roboadvisor; but like santa claus it's busy these days at the north pole & soon will be on its way.

all this might spell doom for the bank's branch-based planners & fund sales reps.


PS twa2w have you ever actually seen a legitimate roboadvisor plan? with your own personal eyeballs? i suspect they're entirely adequate for a 20 something or a brand-new investor at any age.


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If TD are coming out with a robo advisor, I'd "advise" them not to use the same IT guys that turned their website into such a shitshow.
 

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fatcat, depends on what you mean by "I get". If you're using the calculator at autoinvest then at the bottom there's a table that explicitly breaks down the cost by robo-advisor headline management fee, trading fees, and underlying ETF MER so the total cost includes all of it. If you're getting it some other way, you'll just have to see if that's included in your calculation!
 

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Robo Advisor Response

Ok folks, a little new here, so be gentle with a first-timer. One of my readers alerted me to this thread and I figured I’d respond in person to clear up any misnomers.

1) The initial post and follow up comments by “MoneyCanada” are the efforts of a web marketing company we’re trying out to do some marketing work for us. There is a ton of work involved with running Young and Thrifty, and since I teach high school full time, I’m trying to hire out some of the stuff that doesn’t bring me a ton of enjoyment such as marketing.

2) We do in fact get a small affiliate payment when folks sign up for a robo advisor from Young and Thrifty. HOWEVER, the amount for each of the robo advisors is exactly the same (no incentive to recommend one over the others) AND the amount is less than what we get for recommending our preferred discount brokerage (for DIY investing). I’d be totally transparent and state the amount, but I believe that’s against some of the legalese in the affiliate agreements. If it eases any fears about me somehow getting rich, I can assure you that I am not quitting my day job any time soon.

3) As “MoneyCanada” pointed out – at no point have I ever made the claim that Robo Advisors are cheaper or a “better deal” than DIY using basic index funds. Indeed, if you read our Robo Advisor Guide for Canada, I expressly state that I myself continue to use a Questrade account and ETFs. Furthermore, I even provide access to a free eBook that tells you exactly which ETFs I purchase, why I purchase them, and how I execute the purchases in order to incur the least amount of fees. I also give a handy checklist on which direction – DIY or robo – you might like to go based on how you feel about a few questions.

4) I can tell you from the large amount of email we receive, in addition to personal anecdotes from my friends, somewhere in the neighborhood of 70-80% of the people I advised to drop insane mutual fund/traditional investment models, had a difficult time getting over the barriers to DIY index investing. A lot of folks seem not to want to learn to fish, they simply want the fish caught and cooked for them – at a reasonable rate. There is absolutely nothing wrong with that, and I’d love to see an argument that says that the average Canadian (who has no idea what index investing is btw), investing by themselves or investing with a traditional mutual fund salesperson, is better off than with a robo. Several of the robos offer much better overall financial planning advice that what many non-high-net-worth clients would generally receive at banks and investment corps. A lot of Canadians don’t want life insurance advice and investment advice sold to them by a commissioned salesperson – robos are a great tool that they can put in their toolbox.

I’ll stop in from time to time to answer any questions here, but if you want a more immediate response simply reply on the Canadian robo article.

Cheers,
Kyle
 

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^^


thankx Kyle for taking the time to stop in here.

i had read the original Young & Thrifty article on robo-advisors some time ago & i thought it was excellent. It was & remains a fine overview survey of all robos currently offering in canada. It should be a must go-to for any party who is considering engaging a robo advisor service.

that being said, altaRed has kindly included a link upthread to a globe & mail article - rob carrick i believe - on robos, which is also a must-read imho.

it doesn't surprise that MoneyCanada is an auxiliary marketing service; but as i mentioned, you both have excellent writing styles. Good journalism, all dat!

robo advisors are obviously eliciting big attention these days. I hope you'll keep up the fine reporting lead you've established at Young & Thrifty. Please take a peek back in here whenever you have time, we'll always be happy to see you.


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aa
 

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In 1982 when money in money market funds was 5 - 1 to money in stocks. Would walk into the bank & would see money market rates posted on a chalk board. This was a great time to invest in stocks long term & long term bonds.

Now the ratio is flipped to money in stocks is 5 - 1 to money in money market funds. Do not see chalk boards with money market rates any more in a time when ETFs are all the rage, the retail investors thinks ETFs are the holy grail to riches
 

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A robo advisor is not a financial plan or financial planner. At best a rudimentary asset allocator.
Asset allocation and investment are only a small portion of a financial plan.

My personal feeling is that robo advisors are way overpriced. Given the technology and with some economies of scale prices could be lowered by 50% and still leave good profit margins.
I suspect this will take some time and perhaps some serious competition, perhaps if say Vanguard or Blackrock or the big banks devide to join the fray.

I do agree. That's why my friends and I created a web-app that's basically a DIY Robo-advisor. It's free to use and integrates with Questrade . Feel free to check us out at https://getpassiv.com/
 

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I looked at my portfolio and didn’t find roboadvisors any cheaper than discretionary money managers (if I had enough). I think being handed a copy of the wealthy barber 1 and 2 (maybe millionaire teacher, and the little book of common sense investing as supplements - all very quick reads) combined with tangerine, TD e - series, or even mawer or steady hand would put you miles ahead of a robo advisor. Their portfolios are far more complicated than necessary and often go against common knowledge like using hedging. Tangerine is a better portfolio, although it could be cheaper. Then even big money could use it too and be auto rebalanced.
 
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