Robo-Avisors, Where’s the robot?

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Damnit, we thought some uber smart robot is going to beat the market and make us FI! Unfortunately, the name is a bit of a misnomer. Like us, you’re probably a bit confused. We recently pulled out the ole wheelbarrow of FI Garage cash and put a load of spondulix into Wealthsimple*. But what were we investing in, and who was managing those investments? Yes, in the FI Garage we put it all on the line to give you first-hand experience…

The Robos

There’s a list of roboadviors in Canada right now, including Wealthsimple*, Planswell*, Nest Wealth, WealthBar, Justwealth and some brokerages are getting in there too. Our personal favorite is wealthFI, okay maybe that doesn’t exist yet, but hey, we’ll get a robot to build that for us eventually and we own that domain so it’s for sale! All these robos have similar investment objectives and underlying holdings. Which, by the way, have been designed by…no surprise, carbon-based beings. But, let’s be honest here, the number one benefit is that they all attempt to automate your investments monthly and get you building up a portfolio for low fees. We like low fees. Likely you’ll end up holding a basket of ETF’s that are designed to track the indexes of various markets. You could just do that yourself. But, just like Uber-eats, instead of making dinner or heaven forbid picking up your own food, there’s an easy option if don’t mind paying a premium. What is that premium? Usually a few basis points on top of the underlying assets. Around 0.5% which isn’t bad, but it’s something to consider. Larry Bates, author of “Beat the Bank”, has a great graph calculator to show you the impact of fees on his website.  By the way, Uber-eats is way more expensive than that, but we’ll save that for later. Is that premium worth it?

What are you getting?

You’re going to get a beautiful online platform that shows you your growth potential over time, naturally in a graph. Who doesn’t like an exponential growth graph? Hah, exponential, wishful thinking… They also make it very easy to link to your existing bank accounts, automate transfers and, well let’s admit it, basically do nothing. That simply is their benefit, if you can manage your compulsion to check your Facebook feed for 10 minutes you can get an account opened up. They’re going to ask you a few typical questions that will profile your risk tolerance and your time horizon for investment. But you can tweak these a bit if you don’t like their portfolio assessment for you. Ultimately you will end up with a simple low fee ETF portfolio that gets rebalanced regularly and tracks the index nicely. That in its essence is the ‘robo‘ part. At the end of the day, it’s less work than deciding what toppings to get on your pizza.

So, are they for you?

Well, that depends, of course, personal finance is, duh personal. We really like that when we’re in a position to start regular contributions to a stock market investment vehicle (see there’s always a garage reference eventually!) Robo-advisors are a pretty easy and convenient way to do it. Automate your transfer and check your account, almost never. There are loads of ways to DIY your investment strategies, but for those that enjoy a little more cruise control while still being ‘in the market,’ it’s probably worth a little bit of research. Just don’t be disappointed if it’s not C3PO that answers your customer service call.

Are you using a Robo-Advisor? Which one is the best?

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About the Author: Money Mechanic

The Money Mechanic is a 40 something 50% of his way to FI. Active in the FI/RE community. He is passionate about personal finance and educating others and sharing the tools you need on the path to Financial Independence in Canada.


  1. Great overview MM!

    We don’t use a robo-advisor, but I set up my in-laws with Nest Wealth and they’ve been very happy. The staff are friendly and helpful, which my MIL appreciates since she’s still very new to index investing.

    Nest is also the lowest-cost robo in Canada, especially for those with larger portfolios.

    1. My quick check shows that for portfolios of less than $48,000, from $75,000 to $96,000, or from $150,000 to $192,000 there are lower cost options (0.5 percent from Wealthsimple, for example). But for those with portfolios of over $192,000, I believe Nest Wealth is the lowest fee option. I am not aware of any promotions Nest Wealth might offer from their basic fee but that would certainly impact my quick calculations

  2. I don’t use a robo-advisor, but I think they are great for people who don’t want to rebalance themselves. There are new ETFs out there like VGRO from Vanguard that help you rebalance making robo-advisors run for their money, IMO 🙂

    1. I agree, even though I’m using a selection of index etf’s with Questrade, I’m also holding VGRO. Which, not surprisingly, is outperforming them and my wealthsimple account! Rebalancing and no transaction fees to DCA and contribute monthly is key for Robo’s too. However, I’m on a 1 year no fee promo, I don’t think I’ll keep my money there once I have to pay the .5% fee.

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