Justwealth is one of Canada’s leading Robo Advisors. And once again, that ‘Robo’ moniker might be more than misleading when it comes to Justwealth and all of the robo’s. There is advice and guidance and help available. And certainly, the Canadian Robo Advisors offer various levels of financial advice, services and investment offerings. It’s more than important to ‘know your robo’.
And they are all very human, don’t be scared. You will not be investing alone.
Justwealth might be a leader of the pack with respect to advice and offerings for those with larger portfolios and for those who have investments in taxable accounts. We can all (hopefully) understand the importance of keeping fees low, but taxation is also a silent wealth killer, and it can be a challenge to understand the positive effect of lower taxes and how one can create a lower tax environment. Justwealth has more than a few tax ‘tricks’ or moves up its robo sleeve.
Robo advisors allow you to enrol online in a simple manner, and in quick order. In addition to lower fees and transparency that convenience is a core digital advice and platform advantage. And Justwealth is no exception, the on boarding process is clean and friendly. One can set up their personal profile and can become a client in just a few minutes. At this stage Justwealth will get to know you and will gather your personal information, learn about your investment knowledge, your financial situation and investment goals.
The online investment suitability and risk assessment questionnaire is clean and simple and on that most important gauge of comfort level for risk, Justwealth will take your temperature – twice.
Risk might be described as your comfort level for watching your ‘portfolio go down’. I like this framing. It’s about how you might ‘feel’ when your portfolio declines.
You will then be offered a visual representation of the roller coaster ride that an investment portfolio might deliver.
Investing is a risk/return proposition. While not absolute, we typically and usually are rewarded with greater long-term returns when we accept greater risk or volatility. I like the Justwealth approach to risk assessment. Perhaps I am partial as it’s the same approach I took when I was an advisor on lower fee index-based portfolios.
Based on your answers you will receive your portfolio recommendation. But here’s where Justwealth will take a different path compared to other Robo Advisors. Here’s where they get personal. After you receive your portfolio recommendation you will get a notice that your application is being sent for review. Your profile will usually (almost always) land on the desk of Justwealth’s co-founder and Chief Investment Officer, James Gauthier. Yup, your file goes to the top. James is an investment and banking industry veteran and has managed assets for individuals and investment funds that total over $20 billion. He will evaluate the investment recommendation from a tax-efficiency angle and will look at your complete file from a personal financial planning perspective.
Are your investments in the right place? TFSA vs RSP vs Taxable.
Is your investment in the most tax efficient portfolio?
Justwealth has the most portfolio offerings of any of the Canadian Robo’s. While most digital wealth providers offer about 5-10 portfolios using between 4-10 funds, Justwealth uses 42 ETFs from 9 different companies, all adding up to 70 different portfolio options. The portfolios each address specific needs and are applied on a client-by-client basis. The online algorithm will make a suitable recommendation, but again, the file then lands on the desk of the Chief Investment Officer for final tweaks or overhaul. You will then have a phone conversation or email exchange to complete and confirm the portfolio recommendation(s).
At this point you may transfer in monies from another financial institution, and this is when and where Justwealth can provide an added benefit. You can transfer investments in-kind, and the greatest benefit is presented if you have investments that are in a taxable environment. You would be able to bring over those investments in-kind (as is)and avoid any capital gains hit. From there Justwealth will develop a strategy and timetable to move those monies out of the previous investment in the most tax efficient manner.
If you have a considerable portfolio in a more ‘complicated’ arrangement you may benefit from a full financial plan, offered at no additional costs beyond the standard Justwealth fee structure.
The annual fee based is .50% or .40% if your portfolio assets are greater than $500,000.
From their site, here’s some additional info on fees.
*Justwealth’s management fee covers all trading, custody and annual account fees. All accounts (excluding RESPs) are subject to a minimum fee of $4.99 per month when household investments are less than $25,000. Minimum account size is $5,000. RESP accounts are subject to a minimum fee of $2.50 per month when household investments are less than $25,000 and there is no minimum account size.
Of course there are also fees for the ETFs that make up the portfolios. The Management Expense Ratios (MER) for the ETFs are in the range of .07% – .43%, the average being close to .20%.
Justwealth has a more robust suite of offering and services; best to leave it to this chart to do the talking, or this post will move into the 2,000 word area. That’s a no-no in the blogosphere. 🙂 Some of these features are unique to Justwealth.
To highlight a couple of advantages, the RESP accounts and target dated funds will go hand in hand, reducing the risks as the student approaches the years when the funds will be required.
Justtwealth can manage corporate, joint and ‘in trust for’ accounts. Also, financial advisors can allow Justwealth to manage their clients’ monies, so that they can concentrate on financial planning matters. Employers can also create RRSP Group Plans.
Who is Justwealth for?
Answer: Not for everyone. They are not trying to be all things to all investors. From the picture painted in this post, it’s obvious that those with a more complicated scenario and those with a higher net worth might benefit greatly from Justwealth’s added layers of product offerings and features and planning services.
The benefits can be real and meaningful. The potential value created with tax efficient portfolios and tax planning can be in the range of additional returns of 1% annual or more. That benefit might be realized comparing equal fee structures; if investments are in traditional mutual funds with fees in the area of 2.2% annual, we then need to add on an additional potential benefit in the area of 1.5% or more annual.
Hopefully more Canadians will become aware of the wealth-killing effect of high fees in those mutual funds. Here’s an example based on an initial investment of $100,000. Traditional mutual funds vs Justwealth.
If you’re curious about your potential fee savings or the potential of greater after tax returns you can take advantage of their free portfolio analysis offer.
No strings. No obligation. No charge.
Thanks for reading. If you feel that Justwealth is for you, you can receive a $50 bonus when you open an account through this link.
While I do not accept monies for feature blogs please click here for more about Dale and ‘how I might get paid’ disclosures.
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