Cut The Crap Investing is about to celebrate its 6 month anniversary. I understand it’s called a semi-anniversary. So it’s kind of anniversary, but kind of not. All said, milestone or not, it does make one reflect.
As you may know I left my fulltime ‘job’ last June. It was a job I truly enjoyed; I was an Investment Advisor (and eventually trainer of the advisors) with Tangerine Investments. I had been with Tangerine for over 5 years and I enjoyed every minute. Previous to Tangerine I had worked with the company through their advertising agency, GWP Brand Engineering. An interesting tidbit of going full circle – while I was working almost exclusively on ING Direct US, I was brought in to help when Tangerine launched their low fee index based portfolios in 2008 – initially called the Streetwise Funds. I went from working on the funds prior to their launch to working on the funds as an advisor.
Before moving to Tangerine I was a creative consultant and writer. I had a pretty sweet set up. In fact in the move back to fulltime work at Tangerine I doubled my hours, cut my income in half, and added a commute to my daily routine. Just try getting that one past your spouse. Yes, I really wanted to help Canadians find lower fee investments. That’s a consistent mission for me (and why cuthecrapinvesting.com exists) as Canadians pay the highest mutual fund fees in the developed world. And if you talk to Larry Bates the author of Beat The Bank: The Canadian Guide To Simply Successful Investing, he’ll tell you how those high fees are a wealth destroyer. Larry suggests you move your investments away from the traditional Old Bay Street to The New Bay Street. For the record, Tangerine would be on New Bay Street. They operate in the best interests of the clients. Good rates. Very few fees. A very good investment product. I was very happy to work on New Bay Street.
But I moved to a new venue with that same mission at Cut The Crap Investing. And let’s not talk about income cuts with this latest venture 🙂
In the last 6 months I dove into the other lower fee Digital Wealth Managers. Yes, they are typically called Robo Advisors but that is a misleading term. The Robo’s are all very human and very friendly and there is plenty of human contact (and investment advice) to go around.
Humans when you want them. Digital when you don’t – Wealthsimple
That might be the best of all worlds. Access to wonderful low fee investments and help and advice when you need it, on your terms. At the heart of the matter the Digital Wealth Managers simply use technology to provide online convenience and to help them manage the portfolios in a very cost-effective manner.
And the range of portfolio offerings and advice available spans a truly surprising range. The most plain vanilla and perhaps simple approach is offered by Tangerine Investments. This was the first digital advice platform in Canada, launched in January of 2008 – long before the arrival of the more well-know Robos. We have to give Tangerine props for offering a solution over ten years ago, long before all of the noise about Canadian investors being taken to the cleaners by those high fees. Tangerine offers index-based mutual funds with the MER of 1.07%, there are no transaction costs or administrative fees. They use 4 main indices to create globally diversified portfolios. They come in 4 ‘risk varieties’. They rebalance on a quarterly schedule. Very friendly advice is available Monday to Friday 8 to 8 Eastern time.
Simple. Much cheaper than traditional mutual funds. A very good option for Tangerine clients and those starting out, or those with more modest portfolio amounts.
Here’s my review of Tangerine Investments.
And here’s where Tangerine does get creative. They are the only one to offer a Dividend Based Portfolio. Here’s Canadian Robo Advisors – The Tangerine Big Juicy Dividend Edition. Maybe my yapping about Dividends for a few years had something to do with that one making it to the shelf in 2016, but I don’t know for sure, ha. That portfolio is slow-moving out of the gate, but keep in mind that the MSCI High Dividend Indices have a history of beating ‘the market’ in Canada, US and International. Investment themes can take a while to play out. Certainly, past performance does not guarantee future returns.
From the most uncomplicated option let’s move to perhaps the most sophisticated offering from Justwealth. Here’s Justwealth. The Canadian Robo Advisor That Knows When To Get Personal.
Justwealth uses 42 ETFs from 9 different companies, creating 70 portfolio options. There is more specific and target tailoring of portfolios to clients’ specific needs. There is also more advanced tax planning available. I will give one example. If a client has a large stock or ETF or mutual fund asset that is in a taxable environment, Justwealth will allow you to move that asset in-kind (no need to sell), and will then develop a strategy to allow you to draw down that asset in the most cost-effective manner over time. My biggest discovery from when digging into Justwealth was that your application will land on the desk of the Chief Investment Officer, and Justwealth co-founder, James Gauthier. That advice is included in your Justwealth fees that range from .50% to .40%.
Next up, Canada’s Most Famous Robo Advisor, Wealthsimple. They are very competitive on costs in all of the price ranges from beginner to larger portfolios. Once again, advice and assistance is available. They are a wonderful option. Simple and inexpensive. I really like their innovation in saving products. Stay tuned, there’s much more to come from these guys and gals who do so much to spread the good word about low fee investing.
And perhaps no company does more for low fee investing and investors in Canada than another of the Big Canadian Banks – BMO. They have the hat trick when it comes to low fee investing with their discount brokerage BMO InvestorLine, adviceDirect (self directing with advice platform) and SmarFolio (robo).
Here’s my review of their SmartFolio offering. The unique proposition here is that one has access to their Global Asset Managers (GAM) who will steer the ship with regards to the asset allocation – the weighting of the Canadian, US and International stocks and the bond component. The will actively manage the assets reacting to, or anticipating market conditions. For that access to the extensive global team an investor will pay an additional .20% annual in fees compared to a ‘traditional robo’.
Recently I looked at Nestwealth. Here’s Nestwealth Shows You How Those Low Fees Can Be Life Changing. They are unique in that they offer a monthly subscription model. It starts at $20 per month, it tops out at $80 per month – no matter how large the portfolio. Imagine that, just $960 per month on a half mil, $1,000,000, $2,000,000 or more. The fee savings can be into the thousands to tens of thousands of dollars each year.
On the smaller portfolio size we have a new low fee Champion in Canada thanks to Questwealth formerly Portfolio IQ. Thank you Questrade. The fees are .25% for portfolios below $100,000 and just .20% above $100,000. I took a look at the portfolio value bands for the most cost-effective offerings in Canada, here’s Who Is Now The Most Cost Effective Robo Advisor in Canada? In that post I compare Nestwealth’s subscription model to Questwealth’s two fee bands.
Questwealth portfolios also employ actively managed asset allocation through a sub advisor.
Here’s the WealthBar review, Get treated like you’re rich even when you’re not. Once again a truly unique offering as the company offers access to Nicola Wealth Management Funds. These are private investment funds that are normally reserved for clients with at least $1,000,000 or more. Now, thanks to Wealthbar, they are available for the regular Joe’s and Jane’s in a very low fee environment.
We can see that the Canadian low fee investment world (with advice) is largely covered for most Canadians by these low fee providers that build around those digital platforms. Whether you are starting out or have considerable assets and a more complicated tax and personal situation, you might be able to find a low fee offering that’s right for you.
And of course there a few companies that offer mutual funds and robust advice with very sensible fees, such as Steadyhand.
The key is to keep your fees low. Don’t put your monies in the wrong pockets. Keeping your fees low and investing on a regular schedule can be life changing. You might retire twice as rich, or retire several years earlier. If you want some suggestions on how to change your financial life, please feel free to drop a note to firstname.lastname@example.org
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Thanks for reading.