The Canadian Robo Advisors came on the scene just over 5 years ago. A few of the Robo Advisors will offer that they were Canada’s first Robo Advisor. Typically Wealthsimple and Nest Wealth will argue for that crown. Given that time horizon we can now compare the 5-year performance for a handful of the Robo’s. Five years is meaningful enough, and of course it also includes the pandemic-induced correction of 2020. You’ll discover that it is not the Robo with the lowest fees that is the top-performing Canadian Robo Advisor. It is Justwealth.
But first a bit of housekeeping. The first Canadian Robo Advisor was Tangerine Investments. In 2008, they launched index-based balanced portfolios at various risk levels.
Here’s my review of the Core Tangerine Portfolios.
You access those portfolios by signing up for a Tangerine account, and then by completing an online risk assessment. Investors are then placed in the appropriate portfolio that matches their goals, time horizon and risk tolerance level. You know like the other Robo’s.
In December of 2019 I asked, is Tangerine is a Robo Advisor? The answer came back – no. Perhaps it was a no, because they offered index-based mutual funds and not ETF portfolios? Well they fixed that when they launched the Tangerine Global ETF Portfolios. So, end of that ‘who was first’ debate, ha.
Comparing the Canadian Robo advisors
Here’s the 5-year returns comparison, courtesy of Rob Carrick at the Globe and Mail. These are 5-year average annual returns and they include all fees, the exception being BMO – the ETF fees are included but not the management fees (they are applied on a sliding scale)
The period is to the end of September 2021. A balanced growth model was evaluated.
The 5-year average annual returns
- Justwealth 9.54%
- Nest Wealth 9.28%
- CI Direct Investing 8.96%
- Smart Money Invest 8.88%
- Wealthsimple 8.0%
- Questwealth Portfolios 7.89%
- BMO Smartfolio 7.7%
*Returns would be slightly higher as a 70/30 stock to bond ratio portfolio was used, not the 80/20 model.
The 3-year average annual returns
- Justwealth 10.03%
- Nest Wealth 9.88%
- VirtualWealth 9.5%
- Smart Money Invest 8.55%
- RBC InvestEase 8.29%
- CI Direct Investing 8.18%
- BMO SmartFolio 8.10%
- Wealthsimple 7.85%
- Questwealth 7.81%
Is Justwealth Canada’s best Robo Advisor? I would not argue with you if you made that claim. But the title of ‘best’ would certainly not rest on the total return victory. That could change over time. The best Robo will depend on the full package, including the ease of use of the platform, the advice offered, tax efficiency, the responsiveness when clients need any kind of help, the reporting capabilities and more.
Cut The Crap Investing readers can receive a cash bonus between $50 and $500 when they open an account through this link.
Justwealth ticks those boxes. In fact they are also one of the Robo Advisors that offers financial planning. You will also find planning capabilities at Wealthsimple, Modern Advisor and CI Direct.
Justwealth is also unique in that they offer more ETF portfolio models, many of them designed for tax efficiency. And Justwealth will help you transition transfers (in) if you are sitting on large capital gains. They can accept other funds (and individual securities) and will create a tax-efficient strategy for moving those proceeds to the Justwealth ETF Portfolios, over multiple tax years if necessary.
Here’s a must read – be careful when you transfer funds to a Canadian Robo Advisor.
The smart move for RESP accounts
Justwealth is also the only Robo with dedicated RESP portfolios. The RESP platform adjusts the portfolio risk levels as the student approaches the education start date. They are called target date funds.
Please have a read of the smart way to invest in RESPs, at Justwealth.
When I come across a reader who has a complicated scenario, or has taxable accounts, I will suggest that they give Justwealth a call. I’ve sent family members their way as well. The reports always come back as more than favourable. Even upon the first inquiry they receive a very thoughtful and at times detailed response.
As I have long suggested, many of the Robo’s are not that “Robo” at all.
More Canadians should consider the Robo option, especially the millions upon millions of Canadians who are stuck in poor-performing, high-fee mutual funds.
Here’s the updated performance of the Justwealth portfolio models. And here is
Yes, you want to Beat The Bank.
It’s a no-brainer, what are you waiting for? Contact Justwealth or one of the other Robo’s that catch your eye. They are all very good options. And certainly that returns leaderboard could change or shift over time. The key is to find the Robo Advisor that aligns with your needs and your comfort level.
Drop me a note if you have any questions.
For self-directed investors
If you are comfortable managing your own investments you might consider one of the all-in-one asset allocation ETF options. Have a look at the iShares asset allocation ETFs or the TD One Click ETF portfolios for starters.
On MoneySense here’s the ultimate Canadian Couch Potato Guide. You’ll find the many ways to build or find a sensible low-fee portfolio.
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Consider Justwealth for RESP accounts. That is THE option in Canada.
Make your cash work a lot harder at EQ Bank. RRSP and TFSA account savings rates are at 1.25%. You’ll find some higher rates on certain GICs. They now also offer U.S. dollar accounts.
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