BMO SmartFolio Review

Written by Lisa Rennie
Fact-checked by Caitlin Wood

Updated June 18, 2021

BMO SmartFolio Review

Categories

BMO Investing Robo-advisor

The advent of robo-advisors has taken investing by storm, and an increasing number of such platforms is giving investors – both novice and experienced – a much more affordable and convenient way to invest their capital. 

But while there are plenty of robo-advisors out there, BMO is the first out of the five big banks in Canada to offer such a virtual platform for clients and others wishing to grow their wealth without having to pay exorbitant fees that are typical of the average investment broker. 

BMO SmartFolio is an online investment service offered by BMO, and since its inception in 2016, other big banks have followed suit. The right robo-advisor can provide you with professional portfolio management and low fees, and BMO SmartFolio is no exception. 

Let’s take a closer look at this digital investment platform to help you determine if it’s right for you.

How Does BMO SmartFolio Work?

While the term robo-advisor might make it sound like you’re dealing with nothing but robots and algorithms, that’s not necessarily the full picture. Your main interaction with your investments will be virtually, and your portfolio will be managed mostly passively on your part thanks largely to algorithms that help determine if your money is working well for you. But that’s not the full picture. 

With BMO SmartFolio, as with other robo-advisors, your account would actually be managed by a team of human portfolio managers and financial analysts who determine what should be included in your investment portfolio and when adjustments are necessary. More specifically, accounts are managed by BMO Nesbitt Burns and portfolios are created using ETFs mainly from BMO Global Asset Management. ETFs, provide a way to diversify your investment portfolio by providing exposure to various industries and take into consideration market trends and economic data to appropriately position your portfolio. 

Every ETF is carefully analyzed to make sure it makes a good fit for your portfolio. Algorithms are used to weigh the risk and return of the portfolio to help maximize the odds of realizing the greatest return with the level of risk you are comfortable with. 

Before you start investing, you’ll be asked a few questions regarding your financial goals and appetite for risk. The answers you provide will help the portfolio managers come up with an appropriate portfolio that best fits your situation. You can choose to invest a lump sum of money in one shot, or set up recurring contributions over time.  

You’ll be able to chat with an investment advisor at any time when you have questions or concerns. BMO also offers other ways to invest online, such as with its InvestorLine Self-Directed service that allows investors to take the reins on their own to invest, as well as investing with the assistance from expert investment advisors.

Important Features To Consider When Choosing To Work With BMO SmartFolio

BMO SmartFolio comes with a number of features that you may want to check out before you invest with this platform:

Professional Portfolio Management

Your investment portfolio will be built by a team of experts in the field of finance and investing.

Around-The-Clock Portfolio Monitoring

They don’t call this “passive” investing for nothing. Your portfolio will be managed and monitored 24/7 without the need for you to intervene. 

Re-Balancing

If any asset class in your investment portfolio changes too much, the team behind BMO SmartFolio will restore it to the ideal balance. Any changes will steer it back on the right path.

Easy Communication

If you ever have any questions or concerns, you can quickly get in touch with an expert by phone, email, or live chat. 

24/7 Access To Your Account

View your holdings any time, day or night online to see what you’re paying and how much you’re earning. 

Low Cost

Investing with BMO SmartFolio is more affordable than with a traditional investment broker, and no commissions are made by portfolio managers on trades.  

Group Accounts To Reduce Pricing

Accounts can be grouped by household to lower the price. 

Low Minimum Investment Threshold

When you open a BMO SmartFolio account, the minimum investment threshold you’ll need is $1,000.

Various Account Types Offered

These include RRSPs, RESPs, RRIFs, TFSAs, joint accounts, and non-registered accounts. 

Check out the difference between an RRSP and a TFSA here.

Easy User Experience

The BMO SmartFolio platform is clear, crisp, and simple to use and navigate. 

Goal Tracking

The platform’s goal-tracking system is intuitive and lets you track your progress towards your goal instantly.

Is investing on your financial to-do-list?

How Much Does BMO SmartFolio Cost?

Your account fees are calculated as a percentage based on the amount you invest and cover professional portfolio management and round-the-clock support from investment advisors. The following chart outlines the fees you will pay based on the amount you invest:

There are also MER fees that you will be responsible for paying. All ETFs (including those in your BMO SmartFolio portfolio) have management fees that are calculated in addition to advisory fees. The MER is included in the ETFs price, so you won’t see them as an expense item on your statements. You can expect the MER of the ETFs to be around 0.20% to 0.35% of your SmartFolio account’s value. 

ETF Portfolios Available With BMO SmartFolio

You will be matched with one of the following five model ETF portfolios after your investment objectives and risk tolerance have been assessed:

Capital Preservation

• Suitable for those with a low tolerance for risk, want to earn income and want to invest for the intermediate to long-term. 
• Target asset allocation:
  • Equities 10%
  • Fixed income 90%

Income Portfolio

• Suitable for those with a low tolerance for risk, want a regular income and want to invest for the intermediate to long-term.
• Target asset allocation:
  • Equities 30%
  • Fixed income 70%

Balanced Portfolio

• Suitable for those with a medium tolerance for risk, want some income and want to invest for the intermediate to long-term.
• Target asset allocation:
  • Equities 50%
  • Fixed income 50%

Long Term Growth Portfolio

• Suitable for those with a higher tolerance for risk, want some income and want to invest for long-term growth.
• Target asset allocation:
  • Equities 70%
  • Fixed income 30%

Equity Growth Portfolio

• Suitable for those with a higher tolerance for risk, want to invest mainly in equities, and want to invest for the long-term.
• Target asset allocation:
  • Equities 90%
  • Fixed income 10%

How Personalized Are The Investment Portfolios?

When you invest through BMO Smartfolio, you’ll be partnered with a team of financial and investing experts who will devise a highly personalized portfolio based on your exact financial situation, goals, and risk tolerance. The portfolio created will specifically reflect your financial aspirations and will involve an analysis of your current financial situation, a forecast of your future financial situation, and an assessment of your cash flow and net worth. 

This is all done after you answer a few pertinent questions that will give your advisors a clear picture of your current situation and needs. BMO SmartFolio offers many portfolio options, making it possible to choose a specific path that will reflect your precise goals without overstepping your risk tolerance. No matter which avenue you choose to take when you invest, you’ll always be provided with personalized support from certified investment advisors. 

Additional Reading

The Top Budgeting Apps for Canadians 2021

Read Post

BMO InvestorLine Review

Read Post

Why You Need Both Passive and Active Income

Read Post

Account Types Offered

BMO SmartFolio offers a number of account types, providing you with various options to help you achieve your goals:

• Tax-Free Savings Account (TFSA)
• Registered Retirement Savings Plan (RRSP)
• Registered Education Savings Account (RESP)
• Registered Retirement Income Fund (RRIF)
• Joint Investment Accounts
• Non-registered investment account

What Perks Does BMO SmartFolio Have?

There are several benefits to investing your capital with BMO Smartfolio

Reputation

As Canada’s oldest bank, BMO has made a name for itself and is one that can be trusted, especially when it comes to investing your hard-earned capital. 

Refer-A-Friend Program

BMO SmartFolio offers rewards for every family member or friend who signs up for an account using your referral link.

Low Account Minimum

Get started investing with as little as $1,000. 

Competitive Fees

The tiered-fee structure and ability to group family accounts together allows for competitive fees.

Transfer Fees

BMO SmartFolio will cover the cost of transfer fees that your bank may charge to switch.

Sync Your Portfolio With Your Online Banking

Current BMO customers can sync their investment portfolios with their online banking accounts.

Is your computer safe for online banking? Check to see here.

No Withdrawal Fees

You won’t be charged to withdraw your funds.

Who Is BMO SmartFolio Best Suited For?

Investors who are looking to cut back on fees while still benefiting from experienced investment portfolio management will find the BMO SmartFolio platform useful. This particular platform is especially attractive to those who appreciate BMO’s long-standing track record. 

This investment channel is particularly suitable for those who like the idea of having their hands on their investment performance at all times thanks to the user-friendly digital program. Whether you’re a conservative investor or one who is willing to trade in a little risk for higher returns, BMO SmartFolio’s robo advisor can make things extremely convenient without compromising the types of investments you have available to you. 

Overview Of BMO Smartfolio

Should You Use BMO SmartFolio Or Work With a Human Advisor?

Investors have long had the ability to invest their capital with the assistance of a professional financial advisor or investment broker. Yet while this approach allows for direct in-person contact, customized service, and access to investment vehicles, it’s not without its price. In fact, working with a human advisor —while very helpful — is not the most cost-effective approach to investing. 

With robo-advisors like BMO SmartFolio, investors have the chance to significantly reduce their fees to keep more money in their pockets while still taking advantage of professionals behind the scenes managing their portfolios. Plus, the convenience of doing everything virtually is a perk that you won’t get when investing the traditional way. And with BMO SmartFolio, you get the best of both worlds in terms of low fees through an online portal and real-life human advisors managing your portfolio.

Why Should You Invest?

It’s always a good idea to put a little money aside every paycheque to build up a financial nest egg. But it can be very difficult to build a sizable savings account if you’re depending on the low-interest rates that typical savings accounts pay out. Instead, you may want to put that extra capital into an investment account that will grow your money a lot faster, depending on how much risk you can handle.

Investing your money in a high-performing investment vehicle will help your capital grow a lot faster, and when you spread your capital in various ETFs with BMO SmartFolio, you can effectively diversify your investment portfolio without putting all your eggs in one basket. Not only is this a more effective approach to growing your money, but it also significantly reduces your exposure to risk.  

Is investing too much risk for you? Save your money using Canada’s best high interest savings accounts.

Final Thoughts

The combination of a convenient robo-advisor platform and a trusted name like BMO make investing with SmartFolio a great option for investors looking to take their investing completely online. With all the different account options available and portfolio managers keeping tabs on your portfolio, you can grow your wealth a lot faster than your savings account would ever allow. And the much lower fees that you’ll be charged compared to a traditional investment broker is just one more reason to consider investing online with BMO SmartFolio.