Robo-advisors have become a staple in the world of investing. Thanks to digital technology, both beginner and seasoned investors can invest using online platforms that take all the complexities of investing out of the equation.
They’re also more affordable than traditional investment brokerages and some offer hybrid investing approaches, using algorithms and human advisors.
Betterment is one such robo-advisor that streamlines the investing process. But is it available in Canada? If not, what other options are available to Canadian investors who are looking for a robo-advisor to streamline their investment approach?
Who Is Betterment?
Betterment is a robo-advisor based out of the US and was one of the first of its kind to emerge. It was founded in 2008 and uses specific algorithms to invest clients’ money using a passive investing strategy and Exchange-Traded Funds (ETFs).
Their goal is to help people easily and conveniently invest. Investing can be a complex endeavour, but Betterment’s online platform helps to simplify otherwise complex investment ideas and build wealth over time.
Betterment combines user-friendly, automated technology with sound investment advice and guidance for industry professionals to help investors – both newbie and experienced – optimize their investment portfolios.
This platform can be used on mobile devices through the Betterment app, which is available for download on iPhone and Android devices.
Betterment’s online investment platform offers investors a number of helpful features to make investing a cinch. These include the following:
- Low minimum balance. Many investment platforms require a sizable investment amount, which leaves out investors with less capital. But with Betterment, you can invest with as little as $10.
- Fully optimized. This robo-advisor works with your exact financial profile to help maximize the potential for your money to grow.
- Personalized service. You can be as hands-on as you want. If you’re experienced in investing, you may opt to take the wheel. Otherwise, more novice investors may appreciate having a more guided investing experience with the help of the team of experts behind the Betterment platform.
- Low cost. Betterment’s transparent pricing platform can help you keep things simple and affordable with one low, annual fee of 0.25%.
- Automatic rebalancing. There’s no need for manual rebalancing. Instead, asset allocation is automatically managed and rebalanced so that they remain at your specified levels.
- Global diversification. Your investment portfolio’s ETFs are diversified among thousands of investment vehicles from across the globe, which helps both maximize your returns and minimize your risk.
- Tax savings. With Betterment, you can take advantage of tax loss harvesting to avoid having to pay more taxes than necessary.
- Socially Responsible Investing. Keep your investment strategy in line with your beliefs and values with Betterment’s Socially Responsible Investing without compromising your investment portfolio’s performance.
- Simplify and consolidate your finances. Easily manage all of your outside accounts in one place.
Is Betterment Available In Canada?
Betterment is currently not available in Canada. It is only available in the US and cannot be accessed by Americans outside of the US for regulatory reasons. Exceptions to this rule include US military personnel who live abroad and have a valid address in the US.
US citizens who live in the US must meet the following criteria to use Betterment:
- Be at least 18 years old
- Have a valid US address
- Have a US checking account
- Have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
Right now, there are no plans for Betterment to start offering services to Canadians any time in the near future. That said, there are other alternatives to this platform available to Canadians.
Better Alternatives To Betterment
If you are not in the US, you won’t be able to use Betterment. However, there are several similar platforms available in Canada, including the following:
Wealthsimple is a robo-advisor available in Canada and is one of the more popular online platforms in the country. It offers an easy-to-use approach to investing and creates customized investment portfolios based on investors’ appetite for risk using several ETFs held across many asset classes.
Everything is automated, including reinvesting, asset rebalancing, and depositing. There’s no need for active management, though there is an option to take advantage of advice from human experts. Wealthsimple’s predominant investing strategy is to build wealth steadily over the long run while diversifying to hedge against risk.
Wealthsimple offers 3 main investment portfolios:
There are also two specialized portfolios:
- Socially responsible investing
As such, this robo-advisor is ideal for Halal investors or those who are just starting out in the world of investing.
CI Direct Investing
CI Direct Investing was recently rebranded from WealthBar and is part of CI Financial, one of the largest investment firms in the country. As such, clients can still access actively managed investment portfolios through CI Financial.
CI Direct Investing offers a unique hybrid investment model that combines passive investing through a robo-advisor with financial advice from experts who are available via telephone or live chat.
In addition to traditional ETF portfolios, CI Direct Investing also offers Private Investment Portfolios that give investors the opportunity to further diversify their portfolios through various asset classes, including real estate, mortgages, private equity, public equity, and bonds. This helps investors boost returns while being protected against unnecessary risks.
Accounts must have a minimum balance of $1,000 for investment.
Questwealth is Questrade’s robo-advisor that operates more like a hybrid automated-active management platform. It utilizes human investment managers who help rebalance portfolios and make decisions about what investment vehicles to buy and sell.
Questwealth’s fees are among the most competitive in the market at 0.25% for the first $99,000, then 0.20% over $100,000.
Investors have 5 model portfolios to choose from based on risk tolerance. There are also a variety of accounts available, including non-registered cash and margin accounts, as well as a full suite of registered accounts, including RRSPs, TFSAs, LIRAs, LIFFs, and RIFFs. Investors can also hold socially responsible portfolios.
Justwealth also makes use of an automated-human advisor approach to investing, like Questwealth. This particular platform is great for investors across the investing spectrum, from novice investors who need some expert guidance to more seasoned investors who are comfortable with a more hands-on and automated approach.
Unlike most robo-advisors, Justwealth offers a whopping 60 market model portfolios within 6 main categories:
- Global growth
- Canadian growth
- Socially responsible
- Educational target dates
Each category has approximately 10 options. There are also about three dozen ETFs used and arranged within different weightings based on a range of investor types.
Overview Of Alternatives To Betterment
The following chart compares each rob-advisor side-by-side to provide an overview of how they stack up against each other:
|Management Fees||Extra Features||Minimum Deposit|
|Betterment||0.25% – 0.40%||-Access to no-fee chequing account & debit card||$0|
|WealthSimple||0.40% – 0.50%||-Customized financial planning services for investments over $100,000||$0|
|CI Direct Investing||0.35% – 0.60%||-Financial advice from human advisors||$1,000|
|Questwealth||0.20% – 0.25%||-Hybrid investment approach||$1,000|
|Justwealth||0.40% – 0.45%; $4.99/year||-60 market model portfolios||$5,000|
Which Of These Robo-Advisors Is Right For You?
Each robo-advisor offers its own set of pros and cons which every investor should consider before choosing one specific platform. Let’s take a closer look at some of the perks and drawbacks of each to help you make the right decision for you.
Wealthsimple’s biggest con is the relatively high fees for all account balances. It’s, therefore, better suited for those who do not have much experience and need more guidance and hands-on investing from human advisors, as well as those who can stomach the higher fees.
CI Direct Investing
CI Direct Investing also charges somewhat steep management fees for smaller accounts compared to other robo-advisors. Plus, at least $1,000 is required to maintain a minimum balance, so this platform is better suited for those who are OK with higher management fees and who have more money to invest with.
You’ll also need at least $1,000 to start investing with Questwealth. But it’s got the lowest fees in the industry, so this platform may be more attractive to those who prefer to keep their fees to a minimum.
Justwealth requires an even higher minimum account balance of $5,000 to start investing. But it also offers dozens of market model portfolios. So if you want more options in this department, Justwealth may be something to consider.
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Which platform is ideal for beginners?
If you’re located in the US, Betterment is a great robo-advisor to check out. But if you’re located in Canada, you’ll need to look at other alternatives, and Wealthsimple, Questwealth, Justwealth, and CI Direct Investing are all viable options.