A Canadian robo-advisor builds and rebalances an ETF portfolio for about 0.20% to 0.50% a year, plus the ETFs’ own costs: Questwealth charges 0.20% to 0.25%, Wealthsimple 0.4% to 0.5% for most clients, and RBC InvestEase 0.5%. A fee-only planner works on the decisions around the portfolio, such as CPP timing, RRSP and TFSA strategy, and your retirement income, for a median C$1,900 for a one-time plan, C$250 an hour or C$2,300 a year. If investing is the only job you want to hand off, a robo-advisor does it well. If you have decisions to make, you want a planner, and in Canada most fee-only planners are advice-only, so they’ll happily work alongside a robo account.
The US version of this comparison is our guide to robo-advisor vs financial advisor. This one uses Canadian prices and rules.
The short version
| Robo-advisor | Fee-only planner | |
|---|---|---|
| What you get | An ETF portfolio, rebalanced for you | Advice on taxes, pensions, retirement income, insurance and estate |
| What it costs | About 0.20% to 0.50% of assets a year, plus fund MERs | Median C$1,900 once, C$250 an hour or C$2,300 a year |
| Grows with your balance | Yes | No |
| Holds your money | Yes, in accounts it manages | No, if advice-only |
| Registered as | A portfolio manager | Depends on the work; check their credential |
| Best for | Investing you don’t want to do yourself | Decisions that are large or hard to undo |
How Canadian robo-advisors work
In Canada, a robo-advisor is a portfolio manager that works online. CSA Staff Notice 31-342 says there is “no ‘online advice’ exemption” from the normal rules for portfolio managers. You fill in a questionnaire; a registered advising representative is responsible for making sure enough know-your-client information has been gathered and that the model portfolio suits you. Portfolios hold simple products such as ETFs and low-cost funds.
That makes Canadian robo-advisors more hybrid than the label suggests. The BC Securities Commission says you should be able to call and talk to someone at the firm if you want to change your portfolio’s risk or mix. They manage your account with discretion, meaning they trade without asking you each time, and because they’re registered, the Client Focused Reforms apply.
What the person on the phone can help with is usually the portfolio. Ask before you assume they’ll cover CPP, pensions or taxes.
What each costs
On a C$250,000 portfolio, the robo-advisor’s own fee ranges from C$500 to C$1,250 a year at the published rates. The ETFs inside add their own MERs; Justwealth cites an average of about 0.20%, which is another C$500 or so.
The difference is how each one grows. A robo-advisor’s fee rises with your balance; a planner’s doesn’t. At Wealthsimple’s 0.4% rate, the robo fee alone reaches the median C$2,300 for a year of ongoing planning at about C$575,000 (the median divided by 0.4%). Most people don’t need ongoing planning every year, though. A one-time plan every few years costs far less.
Both are much cheaper than the way many Canadians still pay for investing. The Ontario Securities Commission says mutual fund MERs range from less than 1% to more than 3%. Our guide to mutual fund fees in Canada shows what that means in dollars.
What a robo-advisor won’t do
A robo-advisor answers one question: what should my portfolio hold? Most of the expensive mistakes in Canadian finances come from other questions:
- When to start CPP and OAS, each a lifetime choice
- Whether to put new savings in a TFSA, an RRSP or an FHSA first
- How to draw down an RRSP and RRIF without triggering the OAS clawback
- Whether to take a pension’s commuted value
- How much life insurance you need, and what your will should say
The robo questionnaire also only knows what you tell it. The BC Securities Commission notes that recommendations “are only as good as the information you provide about yourself.”
When a robo-advisor is enough
- You’re building savings, with a salary and no pension decision ahead
- You want low cost and no effort, and you won’t fiddle with the portfolio
- You’ve already had a plan done and just need the investing handled
When a fee-only planner is worth it
- A decision in the table above is coming in the next few years
- You have a defined benefit pension, a business, rental property or ties to the US
- You’re within about 10 years of retiring and want to know what you can spend
- You hold bank mutual funds and want a second opinion before moving them
Using both
For many Canadians the best answer is both. Keep the portfolio at a robo-advisor and pay an advice-only planner for a one-time plan at a median C$1,900, or by the hour at C$250, when something changes. Ask the planner to review how the robo account is set up: which accounts hold what, and whether the risk level matches the plan.
Some planners will suggest a self-directed account with an all-in-one ETF instead, which removes the robo fee but leaves the rebalancing to you. Either works if you follow through.
How to check either one
- The robo-advisor: search the firm on the CSA’s National Registration Search. It should be registered as a portfolio manager or restricted portfolio manager in your province.
- The planner: check their credential, such as a CFP, QAFP or PFP, with the body that issued it, and their registration if they’ll recommend specific investments. In Ontario, FSRA regulates who can use the planner title: see financial planner vs financial advisor in Ontario.
Our guide to how to check a financial advisor in Canada covers each step. For prices in more detail, see what fee-only advisors charge in Canada, then browse flat-fee advisors or fee-only advisors in Ontario in the public graph.