What is Robo-Advisor?

Example

Major robo-advisors in Canada:

• Wealthsimple Managed: management fee of 0.50% (accounts < $100,000) or 0.40% ($100,000+), on top of the ETF MER (~0.20%)
• Questwealth (Questrade): fee of 0.20% to 0.25%
• BMO SmartFolio: fee of 0.40% to 0.70%

With Wealthsimple Managed, you answer a questionnaire, deposit your money, and everything is managed automatically. Total cost: about 0.70% per year (management fee + ETF MER).

Compare that to a bank advisor recommending mutual funds with 2.00%+ MER.

Why It Matters

A robo-advisor is an excellent middle ground between "doing everything yourself" and "paying a lot for a traditional advisor." If you do not want to choose your ETFs or manage your portfolio, it is a simple and affordable solution. But if you are comfortable with an All-in-One ETF like VGRO.TO, you can save the management fee by investing on your own.