The Fintech scene in Canada just got a little bit more interesting. Financial innovation brought on by advancements in technology have opened up new investment options that disrupt traditional institutions; the trend is starting to pick up steam.
Robo-advisers have been steadily growing in popularity with players like Nest Wealth, Wealthsimple, and Wealth Bar relying on computer algorithms to manage investments and reduce costs. New competitors will continue to shift the landscape away from high investment fees and benefit investors.
Ladies and gentlemen, the latest online portfolio manager in Canada: JustWealth.
JustWealth Financial Inc. is a Toronto based company co-founded by Andrew Kirkland and James Gauthier. Kirkland, formerly a VP at Invesco Canada, specializes in client service while Gauthier brings asset management expertise from years with Scotia, TD and RBC.
According to Kirkland, “Trust in the financial services industry is decidedly low, which isn’t all that surprising given all of the conflicts of interest that exist.” The pair believe that transparent, honest advice combined with a focus in portfolio construction will allow them to stand out from their competitors.
All assets are held with Virtual Brokers, a division of BBS Securities Inc. who is a member of the Canadian Investors Protection Fund (CIPF). Investors are covered for up to $1 million for each type of account held.
Low-cost, personalized portfolio management
Justwealth offers 61 different portfolio options built from 29 ETFs from seven providers meant to “grow your wealth, generate income, or preserve your wealth.” Upon sign up, clients work with Personal Portfolio Managers and a support team to access services that include ongoing portfolio rebalancing and optional financial planning. Similar to other robo-advisors, clients can take advantage of advanced strategies such as tax loss harvesting.
Clients who opt for a Registered Education Savings Plan (RESP) account can benefit from specially structured Target Date portfolios. The portfolio’s asset allocation moves away from equity funds over time, and fixed-income funds are introduced as a child moves closer to enrolling for postsecondary education. This can help to reduce market risk.
The fees charged by JustWealth are in line with the competition: 0.50% for accounts under $500,000 and 0.40% for accounts with more than $500,000. Accounts with less than $25,000 are subject to a fee of $10 per month. While fees associated with trading are included in the annual fee, clients are responsible for the MER fees charged by ETF providers. They cost, on average, 0.25%, are automatically deducted and bring the fee up to a blended rate of 0.75%.
The minimum account size is $5,000, with the exception of RESP accounts where no minimum is required. Clients with over $1 million under management are able to build a customized ETF portfolio.
The Last Word
Canadians increasingly shop online, bank online and search for advice online. It’s only a matter of time before the general public take their investing online- if not for the convenience, certainly for the cost.
Are you ready to trust your investments to a robot?