7 Things You Need To Know About Robo-Advisors Today

By Randy Cass on October 31, 2017

    Posted in: Inside Nest Wealth

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    There’s been a lot of buzz about a new type of Canadian wealth manager that are collectively being referred to as “robo-advisors”. Rob Carrick wrote an article that these digital robo-advisors “make good sense for…. someone who has neither the time nor inclination to learn about do-it-yourself investing and wants advice at a reasonable price.”

    Even so, while these types of solutions have existed for longer in other countries, they are relatively new in Canada. So, to help you get up to speed, we’ve put together some of the most frequently asked questions about digital wealth managers and answered them here.

    What happens when I open an account with a digital advisor?

    The first thing that happens is the advisor has to learn about you. For example, at Nest Wealth, we take note of your goals, assess your risk tolerance, your investment time horizon, and your financial situation. All of this is done online and is used to build an initial customized portfolio to your needs.

    Truthfully we’re a little different than other robo-advisors, in that we don’t have pre-set funds, buckets, or products. We tailor your portfolio to you, so you get exactly what you need.

    Over time, as your life changes, we constantly monitor and adjust your portfolio to meet your new needs. This usually occurs for one of two reasons: either you let us know you want to update your portfolio, or this is identified when we check in on you to make sure your information is up to date.

    Do I get to talk to any humans?

    Absolutely! Whenever you want.

    We’re here for you. Speak to your portfolio manager or customer service lead by emailing us at questions@nestwealth.com, starting a chat conversation, or by calling our offices to speak at your convenience.

    Wait, I get a Portfolio Manager? Is that person qualified?

    Every client gets their own portfolio manager. Here’s a little bit about Randy Cass, a Portfolio Manager at Nest Wealth. Randy has been involved in the financial services industry for almost 15 years. He learned how to manage portfolios as part of the quantitative investments team at the Ontario Teachers Pension Plan, one of the largest pension plans in Canada. Randy has been managing individual and institutional portfolios using quantitative strategies for his entire career.

    Recently, he concluded a three-year term as a director for the Chartered Financial Analyst Society of Toronto, which stands for the highest level of ethics within the industry. Then, from 2012-2014, Randy was the host of Market Sense on BNN, Canada’s most respected business network.

    When it comes to your money, it always comes down to trust. Feeling comfortable with your portfolio manager, the person who will be directly responsible for handling your portfolio, is a fundamental step in building that trust.

    What kind of portfolio will be created for me?

    We design diversified, bespoke portfolios. Nest Wealth portfolios are based on the work of David Swensen, the Yale University endowment fund manager, author of Unconventional Success, and one of the most respected institutional money managers in the world. Swensen, and other great investment minds, suggest having a portfolio that is diversified over different asset classes, not just different stocks. Nest Wealth clients currently hold 7 asset classes, including:

    • Domestic equities
    • U.S. equities
    • Emerging market equities
    • International equities
    • Government fixed income
    • Real-return bonds
    • Real estate

    We buy low-cost blue-chip ETFs that each represent a different class, and each ETF holds many individual stocks or bonds. In short, although our clients only hold seven ETFs, those securities hold thousands of stocks and bonds. See our current low cost ETFs.

    How much does a digital advisor cost?

    This is where things get really interesting. Not only do you get a sophisticated portfolio constructed specifically for you, but at Nest Wealth your wealth management fee starts at $20 a month and is capped at $80 a month, regardless of how much money you put into your portfolio, or how much it grows over time.

    That’s it. Nothing complicated and no percentages, or hidden costs, that take more of your money as you save more.

    The difference between Nest Wealth and all other advisors is that you don’t pay more as you save more – and we think that’s the fairest way to manage money.

    A flat fee makes a huge difference in your ability to accumulate wealth. A Nest Wealth investor can end up with hundreds of thousands more at retirement, just because of the fixed flat monthly fee, versus a typical mutual fund fee which, compounded over time, can take up to 50 percent of your potential wealth. (If you’re interested in seeing what type of plan that would be created for you and how much of a difference that could make, click here.)

    Where is my account actually held?

    Answer: We use a bank (NBCN Inc. under National Bank) to hold your money. We cannot access your capital, and are limited to buying and selling investments for you and withdrawing our monthly fee.

    Once you open your account, you’ll be able to access it both through www.nestwealth.com, and through National Bank’s portal. Your account remains in your name and your assets are held separately from all other Nest Wealth clients. Your account is covered by the Canadian Investor Protection Fund (CIPF), and you can rest easy knowing your assets are protected and held at one of Canada’s oldest financial institutions.

    If anything should happen to Nest Wealth, your account will be unaffected. Your assets are always held separately in an account, in your name, at NBCN Inc.

    So in one sentence or less, what the heck is a robo-advisor?

    Perhaps, the smartest and best way to invest your money.


    Have any questions about what Nest Wealth can do for you? Feel free to contact us at questions@nestwealth.com.

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