The rise of machine-enhanced financial advisors – or “Robo-Advisors” – lead to the spawn of many different investment products. Wealthfront is one of the most popular, offering automated investing plans alongside financial advice. The platform calls itself “financial planning, redefined,” but is it right for everyone? Here’s our take on Wealthfront, who it works best for, and the best Wealthfront alternatives for Canadians.
Is Wealthfront available in Canada?
No, currently Wealthfront is NOT available to Canadians. However, Canadians have very similar platforms they can use as an alternative such as Wealthsimple Invest, CI Direct Investing, and Questwealth Portfolios from Questrade – which all made it on our list of Top 10 Best Robo-Adviors in Canada.
What is Wealthfront?
Wealthfront is a completely online investment platform powered by a robo-advisor. With a minimum investment of $500, you can get started using both their investment service, as well as a suite of planning tools. Their guidance programs include homeownership, early retirement, travel goals, college savings, and more.
The self-guided financial planning work comes from the company’s 2019 acquisition of Grove, a financial planning startup which helped users set goals and develop strategies to achieve them. Each path is supported by the platform’s three core options: Invest, Save and Borrow.
How does Wealthfront Investing work?
Once a user opens their account and makes the $500 minimum investment into their account, they are asked a series of questions about how they want to invest. This includes their attitudes towards market risk and when they want to access their money.
From there, a portfolio of exchange-traded funds (ETFs) is presented to align with the risks and target access date. Each investment plan comes from a mix of 11 asset classes including U.S. stocks, foreign stocks, emerging markets, and Treasury inflation-protected securities. In most portfolios, the robo-advisor will only select between six to eight options.
Fees
One of the biggest appeals to Wealthfront is its low account management fees. Regardless of portfolio size, the platform only charges a 0.25% account management fee, which is significantly lower than both human advisors and other robo-advisor platforms.
Wealthfront Alternatives for Canadians
Wealthfront is a US-based company and is not available to Canadians. The best alternatives to Wealthfront for Canadians include Wealthsimple Invest, CI Direct Investing, and Questwealth Portfolios through Questrade. All three platforms are among the Top 10 Best Robo Advisors in Canada.
Recommended by LinkedIn
Wealthsimple Invest
Wealthsimple Invest is one of the best Wealthfront alternatives for Canadians. By transferring your investment of $5,000 or more to Wealthsimple, you can receive reimbursem*nt of the transfer fee by filling out a simple online application.
Wealthsimple Invest provides a free portfolio analysis, including detailed information on portfolio allocation, account fees, and tax efficiency for both Wealthsimple and non-Wealthsimple accounts. Tax-loss recovery is another excellent wealth management feature provided by Wealthsimple. This strategy helps you offset your investment losses and reduces your taxes on investment gains.
The portfolio is built by selecting assets based on your risk tolerance, which makes your diversification level independent of your investment amount. Even a $100 investment can enjoy the same risk trading strategies as a $100,000 investment. Wealthsimple also offers innovative investment portfolios for socially responsible investors who want to keep a positive human rights record or who comply with Islamic law.
CI Direct Investing
CI Direct Investing is another top Wealthfront alternative for Canadians that provides clients with comprehensive financial planning services, allowing investors to access private investments that will enhance their diversification strategies. This platform also provides clients with investment access that is typically afforded to high-end investors.
You can even receive a transfer fee reimbursem*nt of up to $150 when switching from another financial institution with a minimum investment portfolio of $25,000. Enjoy a risk-free trial with no transfer fees.
Tax loss harvesting during market events is a great feature of CI Direct Investing because it provides tax benefits by offsetting gains with losses. Investing in socially responsible investments (SRI) is also available on this platform, including investment options such as Cleantech, which focuses on clean energy innovations.
Questwealth Portfolios
For Canadians seeking a reliable investment platform that is an alternative to Wealthfront, Questwealth Portfolios via Questrade is an excellent choice. If you transfer your assets to Questwealth, they may even reimburse up to $150 per account in transfer fees from your institution.
With management fees ranging from 0.2% to 0.25% based on your investment amount, and Questwealth Portfolio ETFs with MERs ranging from 0.11% to 0.23%, your potential total portfolio fee may only be 0.31%.
In addition, Questwealth Portfolios has features that allow you to harvest tax loss to reduce investment gains taxes when you invest in a taxable account or outside of RRSPs and TFSAs. Actively managed portfolios, monitored by experts and adjusted as necessary, come at no extra cost, and automatic portfolio rebalancing and dividend reinvestment are also included.
This article is the shortened version of an article originally published on Hardbacon.ca by Arthur Dubois under the title "Wealthfront Alternatives for Canadians".
