Author Topic: Canadian equivalent of Betterment?  (Read 21432 times)

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Canadian equivalent of Betterment?
« on: March 02, 2015, 08:20:52 PM »
I was reading the revised article on Betterment, and I was wondering if there was an equivalent type company in Canada?  I'm considering moving RRSP, TFSA and savings and looking for options from currently FA.  I appreciate any direction and guidance provided.

cbgg

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Re: Canadian equivalent of Betterment?
« Reply #1 on: March 02, 2015, 08:28:46 PM »
I'm pretty sure there isn't anything at this time that's a good direct equivalent.  Which aspects of Betterment are most appealing to you?  That way maybe someone can make recommendations for things that most closely match your priorities?

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Re: Canadian equivalent of Betterment?
« Reply #2 on: March 02, 2015, 08:43:40 PM »
I was reading the updated Lending Club article about Betterment, so I was wondering if there was something comparable in terms of low rates, the Life Strategy feature and rebalancing of the portfolio.

cbgg

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Re: Canadian equivalent of Betterment?
« Reply #3 on: March 02, 2015, 08:48:41 PM »
It's definitely doesn't' have all the features of Betterment, but the Tangerine investments funds are the best thing I can find in Canada for a low(er) cost fund where you don't have to do any re-balancing on your own. 

RichMoose

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Re: Canadian equivalent of Betterment?
« Reply #4 on: March 02, 2015, 09:38:03 PM »
It's definitely doesn't' have all the features of Betterment, but the Tangerine investments funds are the best thing I can find in Canada for a low(er) cost fund where you don't have to do any re-balancing on your own.

Maybe, but you can't compare the two. Tangerine costs you an extra 0.90% - 0.95% for rebalancing. Betterment costs just 0.15 - 0.35% for complete automated portfolio managed which includes tax loss / gain harvesting and other benefits.

The simplest, bestest Canadian option by far is the 3-ETF Couch Potato portfolio. VAB (bonds), VCN (Canada), VXC (Everything else). To get a bit fancier, and bit cheaper, split VXC into VFV (US) and VDU (Developed ex-North America).

cbgg

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Re: Canadian equivalent of Betterment?
« Reply #5 on: March 02, 2015, 09:50:14 PM »
It's definitely doesn't' have all the features of Betterment, but the Tangerine investments funds are the best thing I can find in Canada for a low(er) cost fund where you don't have to do any re-balancing on your own.

Maybe, but you can't compare the two. Tangerine costs you an extra 0.90% - 0.95% for rebalancing. Betterment costs just 0.15 - 0.35% for complete automated portfolio managed which includes tax loss / gain harvesting and other benefits.

The simplest, bestest Canadian option by far is the 3-ETF Couch Potato portfolio. VAB (bonds), VCN (Canada), VXC (Everything else). To get a bit fancier, and bit cheaper, split VXC into VFV (US) and VDU (Developed ex-North America).

Well, yeah, I think I stated pretty clearly that you couldn't compare…but the suggestion that you gave also isn't a good comparison to Betterment either. 

RichMoose

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Re: Canadian equivalent of Betterment?
« Reply #6 on: March 02, 2015, 09:59:26 PM »
Well, yeah, I think I stated pretty clearly that you couldn't compare…but the suggestion that you gave also isn't a good comparison to Betterment either.

Exactly :) My suggestion was more directed to OP when he ended his first post asking for any direction and guidance, but I should have clarified that. My apologies. My suggestion doesn't compare with Betterment either, unless you're willing to do a lot of extra work and have a good understanding of the Canadian tax system regarding capital gains and dividends in investment accounts.
« Last Edit: March 02, 2015, 10:04:45 PM by Tuxedo »

beee

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Re: Canadian equivalent of Betterment?
« Reply #7 on: March 03, 2015, 09:48:09 PM »

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Re: Canadian equivalent of Betterment?
« Reply #8 on: May 28, 2015, 09:04:33 PM »
Thanks for the all of the input.  I will check out the suggestions in preparation for meeting with a fee only advisor in a couple of weeks, before meeting with our long time advisor. 

fb132

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Re: Canadian equivalent of Betterment?
« Reply #9 on: May 28, 2015, 09:07:13 PM »
In Canada, everything is more expensive compared to the US :(

Heckler

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Re: Canadian equivalent of Betterment?
« Reply #10 on: May 28, 2015, 11:16:03 PM »
In Canada, everything is more expensive compared to the US :(

At least we have our health.

fb132

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Re: Canadian equivalent of Betterment?
« Reply #11 on: May 29, 2015, 05:42:24 AM »
In Canada, everything is more expensive compared to the US :(

At least we have our health.
Yea, the only thing we have although we pay alot, it is still a service I prefer to have, but for the rest, it's expensive especially food.

powersuitrecall

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Re: Canadian equivalent of Betterment?
« Reply #12 on: May 29, 2015, 07:26:05 AM »
Google Robo Investing Canada :)

There are a smattering of new robo investing companies that have arrived on the scene since the fall of 2014 ... unfortunately there won't be a lot of unbiased reviews out there because it's really in it's infancy here.

I looked into it briefly, but concluded for the extra ~0.5% drag there really isn't much advantage for me right now.  My current plan is simple CCP all the way to FI.

Here are some from a quick search though:

NestWealth
WealthBar
WealthSimple
SteadyHand
Tangerine
Questrade PortolioIQ
ShareOwner


Good luck!

powersuitrecall

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Re: Canadian equivalent of Betterment?
« Reply #13 on: May 29, 2015, 10:56:02 AM »
Thanks for the all of the input.  I will check out the suggestions in preparation for meeting with a fee only advisor in a couple of weeks, before meeting with our long time advisor.

Another service that may interest you is CCP's "DIY Investor Service".  They don't appear to be taking on any new clients until later this year, however:  http://canadiancouchpotato.com/diy-investor-service/

fb132

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Re: Canadian equivalent of Betterment?
« Reply #14 on: May 29, 2015, 10:57:50 AM »
Thanks for the all of the input.  I will check out the suggestions in preparation for meeting with a fee only advisor in a couple of weeks, before meeting with our long time advisor.

Another service that may interest you is CCP's "DIY Investor Service".  They don't appear to be taking on any new clients until later this year, however:  http://canadiancouchpotato.com/diy-investor-service/
the fees are quite high (4500$) when you could do them yourself.
« Last Edit: May 29, 2015, 11:57:11 AM by fb132 »

RichMoose

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Re: Canadian equivalent of Betterment?
« Reply #15 on: May 29, 2015, 11:36:36 AM »
Google Robo Investing Canada :)

There are a smattering of new robo investing companies that have arrived on the scene since the fall of 2014 ... unfortunately there won't be a lot of unbiased reviews out there because it's really in it's infancy here.

I looked into it briefly, but concluded for the extra ~0.5% drag there really isn't much advantage for me right now.  My current plan is simple CCP all the way to FI.

Here are some from a quick search though:

NestWealth
WealthBar
WealthSimple
SteadyHand
Tangerine
Questrade PortolioIQ
ShareOwner


Good luck!

Thanks for sharing! Taking a look I think WealthSimple is the only service that truly matches what Betterment offers. While all of them offer automated re-balancing and automatic investing, WealthSimple is the only one that also does automated tax loss harvesting. For larger portfolios that have extended investment beyond the TFSA and RRSP, tax loss harvesting will probably more than make up the 0.4% fee.
« Last Edit: May 29, 2015, 11:38:35 AM by Tuxedo »

yyc-phil

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Re: Canadian equivalent of Betterment?
« Reply #16 on: May 29, 2015, 11:39:30 AM »
In Canada, everything is more expensive compared to the US :(

At least we have our health.

...and a much cheaper higher education system, at least compared to the USA.

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Re: Canadian equivalent of Betterment?
« Reply #17 on: June 13, 2015, 09:04:51 PM »
We see the fee only planner this week, so looking forward to having someone preparing an unbiased review of our portfolio and makingrecommendations based on our life situation, assets and needs for the future.

tomdrake

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Re: Canadian equivalent of Betterment?
« Reply #18 on: March 06, 2019, 03:37:20 PM »
Just wanted to update this as I came across it while looking for info on Betterment.

The robo-advisor space is much more established in Canada now, with Wealthsimple even expanding into the US and UK. It's still those same fees of roughly 0.5% that I'd like to see chopped in half to match the US rates of robos like Betterment and Wealthfront.

Current robo-advisors include (from https://maplemoney.com/best-robo-advisors-canada/)
Wealthsimple
Nest Wealth
ModernAdvisor
Justwealth
WealthBar
BMO SmartFolio
RBC InvestEase
Questwealth Portfolios
Smart Money Invest
Invisor
Responsive

I saw Tangerine and Steadyhand on the previous list, but they're not really robo-advisors, just great options for low-fee funds!

Telecaster

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Re: Canadian equivalent of Betterment?
« Reply #19 on: March 07, 2019, 12:43:38 PM »
American here, so I can't comment too much on how robo-advisors work in Canada, but in the US they suck.  The reason is that the fees, although small, are large enough that they destroy any additional performance the robo-advisor might give you.

In fact, here it is straight from the horse's mouth:

https://www.wealthfront.com/historical-performance

Wealthfront straight up doesn't beat the benchmark.   But their main pitch is they automatically maximize tax savings.  But in the U.S. anyway, the maximum amount you can deduct is less than the fees they charge, at least for medium-large portfolios.  And in fact, MMM is doing a real-time experiment that shows Betterment is lagging the benchmark:

http://www.mrmoneymustache.com/betterment-vs-vanguard/

I have to eyeball the graph a little bit, but it looks like the Robo-investor underperformed by about $25,000 over the past four years (I'd guess the index is at about $200K and the roboinvester at $175K, give or take).   That's real money.

To be fair, the Robo-advisor claims it has harvested $35,000 in capital losses, which would be roughly $10,000 in tax savings.   Since $10,000 is less than $25,000, you can see right away that it ain't worth it.   

But it is worse than that!  In the U.S. you can only deduct $3,000 in capital losses per year.   Over five years, that's a maximum of $15K in deductions, which translates to maybe $5K in tax savings.  Giving up $25K to get $5K is a bad deal.

But it is even worse than that!  By harvesting the losses now, you have lowered the basis which increases your tax in the future.   Because multiplication is associative, it doesn't matter mathematically if you pay the tax now, or later.  The end result is the same (all things being equal of course).   

Their secondary pitch is that they automatically rebalance so you don't have to.  But studies have shown that monthly re balancing is no better than annual.  Some studies say five year periods is fine.   And in fact, rebalancing based on time periods might not be the best way to think about it anyway:

https://www.kitces.com/blog/best-opportunistic-rebalancing-frequency-time-horizons-vs-tolerance-band-thresholds/

In short, you don't need or want a robo-investor (sorry for the U.S-centric nature of this post).