Robo Advisors and Their Impact on the Investment Landscape

For years, Canadian investors and others around the world have relied on traditional practices for gauging market sentiment, placing trades, building financial portfolios. For many of us, it is disheartening to deal with financial gobbledygook such as investment terminology, financial advice, or simply waiting for a consultant to process transactions. That’s where Robo advisors come into the picture. This dynamic, interactive, and AI-based algorithm is smart enough to simplify the most complex trading and investment transactions.

The financial landscape is undergoing tectonic shifts, and Robo advisors are leading the charge. Otherwise known as Robos, these technology-based systems offer feasible financial solutions for quick and easy access to the Canadian markets. Based on the available technology, it is possible to spend just 600 seconds per month to implement and integrate Robo technology into your trading activity. For young folks, Robo advisors offer great value when compared to traditional investment gurus. They are available at a mere fraction of the cost, and they always prioritize their clientele, 24/7.

Humans Don’t Pick Your Stocks

A cursory description of a Robo advisor will not do justice to the high-quality range of services these technological marvels provide. Before describing what Robo advisors are, it’s important to highlight what they are not: They are not automated mechanisms that do not personalize their services to their clients. For starters, Robo advisors are not robots at all.

The only ‘Robo’ aspect of their functionality is that human beings are not tasked with selecting stocks for your portfolio. This is a good thing since it means that bias will be avoided, and only the best performing stocks based on your preferences will be selected. If human beings – financial advisors, investment gurus, financial analyst etc. – were so good at picking stocks and investments, there would be millions of millionaires running around.

Unfortunately, only a handful of folks can lay claim to that prestigious reality. It is far more beneficial to avoid the human element when selecting stocks. But here’s where things get a little more complicated: Robo advisors are not humans, but they are operated by humans. All your interactions through the Robo advisor take place through human engagement channels such as email, telephone, Skype etc. For the most part, it’s unnecessary to have the human interactive component with Robo advisors, but it’s available if you need it.

And since these Robo advisors are not entirely autonomic, cold, and clinical gadgets/devices, there has to be a degree of warmth and human emotion involved in their functioning. Human beings are reluctant to do anything detrimental to their nest egg, and entrusting their hard-earned money to a cold robot is disingenuous. Robo advisors are also strictly regulated in Canada, and they are just as safe and secure as the bricks and mortar investment brokerages and the people who populate them.

The Best Robo Advisors in Canada

It’s always challenging labeling companies with superlatives. However, time-tested techniques for evaluating the quality of a company’s products and services wins out in the end. For example, user reviews, sign-ups, brand presence, and the ubiquity of a company’s market share are telltale signs of its success in the industry. In Canada, one of the premier Robo advisors is Wealthsimple.

 

An in-depth Wealthsimple review by Young and Thrifty confirms precisely what key market participants already know: Robo advisors are the way of the future, available now. This company owns the title of the largest Robo advisor in Canada, and clients can get by with a $0 minimum. Canadian traders can easily register for an investment account with this mobile app, and fractional shares investing is also available. Other features of this Robo advisor include the following:

  • Statements, current balances, details of buy/sell orders, capital gains, deposits/withdrawals etc.
  • Automatic reinvestments of dividend income
  • User-friendly interface and socially responsible investing practices

The company offers exchange traded funds across the spectrum, including Global stocks, Canadian stocks, emerging market economy stocks, clean energy stocks, fixed income exposure through Canadian government bonds and so forth. The cost for a basic account valued up to $100,000 is 0.5%, including all transfer fees, trading costs and account fees. Once the account value increases beyond $100,000, the fee reduces to 0.4% and other benefits are available to traders. Various accounts include corporate, lira, joint, RRIF, personal accounts, RRSP, and TFSA accounts.

David Jackson

David is a personal finance expert, a professional male model, and an entertainment writer.