For example, if you invest $10,000, you will pay approximately $50 in management fees in the first year. Among the most popular robo-advisors, they are generally around 0.5%. Management fees vary in relation to the amount of money invested.
There are several types of fees to consider when investing via a robo-advisor. There are, however, some robo-advisor portfolios that are made up of stocks or mutual funds. Their portfolios therefore tend to be comprised primarily of ETFs, which enable you to invest in a large number of financial products at little cost. That is, the portfolio managers working for the robo-advisors are not trying to beat the stock market, but rather to achieve a similar return while minimizing fees. In terms of portfolio types, most Canadian robo-advisors invest in index-based Exchange Traded Funds (ETFs). But unlike a financial advisor, a robo-advisor does not provide human support or personalized advice. With a robo-advisor, the fees will typically be less than 1%. A client of a mutual fund representative can expect to pay a fee of 2% to 3% of their assets each year. In fact, there are real portfolio managers who shoulder this task.Īs mentioned earlier, a good reason to choose a robo-advisor is to save on fees. Rest assured, however, that a robo-advisor’s investment decisions are not made by algorithms. You don’t need any investment knowledge and you’ll get lower management fees compared to a traditional financial advisor. Investing through a robo-advisor has several advantages. Robo-advisors are an increasingly popular way to invest because they offer portfolio management services online that do not require interactions between the client and the portfolio manager.
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