What is a Robo Advisor?

As the world becomes more connected, it has changed how we manage our lives and our money. It started with online shopping, then we grew more comfortable with online banking, and some of us have even made the jump to buying stocks online.

However, people who want to invest and grow their net worth (but don’t want to trade stocks on their own) have had to keep with traditional ways of doing so, but now there’s an option known as a robo-advisor.

Robo-advisors use advancements in financial technology to make getting your investments managed for you more affordable, more accessible, and easier.

Robo-advisors existed in the US for several years before coming to Canada. While the name suggests an automated service without human contact, that couldn’t be further from the truth. The technology is used to help simplify the sign up process and improve your access to professional advice and money management. We have a team of portfolio managers and customer service agents who are there to help you as well.

Robo-advisors bring portfolio management online, reduce overhead, and help keep your fees transparent. On top of that they use low-fee investment products, like ETFs to keep the cost of the portfolio low. All these low fees save customers money. Because in investing it's important to remember, you can't predict returns but you can control the fees you pay.

At Questrade, our managed investing service is known as Questwealth Portfolios.

Robo-advisors, and services that make use of similar models, are growing in awareness for a number of reasons:

1. Low/no minimum account sizes: high account minimums are going the way of the dinosaur. By using technology to remove the barriers of opening accounts, robo-advisors are making managed investments available to the masses.
2. Low fees: people invest to build a nest egg or reach a goal. High fees can get in the way of that by reducing the amount you have to invest. An online robo-advisor helps keep costs low, leaving you with more.
3. Respect: your time and money is important. Behind all this technology it’s easy to forget there’s real people managing it all, and you should be able to chat with a portfolio manager one-on-one whenever you want.
4. Adaptive and flexible: as your life and your goals change, you need straight-forward online tools to ensure your investment portfolio changes with you.You can even invest to reflect your values with options such as socially responsible investing portfolios.

Like all other types of investing, working with a robo-advisor starts with you. You fill out a questionnaire that tells us about your goals, your timelines, your risk tolerances and more.

Based on your answers to these questions, a globally diversified portfolio of exchange-traded funds (ETFs) is recommended for your investment goals.

To learn how much you could save with a robo-advisor like Questwealth Portfolios, check out our calculator or read more on our Questwealth Portfolios page.

Note: The information in this blog is for educational purposes only and should not be used or construed as financial or investment advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied, is made by Questrade, Inc., its affiliates or any other person to its accuracy.