Skip to main content

Chris Nicola, chief technology officer and co-founder of Wealthbar, an online financial adviser firm, poses for a picture in Toronto, Thursday October 16, 2014.

Mark Blinch/The Globe and Mail

Canadians using so-called robo-advisers can now have access to an investing vehicle that's traditionally been the domain of high-net-worth individuals.

Wealthbar Financial Services Inc., a West Coast robo-adviser, has partnered with Nicola Wealth Management Ltd. (NWM), a fee-based advisory firm, in offering investors access to a family of pooled funds.

Pooled funds have widely been used in the institutional world by large pension funds and high-net-worth clients. Investors are able to combine individual investor funds into one large "pool" of capital. By combining assets, investors are able to access lower trading costs, professional money management, and asset classes that otherwise might not be available to the average retail investor.

Story continues below advertisement

Pooled funds tend to have lower administration costs than your typical mutual funds and offer automatic re-balancing and monthly monitoring. Any capital gains and losses are also split among the 'pooled' group of participants.

The majority of robo-advisers in Canada offer clients online access to a variety of exchange-traded fund portfolios. "The idea is to be able to round out a client's portfolio in the areas where ETFs are not going to be able to represent," says John Nicola, chairman and CEO of NWM. "Our pooled funds can help fill in gaps such as hard asset real estate, mortgages and private equity, areas that we believe investors need in their portfolios."

Wealthbar is among a handful of Canadian players who have entered the robo-adviser marketplace within the past year. These online investment managers are growing in popularity among Canadian investors with offerings that come at a much lower price tag than most financial advisers. Management fees for a robo-adviser platform can range from 0.25 per cent to 0.60 per cent.

Through robo-advisers, investors are able to access an online risk-assessment tool that will determine an appropriate asset allocation based on age, financial goals and risk tolerance. Individuals are then provided with a customized portfolio that is automatically rebalanced for the client. While the term "robo" suggests a technology-driven platform, the investor is assigned a 'human' adviser to discuss investment needs.

Investors will have direct access to NWM's 15 private investment pool funds. (NWM is a 20 per cent shareholder in Wealthbar). The pooled funds hold a variety of investment options. For example, the NWM Real Estate Pool invests in publicly traded Canadian, U.S. and global REITs. In addition, it holds the Manulife Canadian Property Portfolio, London Life Real Estate Fund, Spire LP and MEPT LP (a U.S. real estate limited partnership managed by Bentall Kennedy).

Fees for the pooled funds are slightly higher than an ETF but still below what a F-class mutual fund would cost, says Nicola. (F-class funds are funds sold through a fee-based adviser and do not include a trailer commission. Generally these are between 1.0-1.5 per cent). For example, the NWM Core Portfolio would charge a fee of approximately 1.0 per cent including underlying fees.

Lower fees are part of the allure of a robo-adviser, regardless of the product.

Story continues below advertisement

"Ultimately it is about the investor getting access to the best product at the best price point," says Som Seif, president and CEO of Purpose Investments Inc. which offers ETFs and F-class funds with identical fees. "It shouldn't matter if it comes in the form of an ETF, a pooled fund, or mutual fund."

For investors it also comes down to what they are comfortable with and what they know, says Tea Nicola, co-founder and CEO of Wealthbar. "Right now there is a lot of information out there on ETFs but we want to educate the public about pooled funds as well. We want to bring that high net worth style of portfolio management to the mass market."

Report an error Editorial code of conduct
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter