Although it works similarly, BMO Smartfolio is more than a robo advisor. It’s a great investment option for those who look for an array of top-notch ETFs with a varied portfolio to choose from. Here is all you need to know about BMO SmartFolio.
What Is A BMO SmartFolio?
Calling BMO SmartFolio a “robo advisor” might be a tad inaccurate since it doesn’t quite capture what it does. BMO SmartFolio is a digital investment management service that is offered by the Bank of Montreal (BMO). It was launched in January 2016 and it’s the first digital portfolio management service offered by this Big Five bank.
Is BMO SmartFolio The Same As A Robo Advisor?
The short answer is no.
BMO SmartFolio is similar to robo advisors in the fact that it’s an online portfolio management service. It also has lower fees than regular investment funds, however, the key difference is that BMO SmartFolio employs a team of expert managers to make each decision, including five accredited portfolio managers and eight Chartered Financial Analysts (CFA).
This means you get to have an actual human expert advising you. It also helps to be able to talk with them to ask for financial advice, unlike most robo advisors in which the whole investing process is automated. You can talk with your advisor whenever you have a question via call, email or text.
How Does BMO SmartFolio Work?
A BMO Smartfolio account is an investment account managed by BMO. The process works by opening an account (more on that in the following section), completing a questionnaire that identifies your investment needs, goals and risk tolerance and then, this information will be used by the portfolio managers to match you with an appropriate portfolio made up of ETFs (Exchange-Traded Funds).
Upon completion of the questionnaire, you’ll be presented with a model portfolio that should align with your preferences. Finally, a registered representative will evaluate your application to assure that you’re the right match, and that the portfolio suits your investment needs. Once you’re accepted, your funds will be allocated.
How To Open An Account With BMO SmartFolio?
Opening a BMO SmartFolio account is pretty easy. Any Canadian who is the age of majority can open a BMO SmartFolio account. This is what you’ll need:
- Your Social Insurance Number.
- Your work address.
- Your personal bank account information.
- About 15 minutes to spare for the whole process.
Once you have that, the first thing you need to do is fill the questionnaire with the required information. Some of the things you’ll be asked include:
- Account type
- Investment amount
- Risk tolerance
- Some other profile details
Then you’ll be all set. It’s really easy and the questionnaire process is very practical.
Account Types Offered By BMO SmartFolio
Here are the account types that BMO offers its client when they register for an account:
TFSA (Tax-Free Savings Account)
This account is very flexible because it will allow you to grow your investment without worrying about taxes. Suppose you earn $1000 from your investment, then that money will remain exactly the same every year because it’s not taxed. Despite its name it can actually hold more than just money. You can have all types of investment within a TFSA, including GICs, ETFs, stocks, etc.
This account is useful for saving for any length of time. You can save for a vacation or a home, a small or big purchase.
RRSP (Registered Retirement Savings Plan)
This type of account is similar to a TFSA but it’s more focused on long term savings. Contributing to your RRSP has the benefit of lowering your annual tax bill, it also lets you defer paying taxes on the money inside the account. This account is ideal -as its name suggests- so save for long-term goals, especially for retirement.
RESP (Registered Education Savings Account)
RESPs are ideal as a saving tool for your child’s education. An RESP can be eligible for government grants and the investments inside it will grow tax-free until you need to withdraw the funds.
This account helps you save for your child’s education costs including tuition, books, living expenses, among other things.
RRIF (Registered Retirement Income Fund)
The RRIF is a type of account designed specifically for retirees. As soon as you retire you should convert your RRSP to an RRIF. This will allow you to make withdrawals whenever you need to and keep the remaining balance tax-free.
This account is ideal for managing income on your retirement while continuing to invest and grow.
Overview Of BMO Smartfolio
We’ve analyzed all the nitty-gritty details about the different features BMO Smartfolio and scored it on a 10 points scale on 10 different categories. The following table summarizes BMO Smartfolio’s scores.
|Withdrawal and Deposit options||10|
|We recommend BMO SmartFolio if:|
You have clear investment goals for the short and long term.
You prefer having actual portfolio managers and financial advisors taking care of your investing.
We don’t recommend BMO SmartFolio if:
You want a robo advisor that offers socially responsible investing, in which case you should check our post on Wealthsimple
#1 BMO Smartfolio Minimum Deposit
The minimum deposit for BMO SmartFolio is $1,000. If your account has a lower amount, it’s divested using cash. A starting investment of $1,000 is actually quite common for most robo advisors. However, if you’re interested in a robo advisor with no minimum deposit, you may want to check other services such as Wealthsimple.
BMO Smartfolio Minimum Deposit Score: 6/10
#2 Service Fees
Fees on BMO Smartfolio are calculated based on how much you invest. Once that is established, you’ll be paying a percentage of that ranges from 0,70% to 0,40%. These fees are charged to cover the account’s professional portfolio management and constant support of the team of advisors behind it.
Commission trades are free and fees are usually charged per account unless otherwise stated. These are also subject to change, in which case you’ll receive a 60 days’ notice notifying you of such a new or amended fee. Here’s a breakdown of how fees are charged based on the asset value.
|Asset value||Annual Rate|
These are the charges that you may get when making changes to your account. These fees cover the cost of administrative tasks:
|Transfer-out of a Non-Registered or Registered Account (Full and partial)||$135 per account|
|Partial withdrawal of a Registered Account (excluding TFSA and RRIF accounts)||$25 per request|
|Full Deregistration of a Registered Account (excluding TFSA and RRIF accounts)||$100 per account|
|Cheque requests||$10 per request|
|Paper statement requests:||$5 per statement|
However, compared to other robo advisors, like Wealthsimple who charges 0.40% on service fees or Questwealth that charges 0.20% on fees (the lowest for a robo advisor) Smartfolio’s rate seems high. That being said, it is also worth looking into other factors that may also influence your decision to use this robo advisor beyond its fee charges.
BMO SmartfolioService Fees Score: 5/10
#3 MER Fees
The way that the Management Expense Ratios is calculated for all ETFs offered by BMO SmartFolio is that they charge it within the pricing for the ETFs and thus, won’t appear as an expense item on the account statement. The MER of the ETFs is most likely to be the weighted average of 0.20% to 0.35% based on the value of your SmartFolio account.
However, the MER rate that BMO SmartFolio offers is still within the rate of what’s average for a robo advisor. But there are better rates out there, like Nest Wealth’s 0.15% and Wealthsimple’s 0.20% MER fees.
BMO Smartfolio Fees Score: 5/10
#4 Deposit And Withdrawal Options
BMO has several ways to deposit and withdraw your funds. Here are the ways you can fund your account:
- Cheque made payable to BMO Nesbitt Burns with your SmartFolio account number noted on the cheque.
- Bill Payment from a BMO Bank account (in CAD only and the expected transfer time is 1-2 business days).
- Bill Payment from a non-BMO Canadian financial institution (the expected transfer time is 3-5 business days).
- Using cash transfers from another investment account.
If you need to withdraw some of your funds, you should contact a BMO SmartFolio branch and allow 3-5 business days for the sale and settlement of the amount requested. Once that is completed you get the following options to withdraw the funds:
- Electronic Fund Transfer (EFT).
- Wire transfer.
- Transfer out requests.
You get a lot of options when it comes to withdrawals, but remember that the fees for doing so can be quite high.
BMO Smartfolio Deposit & Withdrawal Options Scor: 10/10
#5 Portfolio Options
Depending on your risk tolerance and investment objectives you’ll be matched with one of the following ETF portfolios.
Capital Preservation Portfolio
Ideal for those who have a low-risk tolerance and would like to receive income while looking to invest for the intermediate to long term.
This portfolio provides safety while still generating income through interest, dividends and capital gains with some exposure to investments that have the potential for better returns.
It also minimizes the effects of inflation by investing in exchange-traded funds (ETFs) that invest primarily in Canadian and foreign fixed income securities, and to a lesser extent, Canadian equity securities.
Target Asset Allocation:
– Equities 10%
– Fixed Income 90%
A great option for those who like to bet safe and look to the long term. The objective of this portfolio is to provide some long-term capital growth by investing in ETFs primarily in Canadian and foreign fixed income products. To a lesser extent, it also includes Canadian and foreign equity securities. Its main difference from the Capital Preservation Portfolio is the way its assets are allocated.
Target Asset Allocation:
– Equities 30%
– Fixed Income 70%
Suited for those who have medium risk tolerance. This portfolio includes more market investments. It works for those investing for the intermediate and long term and is also looking for some income and long term growth.
The balanced portfolio looks for a balance between the safety of principals and appreciation. In other words, not losing money but also growing your investments. It seeks to provide long-term capital growth with some income from interest, dividends and capital gains by investing in ETFs that focus primarily on Canadian and foreign equity securities, as well as Canadian and foreign fixed income securities.
Target Asset Allocation:
– Equities 50%
– Fixed Income 50%
Long Term Growth Portfolio
This is more of a high-risk tolerance type of portfolio. Ideally, people who choose this option will be ok with fluctuations in the market value of their investment. Simply put, it’s for those who would like to have some income and are looking to invest in the long term growth.
The objective of this portfolio is to maximize the returns over time by investing in ETFs that invest primarily in Canadian and foreign equity securities and to a lesser extent some exposure to Canadian and foreign fixed income securities.
Target Asset Allocation:
– Equities 70%
– Fixed Income 30%
Equity Growth Portfolio
Suited for those who also have a higher risk tolerance than average and will accept the fluctuations in the market. The equity growth portfolio is designed for people who like to invest primarily in equities and seek long term gains.
The objective of this portfolio is to maximize the returns over the long term by investing primarily in exchange-traded funds (ETFs) that invest in Canadian and foreign equity securities.
Since the need for income (interest, dividends, and capital gains) is low, the Portfolio’s exposure to ETFs that invest in income-producing investments such as Canadian and foreign fixed income will be minimal.
BMO Smartfolio Portfolio Options Score: 5/10
#6 Portfolio Performance
BMO is very straightforward and transparent with the performance of their portfolios. You can check the historical performance of each model in their site or view your own portfolio performance by logging into your account.
With BMO, you enjoy a large selection of highly regarded ETFs that have been recognized and awarded multiple times, including getting top honors in the 2017 Thomson Reuters Lipper Funds Awards. Their ETFs are usually top-notch and found in the model portfolios of robo advisors.
BMO Smartfolio Portfolio Performance Score: 9/10
#7 Human Advice
Because of its human advice, BMO SmartFolio takes pride in being more than a robo advisor. Here is how it works: BMO offers the usability of a normal robo advisor based on your answers to the questionnaire, but what sets BMO SmartFolio apart is that they have professional managers who monitor and adjust the allocations in the funds as they see fit. Additionally, human advisors are also available by live chat, email or phones.
BMO Smartfolio Human Advice Score: 10/10
As of right now, BMO Smartfolio does not have an app but their website is very thorough and is quite easy to use, be it on a computer or mobile device. The layout of the website is also very intuitive and you will find what you’re looking for pretty much at a glance.
BMO Smartfolio Usability Score: 5/10
#9 Customer Service
If you have any inquiries about BMO SmartFolio, here’s how you can contact them:
Email: [email protected]
Phone: 1-844-895-3721 (From Monday to Friday, 8AM to 5:00 ET)
Schedule a call: a BMO Representative will call you
It is safe to say that BMO Smartfolio’s customer service is top notch, and one of the best in the robo advisor industry.
BMO Smartfolio Customer Service Score: 10/10
#10 Referral Program
The BMO SmartFolio Referral Program is pretty great and the premise is simple: If you give your friends your referral code, both you and your friend will get $50 cashback!
Basically you share your code and once your friend opens their account and it is approved and funded, BMO will deposit the $50 cashback into both your and their account on the last business day of the month following a 90-day holding period.
BMO Smartfolio Referral Program Score: 10/10
BMO Smartfolio In A Nutshell
In comparison with other robo advisors, SmartFolio offers some incredibly competitive rates. The added benefit of having actual portfolio managers working to make sure everything goes accordingly is also a huge advantage. Its MER is lower than most robo advisors and the account types offered are ideal for everyone along with their ETFs portfolio that pretty much offer the ideal investment for everyone no matter their risk tolerance.
For those looking for a more automatized robo advisor option that also offers Socially Responsible Investing, Smartfolio may not be the best fit. In this case, we recommend that you check WealthSimple or ModernAdvisor.
However, overall, BMO SmartFolio is a solid choice for a sort of mixed human-robo advisor investment platform with a fairly simple sign-up process.