Nest Wealth is one of Canada’s largest robo-advisors and it offers a wide range of accounts and portfolios for every type of investor, but specially for those who seek lower risk investing. With a fixed monthly fee that goes from $20 to $80, depending on your account size, instead of the standard account percentage fee, Nest Wealth is one of the most cost effective investment platforms available to Canadians today.
Customized portfolios, diversified asset allocation, consistent monitoring, automatic portfolio rebalancing and more, plus real human advisor support will all be at your fingertips and is only 10 minutes away.
In this post you’ll find:
What is Nest Wealth?
Nest Wealth is one of the first robo-advisors in Canada and it counts with two custodians, the NBIN (National Bank Independent Network), which is a subsidiary of the National Bank (one of the largest banks in Canada), and FCC (Fidelity Clearing Canada ULC). This means that when you open an account with Nest Wealth and put funds in it, your funds are held with these two custodians and are insured by CIPF (Canadian Investor Protection Fund), which covers individual accounts for up to $1,000,000.
Another great premise of Nest Wealth is that each account opened is unique and will be treated as such by the advisors who will be offering a custom portfolio built for you using Exchange-Traded Funds or ETFs.
Nest Wealth is ideal for you if…
- You like having low-risk investment options.
- You’re looking for a robo-advisor that is great for bigger investments.
- You like having a human touch in your investment with registered advisors monitoring and helping you.
So, how do you open an account in Nest Wealth?
Nest Wealth takes pride in making itself a robo-advisor with a really simple onboarding process. The whole sign-up process should take no more than 10 minutes.
Step 1 Gather your personal info
Gather your documents including SIN and electronic copies (photos/scan) of your driver’s license and a void cheque.
Step 2: Register
Visit Nest Wealth via this link. Introduce your details and upload the required documents.
Step 3: Wait for your documents to be reviewed
Now, you have to wait for your documents to be reviewed and then, they’ll open an account for you with their custodians who are either NBIN, which, as mentioned before, is a subsidiary of National Bank, or at FCC. This is where your funds will be held. Both custodians charge a flat rate per trade. NBIN charges $9.99 and FCC charges $7.99.
Step 4: Add Funds
Add funds to your account. You’ll finally be able to speak directly with a portfolio manager (online or by phone) to ensure all your questions are answered before your funds are put to work. To fund your account, you can do so in three ways:
- Directly from your bank account
- Make a cash deposit through Bill Pay
- Transfer funds from another brokerage account using a transfer form.
What about fees?
Most people are initially interested in a robo-advisor like Nest Wealth for its lower fees. While most robo-advisors in Canada charge a percentage fee on your account balance, Nest Wealth charges a fixed amount. So, based on your portfolio size, Nest Wealth fees can go from $20 to $80 per month. Fees go from $20 per month on accounts of under $75,000. And $80 per month on accounts over $150,000.
These fees are hundreds of dollars less than what you would pay for a comparable portfolio of mutual funds. If you’re interested in seeing the fee difference, Nest Wealth has a mutual fund fee calculator available right on their homepage.
Personalized wealth management services have been available since long ago, but they were limited to people with huge portfolios, mostly due to the high cost and work involved. With today’s technology in the investment industry, even though a few different features are still available only to larger portfolios (such as tax-efficient asset allocation), all portfolios get a similar set of basic features:
- A portfolio customized to your investment goals, timeline, and circumstances
- Diversified asset allocation within your investment portfolio
- Consistent monitoring of your portfolio
- Automatic Portfolio Rebalancing based on your individual asset allocation
- Support from a registered advisor
- Transparent fee and performance reporting available online
Research suggests that a diversified, risk-balanced, passive all-index fund portfolio, like the one you’ll get with Nest Wealth, is likely to outperform an actively managed mutual fund portfolio. With Nest Wealth, you get the best low-fees and the best performance. What this means to you is that choosing Nest Wealth over a portfolio of mutual funds could help you earn a good coin or help you save for your retirement.
You can get an estimate of your portfolio’s performance by putting your details into the Nest Wealth investment calculator. You will see that by investing 20 minutes of your time, you could get a pretty good rate of return if all those assumptions work out.
However, always keep in mind that, when it comes to investing, there are no guarantees, regardless of whether you use a robo-advisor or not.
Types of Accounts offered by Nest Wealth
RRSP (Registered Retirement Savings Plan)
This account holds savings and investments. One of its greatest perks is its twofold: contributions are tax-deductible. This means you’ll get a tax refund for your contributions, and investments grow inside your RRSP basket tax-free.
TFSA (Tax-Free Savings Account)
Works similarly to the RRSP. This means you can fill your TFSA basket with cash and investments like stocks, bonds, GICs, ETFs, mutual funds, and money market funds.
Think of it as an investment account for your spouse’s retirement. You’ll be contributing with the money and receiving the tax deduction, they’ll make the withdrawals in retirement and pay the resulting income tax.
LIRA (Locked-In Retirement Account)
It is quite similar to the RRSP account, but with a few important differences. With this account, you cannot contribute to it or withdraw money from it. Like its name would suggest, that money is locked-in there until you retire and it is also tax-deductible.
RESP (Registered Education Savings Plan)
Nest Wealth offers a tax-sheltered education savings account that’s meant to help parents save for their children’s post-secondary education. With this account, you can start the RESP when your child is born and contribute until 31 years after the account was opened.
Spousal RRIF (Spousal Registered Retirement Income Fund)
This is a tax-effective tool to help you and your spouse generate income during your retirement. Like a Spousal Registered Retirement Savings Plan (Spousal RRSP), a Spousal RRIF is what your Spousal RRSP turns into once you retire by investing money and providing you with a steady source of income to fuel your lazy retirement days.
Joint Ownership Account
The main two types of Joint Ownership Accounts are: Joint Tenancy and Tenants in Common. Either of these allow two or more people to deposit cash which can then be used to buy stocks, bonds, ETFs, or other investments.
This is an account that specializes in offering services for companies and offshore businesses. What sets it apart from personal and investment bank accounts lies in the fact that it requires a deposit cash which you can then use to buy stocks, bonds, ETFs or other investments.
The Nest Wealth at Work Account
On March 27, 2018, Nest Wealth announced the introduction of “Nest Wealth at Work,” a group RRSP plan for small-to-medium-sized businesses and first of its kind in Canada.
This platform was built from the ground up for busy business owners and it is free for employers. No initiation, administration, setup or monthly fees needed, the whole process to roll it out is simple, fast and online.
Additionally, since the goal of any group saving plan is to better prepare the employees for their retirement, it lets employees save even more wealth because they’ll pay almost 2/3rds less than the average individual Canadian investor.
Portfolios Offered by Nest Wealth
Upon opening an account with Nest Wealth, they will build you a custom portfolio using seven ETFs that represent different asset classes and include international, US, and emerging market equities; government fixed income, real-return bonds, real estate, and cash.
These ETFs are used to build a diversified portfolio that will match the customer’s risk tolerance and investment/return objectives.
Here the 7 ETFs they use to design portfolios:
- Vanguard Canadian Short-term Bond Index ETF (VSB): MER of 0.11%
- BMO Aggregate Bond Index ETF (ZAG): MER 0.09%
- iShares Canadian Real Return Bond Index ETF (XRB): MER 0.39%
- iShares Core S&P/TSX Capped Composite Index ETF (XIC): MER 0.05%
- iShares Core S&P 500 Index ETF (CAD-Hedged) (XSP): MER 0.11%
- iShares MSCI EAFE ETF (IEFA): MER 0.08%
- Vanguard REIT ETF (VNQ): MER 0.12%
Account Benefits and Fees
Besides low-cost ETFs and a diversified portfolio, Nest Wealth offers these benefits:
Professional Financial Advice
Customers get personalized financial advice included in their account. This is pretty neat since it means you get financial advice matched exactly to your financial situation from a dedicated portfolio manager who you can call, text or email.
If the customer’s portfolio asset allocation strays from its preferred targets, it will be automatically rebalanced to ensure it remains in line with their needs.
The customer’s personal information remains secure because Nest Wealth uses bank-level encryption. Funds are kept separately in an account in the customer’s name at FCC or NBIN. Both custodians are members of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF) so basically, assets are protected by the CIPF in the event of insolvency by the custodian for up to $1,000,000 of coverage.
Nest Wealth offers a subscription-based pricing model. This means customers pay a fixed low-fee per month based on their account-size category. Fees are as follows:
- Under $75,000: $20 fee per month ($240 per annum)
- $75,001 to under $150,000: $40 fee per month (or $480 per annum)
- $150,001 and Above: $80 fee per month ($960 per annum)
So, unlike the “percentage of account fee” pricing model utilized by most robo-advisors, Nest Wealth’s pricing does not continue to rise linearly and indefinitely as the portfolio assets increase, which is a huge advantage of its unique model for you as an investor.
Another benefit of most robo-advisors is their low management fees. 2.23% is the average annual management expense ratio (MER) charged by equity mutual funds. However, Nest Wealth, like other robo-advisors, offers portfolio management at much lower fees. Management fees on ETFs held in each portfolio are charged directly by the ETF providers and are an average of about 0.15% (which is low compared to the industry average).
In addition to the standard management fees, when trades are required to rebalance the customer’s portfolio, transaction fees may incur. These could add unwanted expenses and reduce your earnings. However, with Nest Wealth, these transaction fees are capped at a maximum of $100 per year.
Summarizing, here are this robo-advisor’s main pros and cons:
|Lots of choices for low-risk investors||Investment options are lacking for those interested in high-risk portfolios|
|Lower fees||The fee schedule may be expensive for smaller investors|
|Fee schedule ideal for customers with big investments.|
|No minimum investment required|
How does Nest Wealth compare to other Robo-advisors?
The fact that there is no minimum requirement is a great selling point for those getting started in investing. However, the fee system isn’t very attractive for those with small accounts since it is better structured for customers with larger amounts. Those with smaller investments may prefer a robo who takes an annual percentage, such as Wealthsimple or Justwealth, rather than one that charges a monthly rate.
Another big point for Nest Wealth is the fact that there are so many low-risk options. This is ideal for those who are at a later stage of life or simply prefer low-risk investments. However, those who prefer to have more high-risk options may, perhaps, be better off with another robo-advisor with more portfolio options such as Justwealth, Wealthsimple, or Questwealth Portfolios.
So there you have it, everything you need to know about Nest Wealth. Have you used Nest Wealth or any other robo-advisor before? Are you a low-risk or a higher risk investor? Leave a comment and tell us what you think about it? We’d love to hear from you!