By the numbers: Robo-investing turns 5 in Canada
Robo-investing in Canada has just turned five. As one of Canada’s first robo-advisers, we wanted to take this opportunity to shine a light on the industry’s growth and how we’re helping Canadians build their wealth.
“Since day one, our single goal has been to ensure that every Canadian has equal access to low-cost, low-effort ways to grow their wealth,” says Tea Nicola, CEO of WealthBar says. “Five years later, we can see that Canadians of all ages and income levels are embracing these tools.”
So is robo-investing really catching on? Are Canadians who invest with robos any better off than those who don’t? Is online investing just for millennials?
We’ve answered all these questions and more, below.
By the numbers:
A nearly $6-billion industry and growing
The robo-investing industry in Canada had $5.9-billion combined assets under management as of the end of Q2 2019, according to Strategic Insight.
While the industry has seen explosive growth in the last five years, many analysts argue it’s still in its infancy in Canada and poised to continue to attract a greater share of the consumer market in years ahead.
A testament to that growth, WealthBar grew its client base by 100% in 2018.
Canadians who invest with robo-advisers are wealthier
Canadians who invest with WealthBar are better off financially.
WealthBar offers diversified portfolios that can help insulate investors from the market’s ups and downs.
- If a client invested $100,000 in WealthBar’s Growth ETF portfolio on August 20, 2014, that account would have been worth $139,041 as of August 20, 2019. The portfolio delivered a 6.82% annual return over that period.
- In comparison, the S&P / TSX Composite Index saw an annual return of 4.13% over that period, according to Morningstar data.
- Meanwhile, 90% of actively managed mutual funds in Canadian Equity underperformed the same index over the past five years (as of the end of 2018).
- WealthBar investors also pay lower fees, with management fees starting at starting at just 0.6%. The average cost of investing with mutual funds is 1.93% (according to Strategic Insight, June 2019). On a $20,000 investment, that works out to $216 in annual savings.
Not just for millennial investors
Robo-advisers were once billed as an investing solution for millennials, but the chart below shows that investors of all ages are embracing these tools to grow their wealth.
People over 45 are investing with WealthBar and are building significant assets through their investments:
|Investable assets, WealthBar clients|
|Age||WealthBar client||Canadians||WealthBar clients are X% richer|
(How did we get these numbers? WealthBar numbers were derived using the average total investable assets as reported through client account applications. For Canadians’ investable assets, we took numbers from Statistics Canada.)
Across Canada, millennial money makes up only about 27% of the total assets under management with all robo-investing services. People 35 and over control 73% of the total money invested, according to data provided by Strategic Insight. Here’s the breakdown (figures are represented in millions of dollars.):
|Assets under management, industry totals|
|Age||Total Combined Assets Under Management (in Millions)||Percentage of Assets Under Management|
Not just robots
Finally, the term “robo-adviser” has proven to be a bit of a misnomer. While the services may be delivered online, WealthBar clients benefit from unlimited personal financial advice from a team of Certified Financial Planner professionals.
So where does the “robo” come in? Robo-investing firms leverage technology to create a leaner, more efficient business, while also improving the client’s experience.
We can’t wait to see what the next five years have in store.
Cheers to a wealthier future.
¹ This is a hypothetical illustration of performance as of August 19, 2019 based on the current model portfolio’s holdings and weights, being rebalanced daily and denominated in Canadian dollars. All returns are time weighted and include the underlying funds’ management expense ratio (MER); however, do not include WealthBar’s management fee or taxes.
This blog post may make financial planning assumptions such as rate of return, inflation, and/or tax rates to illustrate a concept. It is provided for informational purposes only and is not to be considered as investment advice. Investment returns are not guaranteed. The value of your investment may go down as well as up. There may be significant differences between the investments that are not discussed here, including different investment objectives and risk factors. To see our additional explanation on the information presented, please click here.