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CI Direct Investing Review (previously WealthBar): Robo-Advisor with a Personal Twist

CI Direct Investing Review (previously WealthBar): Robo-Advisor with a Personal Twist

If you’re looking for a way to start investing but aren’t sure how to go about it, a robo-advisor might be able to help.

Robo-advisors are increasingly sophisticated and they offer you a way to build your wealth — even if you don’t have a lot of money available right now. On top of that, many of these robo-advisors can help you manage your portfolio using time-tested principles.

Canada is seeing a surge in the number of robo-advisors available, and this is a good thing. It gives Canadians a chance to invest with lower fees and better access to strategies that can help them grow their wealth. One of the latest entries into the arena is CI Direct Investing.

My CI Direct Investing review can help you figure out if this is the right robo-advisor for you.

What is CI Direct Investing?

CI Direct Investing is a robo-advisor that uses low-cost ETFs to build portfolios that match your risk tolerance and long-term goals. Not only can you have someone else manage your portfolio, but you can also access your own actual advisor to help you make some of your decisions.

The co-founders of CI Direct Investing, Tea and Chris Nicola, are a successful husband and wife team with a deeply rooted history in wealth management through their affiliation to Nicola Wealth, a successful private wealth firm with decades of experience and performance to show.

Chris and Tea Nicola aren’t the only people on the CI Direct Investing team, of course. The company includes plenty of CFAs, financial advisors, and portfolio managers. On top of that, there are dedicated developers who keep the interface running smoothly, along with other professionals that make this startup feel more like a seasoned company.

It’s also worth noting that CI Direct Investing is a licensed insurer. If you live in BC or Ontario, you can get life insurance through CI Direct Investing.

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Is CI Direct Investing Safe?

This CI Direct Investing review also addresses the safety of the robo-advisor. Many consumers are rightfully concerned about a newcomer to the space. Will your money be safe? What sorts of protections are put in place for your money?

The good news is that CI Direct Investing has jumped through the regulatory hoops needed to be a registered Portfolio Manager in Alberta, British Columbia, Labrador, Manitoba, New Brunswick, Newfoundland, Nova Scotia, Ontario, PEI, Quebec, and Saskatchewan.

Money invested in CI Direct Investing is protected, up to $1 million CAD, by the Canadian Investor Protection Fund (CIPF). Realize, though, that CI Direct Investing doesn’t actually hold your assets. Instead, they are held by different custodians. CI Direct Investing uses BBS Securities Inc., Credential Securities Inc., Interactive Brokers Canada Inc., and National Bank Correspondent Network.

Now, it’s important to realize that your money isn’t protected from market events or other losses. Instead, your money is insured by the CIPF in the event that CI Direct Investing folds. So if CI Direct Investing goes down, you don’t lose the money you have invested with them. Your money is still subject to investment losses and the realities of markets and economics.

In that way, though, CI Direct Investing is no different than any other broker. You can’t be guaranteed that you won’t lose money through investments made on your behalf through CI Direct Investing. However, at least your money isn’t subject to extra risk.

Because CI Direct Investing uses ETFs, though, you are likely to see performance in line with markets. The fact that you aren’t picking stocks can help you avoid some of the risk that comes with stock investing.

Types of CI Direct Investing Accounts

Pretty much anything you want to do can be accomplished with CI Direct Investing. They offer the following types of accounts:

  • RRSP (including spousal RRSP)
  • RESP
  • TFSA
  • LIRA
  • RRIF (and spousal RRIF)
  • LIF
  • Non-registered accounts
  • Joint non-registered savings account
  • Corporate non-registered account

It’s a nice touch that you can open a corporate non-registered account through CI Direct Investing and manage it for the benefit of your business.

The portfolios CI Direct Investing creates for you are based on your goals and the type of account you have. Your portfolio is comprised of between eight and 10 ETFs and pooled funds.

One thing to be aware of is that CI Direct Investing offers a pooled fund from Nicola Wealth Management, which owns a stake in the company. This isn’t really surprising since Chris Nicola is the son of the Nicola Wealth Management’s founder. However, it does mean that you have access to a pooled fund that is usually only available to the very wealthy (the MER is a little higher than what you see with ETFs, though).

Figure out which accounts make the most sense for you and then you can decide if CI Direct Investing is the right decision for you.

CI Direct Investing Fees

So far, this CI Direct Investing review might look pretty good. Now it’s time to find out how much it’s going to cost you.

Like many robo-advisors, CI Direct Investing comes with different tiers of pricing. First of all, it’s a nice touch that if you have less than $5,000 in your account, the management is free. Also, if you sign up through our link, your first $15,000 is managed for free for one year.

Fees are charged as a percentage of your account balance:

  • Between $5,000 and $149,999 = 0.60% annually
  • Between $150,000 and $499,999 = 0.40% annually
  • If you have $500,000 or more under management you pay 0.35% annually

The fees you pay include transaction costs, financial planning, and administrative costs. Access to your individual advisor is also included in the fee you pay.

However, it’s important to note that your annual management fee doesn’t include the expense ratios and MERs of the ETFs and funds chosen for your portfolio. Those costs run, for the most part, 0.29% to 0.35%, depending on the fund in question. You do need to watch that, though, since CI Direct Investing decides where to invest your money.

The simplicity of the fee structure, though, makes CI Direct Investing (and other robo-advisors) attractive. Plus, the fees are low, especially when compared with some of the other more traditional brokerages out there. After all, transaction fees and other costs can add up quickly. The rise of robo-advisors means that you have the chance to keep more of your own money and see higher real returns.

Finally, if your current broker charges a transfer fee, CI Direct Investing will cover it for you, up to $150. Additionally, there’s a risk-free trial involved with CI Direct Investing. If you try out the service, and decide it’s not for you during the trial period, you can transfer back out of CI Direct Investing without paying a fee.

CI Direct Investing Returns

As mentioned above, there is no way of guaranteeing returns on any investment. All investing returns depend on what you have invested in, as well as market conditions.

One of the advantages of CI Direct Investing, though, is its use of ETFs to build your portfolio. As a result of these broad-based funds, you own a bigger part of the market. That means your returns are likely to be in line with how the market performs overall, rather than being based on the performance of a handful of individual stocks.

Indexing makes it easier for you to capture the gains of the market over time. However, on the other hand, you aren’t likely to see dramatic returns, especially in the short term. Chances are, you won’t beat the market when you invest using CI Direct Investing. That’s not the point of investing, though. Instead, the idea is that you can consistently invest over time, and the returns will compound in a way that helps you reach your long-term goals.

You might see better returns if your risk tolerance calls for a growth portfolio, though. CI Direct Investing has five different portfolio options, based on your risk tolerance, which includes how long until you plan to use your money, and what you might do if your portfolio lost 10% of its value. CI Direct Investing asks a few questions when you sign up to decide whether to put you into one of the following portfolios:

  • Safety
  • Conservative Balanced
  • Balanced
  • Growth
  • Long-Term Growth

The higher your risk tolerance, the likelier you are to be in assets that will give you a higher return.

Socially Responsible Investing

Finally, many Canadians are increasingly interested in socially responsible investing. CI Direct Investing offers a Cleantech fund you can add if you like. It’s a way for you to support environmentally conscious companies as part of your investing strategy.

CI Direct Investing Review: Bottom Line

In the end, CI Direct Investing is a solid entry into the world of robo-advising. You get a decent mix of funds, as well as access to some high-end investment assets that you might not otherwise be allowed to own, thanks to CI Direct Investing’s relationship with Nicola Wealth Management.

The website is well-designed and easy-to-use, and signing up is simple and the process relatively frictionless. On top of that, CI Direct Investing also sells insurance in some provinces, just in case that’s a need for your financial situation or portfolio.

Finally, it’s definitely an advantage that you get individualized financial planning help and an advisor that you can contact via email, or even by phone if you book a call. There are some nice touches with CI Direct Investing that make it stand out a little from the robo-advisor crowd.

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