Nest Wealth Review: A Robo-Advisor for Larger Portfolios
In recent years, robo-advisors have become increasingly popular in Canada. In many cases, they provide a cost-efficient way for inexperienced investors to get a good start on their portfolios. If you aren’t sure how to get started investing, robo-advisors offer low costs and a simple long-term investing strategy. But what if you already have a fairly sizable nest egg? What if you have a larger portfolio? Can you get the same benefits?
Thanks to Nest Wealth, it’s possible to get a personalized ETF portfolio, even if you’re already well on the road to investing. This relatively new company offers help managing your retirement portfolio for less. This is a big deal because Canada is known for its expensive financial products.
We pay more mutual funds than our neighbors to the south, and fees are out of control. In fact, our fees aren’t just higher than those found in the States. We pay more for investing than anywhere else in the developed world. And it costs us tens of thousands of dollars over our lifetimes.
Being able to lower fees can help you improve your real returns over time — especially since that money is now in your account, earning compounding returns.
Nest Wealth aims to change that. With much lower fees and a cap on monthly fees so you don’t have to worry about being charged even more as your portfolio succeeds, Nest Wealth is providing a new way to invest. This Nest Wealth review will provide you with the information you need to decide if this robo-advisor is the right choice for you and your money.
What is Nest Wealth?
Like many other robo-advisors, Nest Wealth uses concepts of asset allocation under Modern Portfolio Theory to create a personalized portfolio based on your risk tolerance. Exchange-traded funds (ETFs) are used to build your portfolio. ETFs are low-cost and easy to trade. As a result, they are ideal for this type of robo-advisor.
Nest Wealth was started by a man named Randy Cass. He has more than 15 years in the financial services industry. Not only that, but he has managed huge portfolios. He understands what it’s like to manage larger portfolios and make them successful.
Not only that, but he was also a host on BNN, for Market Sense. He has a business background and plenty of credentials. Cass also knows how to assemble a team. The members of the Nest Wealth team include plenty of people from the financial and tech worlds. Plus, the client assets are held by a subsidiary of National Bank, which owns a minority stake in the company. This might put your mind somewhat at ease, knowing that a major player like National Bank is involved — even though National Bank isn’t running the show.
Is Nest Wealth Safe?
First of all, it’s important to realize that no investment is completely safe. There is always the chance that you will lose money, that the stock market will crash, or any number of other things will happen. However, it’s important to note that the company takes steps to make sure it is in compliance with Canadian law, and that your information and accounts are protected.
Nest Wealth client accounts are held at National Bank Correspondent Network, which is a National Bank subsidiary. As a result, your account is protected by the Canadian Investor Protection Fund, up to $1 million, against bankruptcy or insolvency. New Wealth also follows the regulations set forth by the Ontario Securities Commission.
On top of that, Nest Wealth encrypts communications between their servers and your browser, and everything is securely stored. Nest Wealth makes due diligence efforts to protect your data.
Types of Nest Wealth Accounts
You can meet just about any investing goal you have using Nest Wealth. Here are the types of accounts you have access to with this company:
- Spousal RRSP
You can also open a joint account or a trust account. These are non-registered accounts that you can use to help you meet your investment and wealth goals. It’s also possible to open a corporate account with Nest Wealth.
Nest Wealth Fees
One of the big reasons Nest Wealth is so desirable is due to the low fees, especially for larger portfolios. Nest Wealth offers a handy fee calculator that can help you compare what you would pay each month with mutual funds. The reality is that mutual funds are much, much more expensive.
Nest Wealth has a subscription model for its fees. There are three different monthly fees, depending on the size of your portfolio:
- Less than $75,000: $20 per month
- $75,000 – $150,000: $40 per month
- More than $150,000: $80 per month
At first, that seems like a lot, but when you consider that a portfolio of $150,000 would cost $293 each month in management fees with “regular” mutual funds, it doesn’t seem so bad. In fact, it’s a huge savings of $113 each month. What if you were able to keep that in your account, putting it to work for you, instead of paying it out for management?
You can see where that would be a huge bonus.
The main downside to Nest Wealth fees, though, is the fact that they aren’t that great if you have a smaller portfolio. If you are just starting out, and have a portfolio value of $10,000, the $20 per month you’ll pay isn’t as cost-efficient. In fact, MapleMoney readers can have the first $10,000 of their portfolios managed for free with Wealthsimple. If you have a portfolio value of $20,000, you’ll pay Wealthsimple the equivalent of $8.33 per month for management.
Nest Wealth starts being more competitive with other robo-advisor services in Canada, once your portfolio reaches a balance of about $50,000. As your balance grows, Nest Wealth is an even better deal, since the fees are capped at $80 per month. With services that charge an annual rate based on your balance, your fees will continue to rise along with your balance.
Nest Wealth Returns
There’s no way to predict any type of investment returns. Market conditions, economic events, and what you’re invested in all make a difference in the ultimate result. Plus, because Nest Wealth relies on broad-based ETFs, you’re not going to see amazing market-beating returns. Instead, your returns are more likely to keep pace with the market.
However, that’s not a bad thing. Over time, if your portfolio reflects long-term market trends, you should be able to see compound returns that will help you meet your goals.
The ETFs used to compose your personalized portfolio include bond funds, stock funds that include the TSX and the S&P 500, and an all-world fund. Plus, the assets include a U.S. real estate investment trust (REIT) ETF. This allows you to have plenty of diversity in your portfolio, in terms of asset classes and geography.
Nest Wealth will take your risk tolerance information and build you a portfolio based on your goals and risk tolerance. Your returns will vary, depending on the where you’re at in the cycle. As you get closer to your goal (whether it’s retirement or sending your kid to college), the asset allocation will change. Nest Wealth will rebalance, so the returns will change. However, they will still be in line with your goals and your time frame.
Other Perks of Nest Wealth
Nest Wealth offers a lot of perks. First of all, it offers tax-efficient asset allocation and customized portfolio creation. But it doesn’t stop there. You also get a portfolio manager. On top of that, you can receive professional support from a registered advisor. Choose whether you want to communicate via chat, email, or phone. It’s even possible to schedule a call with your dedicated advisor. This is a great way to make sure you understand your portfolio, and why it’s assembled the way it is.
Finally, Nest Wealth offers you transparent fee and performance reporting. The online dashboard is easy to use and intuitive. Its slick design is clean and easy to read. You can see how things are going, and even see what sort of rebalancing is going on. It’s even possible to see the fees you’re paying. Your annual report contains everything you need to know about your investments through Nest Wealth.
Nest Wealth Review: Bottom Line
Nest Wealth is an impressive robo-advisor. It’s clear a lot of thought has gone into developing this product and making it user-friendly and helpful to long-time investors. The personalized portfolio and access to a registered advisor for a relatively low monthly cost are two of the biggest selling points. Plus, it’s nice to see a little real estate (in the form of a REIT ETF) in the mix.
However, Nest Wealth probably isn’t the best choice for investors just starting out. While the customized portfolio is nice, and you can benefit from the advisor, the reality is that the subscription model means that you’ll pay a higher percentage of your balance in fees when you have a small portfolio.
Figure out on your own if this is the right move for you. If you’re just beginning, perhaps start with another robo-advisor, and then switch to Nest Wealth when your portfolio gets bigger.