RBC InvestEase Review: Can a Big Bank Robo-Advisor Stack Up to the Competition?

With the surge in popularity of robo-advisor platforms like Wealthsimple in recent years, it was only a matter of time before Canada’s big banks got in on the action. RBC made its foray into Canada’s robo-advisor scene in 2018 when they launched RBC InvestEase. In this RBC InvestEase review, I’ll explain how it works, including the pricing, and compare RBC InvestEase to Wealthsimple, Canada’s largest robo-advisor.

What Is RBC InvestEase?

RBC InvestEase is a robo-advisor platform, similar to Wealthsimple or QuestWealth Portfolios by Questrade. Investors can open an account online, choose a portfolio based on their investor profile, and automate their investment contributions without the involvement of a human advisor. Of course, if you need assistance or investment advice, an advisor is only a phone call or email away. RBC InvestEase portfolios consist of a series of low-cost exchange-traded funds (ETFs).

Why Choose a Robo-Advisor?

Robo-advisors like InvestEase offer a fully digital investing experience. This is just one reason they are cheaper to own than traditional mutual funds that human advisors sell in a bank branch or over the telephone. I’ll cover RBC InvestEase pricing in more detail below, but lower fees mean better returns in the long run. Robo-advisors also give investors simplicity and convenience by enabling you to invest from the comfort of your living room. Your portfolio is automatically rebalanced, so it really can be a set-it-and-forget-it scenario.

RBC InvestEase Account Types

You can hold three types of accounts with RBC InvestEase: non-registered investment account, Registered Retirement Savings Plan (RRSP), and Tax-Free Savings Account (TFSA).

The RBC InvestEase website (FAQ section) states that “we are working on adding other accounts in the future, like a Locked-In Retirement Account (LIRA), Restricted Locked-in Registered Retirement Savings Plan (RLSP), Registered Retirement Income Fund (RRIF), Registered Education Savings Plan (RESP) and joint accounts.”

These additional account types will be a welcome improvement and place them more in line with other robo-advisors.

Getting Started with RBC InvestEase

RBC InvestEase makes it easy to open an account and get investing. Here’s how the process works, in 3 easy steps:

1. Head to the RBC InvestEase landing page. Select “Open an Account” and follow the prompts. If you’re an existing RBC customer, you can speed up the process by providing InvesEase with your RBC customer information. If not, select “Continue” to proceed.

2. Setup Your Investor Profile. Before you can start investing, InvestEase will guide you through a series of questions so that they can recommend the right ETF portfolio based on your investment time horizon and risk tolerance, among other things.

3. RBC InvestEase will assign you an investment portfolio based on your responses to the questions they ask. You will need to make an initial purchase of at least $100 to start investing.

RBC InvestEase Portfolios

Standard RBC InvestEase portfolios utilize a mix of low-cost RBC iShares ETFs. There are five different portfolio mixes available. Here is a list of the iShares ETFs included in InvestEase portfolios:

• iShares Core Canadian Short-Term Bond Index ETF
• iShares Core Canadian Universe Bond Index ETF
• iShares Global Government Bond Index ETF (CAD-Hedged)
• iShares Core S&P/TSX Capped Composite Index ETF
• iShares Core S&P 500 Index ETF
• iShares Core MSCI EAFE IMI Index ETF
• iShares Core MSCI Emerging Markets IMI Index ETF

RBC InvestEase Small Balance Portfolio

RBC InvestEase can accommodate all portfolio sizes. If your balance is between $100 and $1499, they place the money in a “Small Balance Portfolio.” It’s similar to their Standard and Responsible Portfolios, except it holds fewer ETFs. As soon as your account balance hits $1500, RBC InvestEase will bump you to one of the regular portfolios at no additional cost.

They do this because RBC InvestEase does not purchase fractional shares of ETFs, so it’s more challenging to build a proper portfolio with such a small account balance.

RBC InvestEase Responsible Investing Portfolios

More than ever, investors are considering factors other than financial when it comes to picking investments for their portfolios. They want to put their money into companies that focus on environmental, social, and corporate governance issues) as well as profits. Sustainable companies believe that being socially responsible can be profitable. RBC InvestEase offers ESG portfolios for investors who have an eye towards sustainability. The ESG stands for Environmental, Social, and Governance. The following is the list of iShares ESG ETFs that comprise the InvestEase portfolios.

• iShares ESG Canadian Short Term Bond Index ETF (XSTB)
• iShares ESG Canadian Aggregate Bond Index ETF (XSAB)
• iShares ESG MSCI Canada Index ETF (XESG)
• iShares ESG MSCI USA index ETF (XSUS)
• iShares ESG MSCI EAFE Index ETF (XSEA)
• iShares ESG MSCI Emerging Markets Index ETF (XSEM)

RBC InvestEase Pricing

Most robo-advisors have a two-layered pricing model, where you pay a small MER for the ETFs you hold and an annual fee to the robo-advisor for managing the portfolio. RBC InvestEase is no different.

The account management fee is 0.50% regardless of your account balance. The ETF MER for a standard portfolio ranges between 0.11% and 0.22%. It’s slightly higher for the ESG portfolio (0.18%-0.30%)

Annual Account Management Fee 0.50%

Standard Portfolio MER 0.11% – 0.22%

ESG Portfolio MER 0.18% – 0.30%

RBC InvestEase fees are comparable to other robo-advisors, even if they’re not the lowest on the street. Questwealth, for example, charges a 0.25% annual account fee on balances up to $99,999. But when you compare InvestEase with traditional equity mutual funds, which can charge MERs over 2.00%, the cost savings are enormous. This is what makes robo-advisors like InvestEase so attractive.

Example of RBC InvestEase Fees

Let’s say you hold $25,000 in a Standard RBC InvestEase TFSA portfolio. If the MER is 0.22%, you would pay $180 in annual fees: $25,000 X 0.72% (.50% account fee + .22% ETF MER).

A $200,000 ESG Portfolio with an MER of 0.30% would set you back $1,600 ($200,000 X 0.80% (0.50% account fee + 0.30% MER)

Other RBCInvestEase Fees

If you transfer money to another financial institution from your RBC InvestEase account, you’ll be charged a transfer fee of $135, plus applicable taxes. On the positive side, RBCInvestEase will waive up to $200 in transfer fees incurred when you move at least $1000 into your account from another financial institution.

RBC InvestEase Customer Service

If you need help, you can access an RBC advisor for financial advice or questions of a general nature. Here is the contact info:

RBC InvestEase Hours of Operation: 9:30 AM – 4 PM EST

Telephone: 1-800-769-2531

Email: [email protected]

RBC InvestEase vs. Wealthsimple

Fans of robo-advisor investing may be wondering how RBC InvestEase stacks up to Wealthsimple, Canada’s largest robo-advisor. The short answer would be that Wealthsimple is slightly better overall, mainly because they offer more account registration types and tiered pricing based on the account balance.

With Wealthsimple, you can hold the following accounts: RRSP, TFSA, RRIF, LIRA, RESP, Corporate, and non-registered. RBC InvestEase only permits the following: RRSP, TFSA, and non-registered. When it comes to fees, the standard account management fee is 0.50% for both, but with Wealthsimple, it drops to 0.40% on balances over $100,000. RBC InvestEase doesn’t have a tiered pricing model. MERs between the two companies’ portfolios that it’s inconsequential.

Wealthsimple offers Halal and Socially Responsible Investing options, while RBC has their Responsible portfolios made up of iShares ESG ETFs. There is no minimum account balance with either company, but RBC InvestEase does require a $100 investment to get started – a low threshold.

The bottom line is that if you’re an existing RBC banking customer, the slight advantages offered by Wealthsimple might be enough to convince you to move your money over. If you don’t have any particular RBC loyalty, Wealthsimple is probably your best bet.

RBC InvestEase vs. Questwealth Portfolios

Questwealth is the robo-advisor arm of Canadian discount brokerage, Questrade. Through Questwealth, Questrade can offer automatically rebalanced robo-advisor investment portfolios, unlike the more hands-on approach required with self-directed investing. Like Wealthsimple, Questwealth offers more account types than RBC InvestEase. You can hold the following account types: RRSP, TFSA, Spousal RRSP, RRIF, LIRA, RESP, non-registered, and Corporation.

Questwealth offers another distinct advantage over RBC InvestEase and Wealthsimple – their account management fee is a paltry 0.25%, and 0.20% on balances over $100,000. On the downside, they have an account minimum balance requirement of $1000, compared to $100 at RBC InvestEase.

Investors with larger portfolios will benefit from Questwealth’s low fees and more flexible account options, but RBC InvestEase will likely appeal to new investors starting from scratch.

RBC InvestEase vs. RBC Direct Investing

RBC Direct Investing is Royal Bank’s online brokerage for DIY investors who require full access to the Canadian stock market. If you don’t mind utilizing RBCs investing tools to do your research, then Direct Investing will give you almost unlimited options. You also avoid the management fees of a robo-advisor, although you will pay trading fees when you purchase ETFs through RBC Direct Investing.

RBC InvestEase is not a replacement for Direct Investing, but the two platforms can complement one another very well. For example, you could open an RBC DI TFSA account for active stock trading while automating your retirement savings in an RBC InvestEase RRSP account.

RBC InvestEase Pros and Cons

If you’re shopping for a robo-advisor, there’s a lot to like about RBC InvestEase. At the same time, it lags the competition in a couple of areas. To summarize, here’s a list of pros and cons:

Pros

• Enjoy low-MER ETF investing
• Invest with as little as $100
• Responsible investing (ESG) portfolios are available
• Automatic rebalancing
• Access a human advisor for advice when needed
• Backed by RBC, a major Canadian bank

Cons

• Only three account types: RRSP, TFSA, non-registered
• No tiered account pricing (0.50% flat fee on full balance)

Who Is RBC InvestEase Best Suited For?

To me, the RBC InvestEase account is a great idea for existing Royal Bank or RBC Direct Investing customers. You get access to a low-fee robo-advisor platform without having to move your money to another financial institution, like Wealthsimple or Questrade. Funds can be easily transferred using the RBC online banking platform or the RBC mobile app.

Another ideal customer would be new investors, who might not have the $1000 initial investment required by Questwealth, and won’t be put out by the 0.50% account fee because they’re a long way off from a six-figure account balance.

Of course, fans of responsible investing will appreciate the RBC InvestEase ESG portfolios, and their low management fees.

Final Thoughts on RBC InvestEase

I think it’s great that Canada’s big banks are getting on board with robo-advisor investing. More competition robo-advisors in Canada should eventually translate into lower fees. But low fees aren’t the only consideration. Robo-advisors take the work out of managing your own portfolio. It really is a set-it-and-forget-it solution. As long as you have the mobile app, you can keep track of your investments on the go.

In my view, RBC InvestEase is ideal for RBC clients or new investors with less than $100,000 to invest, or self-directed investors who want to stay hands-off with a portion of their portfolio. If you have more than $100,000, however, you’re better off with Wealthsimple or Questwealth because of the lower fees.