BMO adviceDirect Review: Investing Advice for a Low Fee

The jump from traditional investing using mutual fund + full service advisor model, to all-on-your-own DIY investing using a discount broker can be a big jump for a lot of Canadians. BMO adviceDirect offers a service that is somewhere in the middle of that jump.

Our BMO adviceDirect Review breaks down if whether this unique service is right for you. The idea is to allow investors to get advice directly, but then act on that advice in a way that you see fit – and in a way that cuts out 50%+ of the cost a mutual fund would charge. 

AdviceDirect shouldn’t be confused with the standalone BMO InvestorLine Self-Directed product. To clarify, BMO InvestorLine Self-Directed is a discount brokerage – no direct advice asked for or needed. You can have both an adviceDirect account and a BMO InvestorLine account, but the two have different value propositions and different fee structures.

Nor should adviceDirect be confused with the other standalone BMO SmartFolio product. BMO SmartFolio is BMO’s robo advisor. Essentially, adviceDirect can be seen as the in-between Investor Line Self-Direct and SmartFolio.

What is BMO adviceDirect?

BMO adviceDirect seeks to combine personalized advice and support of licensed investment advisors, with the freedom of using your own DIY investing account to choose your own investments.

It’s a one-of-a-kind service that isn’t a robo advisor and isn’t a simple brokerage platform. If the idea of choosing your own investments appeals to you and you’re leaning toward active investing, adviceDirect might be a great fit. This is especially if you’re concerned about not having enough time to manage your portfolio, or want someone experienced to bounce ideas off of – then you fall squarely within adviceDirect’s target market.

If you’re simply looking to cut costs to the absolute bone and keep life simple with a passively indexed ETF strategy, then it’s probably not worth paying for direct advice from BMO (or anyone else). If, on the other hand, you want to try your hand with active investing, then adviceDirect might be worth the relatively cheap price tag (relative to mutual fund or full-service advisor fees in Canada).

When you sign on with adviceDirect, an advisor will speak with you to make sure that you understand how your investment goals, trading experience, financial situation, risk tolerance, and time horizon, should all play into the investment portfolio that you’re about to create. These advisors will be available to update your strategy every step of the way, should you want their thoughts and advice.

BMO adviceDirect Fees and Overall Cost

Of course, this level of expert advice doesn’t come free.  There are three tiers of pricing for BMO’s direct advice service, but the good news is that included in these fees are your probable trading costs.

It is important to note that these fees listed below are simply the annual fee for the adviceDirect service, and do not include mutual fund or ETF Management Expense Ratio fees (MERs). Our list of the Best ETFs in Canada has MERs ranging from 0.04% to 0.66%, with two outliers at 0.91% and 1.00%. Meanwhile, mutual fund fees, with Canada having some of the highest in the world, can average around 2%!

To fully understand the overall value proposition of adviceDirect, we have to take into consideration the trading costs that are shaved off by using the platform.  Here’s a quick look at the number of “free” trades included at each asset level.

Basically, when it comes to adviceDirect fees, the idea is to take a 0.50% fee – which is similar to the MER that you’d see on a mutual fund – but there has to be a minimum to make it worth it to set up the logistics. When you consider the price that you’d be paying for trades at a discount brokerage anyway, the overall costs are much more manageable.

However, it is worth noting, if you exceed your annual trade limit (trades included yearly seen above), you may have to pay an “Excess Trade Charge” of $7.95 per trade. Also, if your total assets are under $10,000, you will have to pay $7.95 per trade as no trades are included.

What Am I Paying for with adviceDirect?

Here’s what you get wrapped up in the unique DIY+++ package that is adviceDirect.

1) The adviceDirect platform delivers personalized advice, backed by access to an advisor, at roughly between 30-50% of what you would typically pay to a traditional advisor.This portfolio monitoring is 24/7.

2) Free trades on the adviceDirect platform (annual maximum based on account balance).

3) Industry-leading investor education materials. Exclusive access to buy and sell recommendations.

4) Access to third party investment research such as MorningStar and MarketGrader.

5) The use of top-level tools and real-time stock quotes.

6) The option to set automated email notifications when important events occur such as rating changes to assets in your portfolio, or an equity order being filled.

BMO adviceDirect Options

BMO adviceDirect offers a few different options to prospective clients:

• adviceDirect Preview: sample adviceDirect for free; no funding is required
• adviceDirect: the base level account, $10,000 minimum account size
• adviceDirect Premium: in addition to adviceDirect, receive a dedicated advisor and financial planning. This is for clients with a minimum account size of $500,000

BMO adviceDirect Types of Accounts

As you might expect from an offering at one of Canada’s largest and most trusted financial companies, nearly the full suite of account types is open to you when using adviceDirect, including:

• Registered Retirement Savings Plans (RRSPs)
• Spousal RRSPs
• Tax-Free Savings Accounts (TFSAs)
• Non-Registered Accounts (including Individual, Joint, Cash, and Margin)
• Locked-In Retirement Accounts (LIRAs) as well as other Locked-In Accounts (LRSP, RLSP, LRIF, LIF, PRIF, RLIF)
• Registered Education Savings Plan (RESP)
• Retirement Income Account (RRIF)
• Spousal RRIF
• Corporate Accounts and Non-Personal Accounts

We’re just waiting for them to add the First Home Savings Account (FHSA) to the list of options!

BMO adviceDirect vs Objective Financial

How does BMO adviceDirect compare to our top-rated financial advisor, Objective Financial?

First, let us outline what we love so much about Objective Financial:

• To start with, Jason Heath at Objective Financial is one of the most trusted voices in Canadian financial planning, and he has a deeply knowledgeable and specialised team. From accounting to expat and corporate finance to planning for estates, retirement, and senior citizen finances, they have you covered.
  
• Objective Financial doesn’t earn commissions or kickbacks, so their advice is 100% focused on your best interests.
  
• Transparent and straightforward pricing. You explain what you need, and they tell you exactly what it will cost—no hidden fees, no surprises.
  
• No asset-based fees. Unlike many firms that charge a percentage of your investments each year (often referred to as “Assets Under Management” or AUM), Objective charges flat fees, keeping more of your money working for you.

The last points here are the big ones when comparing Objective Financial to BMO adviceDirect. Objective Financial is going to give you a quote for a one-time fee for their service, whereas adviceDirect is going to continue to charge you year after year based on the size of your portfolio! Not only is this going to save you money in the long run, but we love the transparency and level of expertise from Objective Financial.

BMO adviceDirect FAQ

Who is BMO adviceDirect Best For?

As we mentioned at the beginning of our BMO adviceDirect review, this platform isn’t designed for investors looking for a bare-bones brokerage account, nor is it the best fit for passive index investors – those individuals would likely be better off with a low-cost robo-advisor or an all-in-one ETF.

BMO adviceDirect stands out for investors who want the freedom of DIY investing, but also value premium research tools and licensed advice, all without the high costs of traditional wealth management. 

Over the years, their annual fees for smaller accounts (under 1 million dollars) have improved, but large account holders are paying a pretty penny in fees with the removal of the once $3,750 annual cap on accounts over $500,000. This has reduced the overall value for larger account holders.

However, the more you deposit, starting at $10,000, the more free trades you receive, making it a low-risk opportunity to test the platform for a year. Alternatively, you can sign up for adviceDirect Preview for free and explore the platform.

There is also the option to take advantage of the current cash back promotion. Starting with $300 cash back for a deposit of $10,000-$24,999, all the way up to $3,500 for a deposit of over $1,500,00. And, if you’re already a BMO customer, you’ll get an extra $50.

Despite these small perks, a service such as BMO adviceDirect is not our top recommendation. In our opinion, the best financial management firms are those that are advice-only and don’t take an annual percentage of your portfolio, such as Objective Financial.

When choosing an advisor who is fee-only, you will pay a one-time fee, determined ahead of time, rather than a recurring percentage year after year. Paying a one-off fee rather than an annual percentage saves you a huge amount of money in the long run. And isn’t that the point of investing – to grow your money?

While BMO adviceDirect is a good option for a select group of Canadians, if you are looking specifically for a financial advisor, check out our Best Financial Advisors in Canada article. Or, if you’re wanting to take your investments under your own wing, we suggest learning about Canadian Robo Advisors.