ModernAdvisor Review 2024
ModernAdvisor Review
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Annual Fees
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MER Commissions
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Account Features
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Customer Service
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Ease of Sign Up
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Platform User Experience
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Overall Banking Convenience
ModernAdvisor Review Summary:
As we went to press with this review, we were informed by ModernAdvisor that they are no longer taking clients directly. They are now only accepting clients who are working with a financial planner that have a referral arrangement with them.
Stay tuned for more developments, and make sure to consider this if you’ve decided that you want to try ModernAdvisor. Going through a financial planner will add another layer of fees and/or commissions to the product.
Robo advisor services such as ModernAdvisor, which launched in Canada over a decade ago, offer customers hassle-free financial solutions at a fraction of the cost of traditional mutual funds. These low-fee, automated investment tools are ideal for those who want to set up an account without the hands-on involvement required for a DIY portfolio.
Founded in Vancouver in 2013, ModernAdvisor was acquired by Guardian Capital in 2020. Like many low-fee Canadian robo-advisors, it provides a range of fully automated ETF portfolios, handling everything from asset management to rebalancing.
However, since we first began writing about ModernAdvisor they have dropped some perks and branched out into more mutual-fund-based and actively managed portfolios. While some low-fee ETF-based portfolios do still exist, the company’s current mission isn’t entirely clear.
In this ModernAdvisor review, you’ll discover how easy and affordable it is to get started with a low minimum investment of just $1,000. We’ll also cover the sign up process, the portfolios available, and how it stacks up against our top-rated robo-advisor, Justwealth.
Pros
- Decent selection of ETFs
- Socially responsible investment options
- Reasonable fees (account management and MERs)
- Aesthetically pleasing and easy to use app and web platform
Cons
- Minimum $1,000 balance to begin investing
- Monthly account fees of $2.50-$5.00 per account
- Overly frequent rebalancing
- No promo deals
What is ModernAdvisor?
ModernAdvisor was founded in 2013 by Navid Boostani (the CEO and a Certified Financial Analyst) and Adrian Brouwers. ModernAdvisor focuses on robo-advising, with 2 model portfolios for passive ETF investing, but they have also introduced a hybrid portfolio with passive and active management, as well as an actively managed portfolio. In addition, they also offer ModernAdvisor Pro, a service for professional financial planners.
In our ModernAdvisor review, we’ll take a closer look at what ModernAdvisor has to offer and how it works. We’ll outline the pros and cons of this service and compare it to Justwealth, our choice for the best robo advisor in Canada.
How ModernAdvisor Works
Like most robo-advisors, ModernAdvisor invests your money in a portfolio of exchange traded funds (ETFs) based on your investment goals, timeframe, and level of risk tolerance. ETFs are well-balanced and diversified collections of investments that allow investors to develop a low-cost, low-maintenance portfolio without picking individual stocks.
ModernAdvisor’s “hybrid investing strategy” means that they rebalance your account whenever it strays more than 5% from your stated goals. This is a more active strategy than some other advisors. Many index investors rebalance quarterly, or even just once a year.
Get Started With ModernAdvisor:
- Start by identifying your financial goal and the timeline for your investment.
- Answer a questionnaire that clarifies your risk tolerance.
- The system will recommend a portfolio based on your goal, timeframe, and risk level.
You can edit your level of risk tolerance at any time via the ModernAdvisor site, or you can contact them to change your stated investment goals and timeframe.
- Once you have a recommended portfolio, provide your personal information to set up your account. This includes:
- Your SIN
- Government-issued photo ID
- Screenshot of your online banking or image of a recent bank statement
- A void cheque
- Fund your account. You can open an account with any amount of money, but ModernAdvisor won’t invest it until your balance reaches $1,000.
ModernAdvisor will invest your money in the portfolio of ETFs that best matches your goals and risk level. They’ll check and rebalance the account as needed to make sure that it stays on track to meet your target allocation.
ModernAdvisor Fees
The management fee for the ModernAdvisor Core and Socially Responsible Portfolios is 0.40%, regardless of the account balance.
ETF MERs
In addition to the annual fees, investors pay the MER that is built into the ETFs. ModernAdvisor ETFs fees range from 0.12% to 0.26%, although the total will vary depending on your personal portfolio.
Transfer Fees
While ModernAdvisor doesn’t directly charge you if you choose to transfer your account to another service, their custodian does. Account holders who transfer out of ModernAdvisor can expect to pay $50-$150 depending on which custodian is holding their funds, and whether they are making a partial or full transfer out.
ModernAdvisor Portfolios
ModernAdvisor offers a selection of Core Portfolios, and Socially Responsible Portfolios. Each portfolio is made up of a selection of ETFs, which are chosen based on your personal investment profile. This takes into account your risk level, and for both the Core and Socially Responsible Portfolios, there are 10 different risk categories, for which your ETFs are selected accordingly.
Please note, ModernAdvisor also offers BCV Actively Managed Portfolios, Harmony Portfolios, and High Interest Savings. In this article however, we are focusing on their low cost, passive ETF investing portfolios: the Core and Socially Responsible Portfolios, as listed above.
Their selection of ETFs for the Core and Socially Responsible Portfolios cover a range of industries and asset classes. ModernAdvisor looks for asset classes that:
- Provide diversification benefits
- Have at least 10 years of investment track record
- Are covered by at least one low-cost, high-quality ETF
The asset classes that ModernAdvisor uses in their portfolios are:
- Canadian Stocks
- US Stocks
- International Stocks
- Emerging Stock Markets
- Canadian Bonds
- Emerging Market Bonds
- REITs
They do not include commodities or natural resources in their asset class sets.
ModernAdvisor’s current list of ETFs includes:
- iShares Core S&P/TSX Capped Composite ETF (XIC)
- Vanguard US Total Market ETF (VUS)
- Vanguard Developed ex US ETF (VEF)
- Vanguard FTSE Emerging Markets All Cap Index ETF (VEE)
- Vanguard FTSE Canadian Capped REIT ETF (VRE)
- Vanguard Canadian Short-term Bond ETF (VSB)
We appreciate the fact that ModernAdvisor also offers socially responsible investment options (SRIs). SRIs are growing in popularity, particularly driven by millennials who want to know their money is being ethically invested. It is an investment strategy that also takes into consideration the social/environmental impact of the industries involved.
With ModernAdvisor, these investments can make up 75-95% of your portfolio and have an average MER that’s roughly equal to their standard ETFs. Their SRI selection includes:
- iShares ESG Advanced MSCI Canada Index ETF (XCSR)
- iShares MSCI KLD 400 Social ETF (DSI)
- iShares MSCI EAFE ESG Optimized ETF (ESGD)
- iShares MSCI EM ESG Optimized ETF (ESGE)
- iShares Global REIT ETF (REET)
- iShares Short-term Government Bond Index ETF (CLF)
You can look at sample portfolios and their past performance on the ModernAdvisor website.
A passive ETF portfolio has some drawbacks. You can’t pick and choose the stocks you want, and you have to choose from a set menu.
That means you can miss out on some good investment options – like dividend stocks, which provide regular income. You can check out our article about the Best Canadian Dividend Stocks for more information.
However, the plus side is that a robo-advisor makes investing accessible to novice investors, and that’s a good thing (for you, and for the market in general!).
ModernAdvisor Account Options
ModernAdvisor clients can open the following accounts via the website:
- Individual or spousal RRSP
- TFSA
- Individual and Family RESP
- FHSA
- LIRA
- RRIF
- Joint and individual taxable accounts
Corporate accounts are available by contacting ModernAdvisor directly.
ModernAdvisor Review: Features and Ease of Use
Safe and Secure: ModernAdvisor uses the highest level of encryption available to protect your information. Their software and systems are regularly audited by security experts.
All ModernAdvisor accounts are held by an independent custodian which is a member of CIPF. Your accounts are insured up to $1 million, which is 10 times more insurance than your average bank account. But of course, this is not insurance against trading losses.
Automatic Rebalancing: If your account strays more than 5% from its target allocation, ModernAdvisor will automatically rebalance it. Trading fees are included in your annual fee.
Flexibility: While you can’t go in and dictate what investments are included in your portfolio, you can slightly edit your risk preference via the ModernAdvisor website. For major changes in investment goals or desired risk, you can contact ModernAdvisor directly.
User-friendly: ModernAdvisor’s website navigation is intuitive, and information is clear and easy to find. A chat window allows you to contact someone between 8:30 am and 5:00 pm Pacific Time if you have any questions.
However, when I used the chat window, a bot just took my contact information and said someone would be in contact. The bot did not answer any questions but functioned more as a forwarding message service. They’re also reachable by phone or email, and contact information is easy to find in the website footer.
ModernAdvisor Mobile App Review
ModernAdvisor has a free mobile app available which allows users to:
- Track your portfolio’s performance
- Make changes to your investment plan
- Contact advisors via chat
- Transfer funds
- View your account holdings and transactions
It has a clear, streamlined interface and has a 5-star rating on the Apple App Store. It is also available for Android, on the Google Play Store, but doesn’t have any reviews yet.
ModernAdvisor vs Justwealth
Our ModernAdvisor review wouldn’t be complete without a look at how it compares with Justwealth, our most recommended robo advisor.
Like all robo advisors, both ModernAdvisor and Justwealth specialize in mostly passive investing. This means that they choose a portfolio of ETFs based on your investment goals and risk tolerance.
You, the investor, don’t have a hand in selecting the investments, and you can’t direct specific sales or purchases. If you’d prefer a more DIY service, we recommend checking out an online brokerage like the ones in our list of the Best Canadian Online Brokers.
ModernAdvisor | Justwealth | |
 |  | |
Number of Portfolios Available | 2 portfolios, with 10 different levels of risk each. | Over 80 different portfolios designed to grow your wealth, generate income, or preserve your wealth. |
Personalized Financial Advisor | No | Yes |
5-year returns (balanced portfolio) | 4.20% | 8.48% |
Fees | 0.40% | 0.40%-0.50% |
Target-Date RESP Funds | No | Yes |
SRI Options Available | Yes | Yes |
Account Minimum | $1,000 | $5,000 (although there are exceptions for RESP and FHSA accounts) |
Promo | No Available Promo | $100-$500 Instant Cash Back |
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Portfolios and ETF Selection: ModernAdvisor has 2 types of portfolios, Core and Socially Responsible. For each type, there are 10 different different risk levels. Justwealth on the other hand offers an abundance of choice, with over 80 model portfolios to choose from, including SRI options. Justwealth is also the only robo advisor to currently offer target date RESP funds.
Fees: Justwealth and ModernAdvisor both operate with a percentage-based annual fee. ModernAdvisor has a management fee of 0.40%-0.50%, while Justwealth charges smaller accounts (up to $500,000) 0.5% annually. After $500,000 is invested, Justwealth’s management fee drops down to 0.40%.
Account Minimums: ModernAdvisor has a lower threshold for getting started with robo investing. Their account minimum is only $1000, compared to Justwealth’s $5000, so ModernAdvisor is a more feasible option for a beginner looking to start investing bits of their paycheque.
Ease of Use: Both ModernAdvisor and Justwealth have websites that are easy to navigate and apps that are easy to use. While there are very few reviews for either app, both companies have pulled off 5-star ratings for their respective apps. Now, that’s not a number we’re usually reporting!
Perks: Justwealth offers a personalised advisor to each investor which is a super cool feature. You pay the low cost of robo investing, but feel like a bit of a VIP when you can contact your Personal Portfolio Manager.
Once upon a time ModernAdvisor had a free trial period where potential customers could try out a $1,000 investment portfolio and fund the account later, keeping the gains. Unfortunately that no longer appears to be active.
While ModernAdvisor has some excellent features, we still prefer Justwealth for ease of use and range of services. For a more in-depth look at Justwealth, check out our Justwealth Review.
ModernAdvisor Review: FAQ
ModernAdvisor Review: Our Verdict
Since I wrote our last ModernAdvisor review, I noticed a few things have changed for new clients, and not necessarily in a good way. ModernAdvisor used to have a practice account with $1000 of “play money” where you could keep the gains if you ended up funding the account with real cash later on. They also used to be fee-free for portfolios of up to $10,000. Unfortunately, neither of these great features appears to still be on offer.
Furthermore, as noted at the beginning of the article, the fact that they no longer take clients directly anymore makes the overall cost of the product murky. How much extra will you be paying when working with a financial planner? These are things to ask and consider.
Nonetheless, they are still a good introductory robo advisor (if you aren’t hit hard with commission fees from the advisor). The management fee of 0.40% is reasonable, and the minimum balance of $1000 to start investing is more attainable than say, $5000. However, there are robo advisor options such as Wealthsimple and Nest Wealth where you can start investing with as little as $1.
Additionally, the ETFs in ModernAdvisor’s portfolios provide excellent diversification, both across sectors and geographically. In terms of convenience, it has a user-friendly mobile app and web platform, making it easy to monitor your account and make adjustments when necessary.
While ModernAdvisor does have some good things going, it isn’t outstanding by any of our metrics. To discover our insights on the Best Canadian Robo Advisors, be sure to check out our complete write-up. You can also learn why Justwealth is our top pick in our detailed Justwealth Review.
