ModernAdvisor Review 2024

ModernAdvisor was founded in 2013 by Navid Boostani (the CEO and a Certified Financial Analyst) and Adrian Brouwers. ModernAdvisor focuses on robo-advising, although they also offer ModernAdvisor Pro, a service for professional financial planners.

ModernAdvisor has some unique characteristics that set it apart from the robo-advising crowd. This is particularly true for beginner investors who are uncertain how robo-advising works and whether it’s for them.

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 Wealthsimple, 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.

Get Started With ModernAdvisor:

1. Start by identifying your financial goal and the timeline for your investment.
2. Answer a questionnaire that clarifies your risk tolerance.
3. 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.

4. 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

5. 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

ModernAdvisor’s annual fees depend on the size of your account:

• Accounts under $10,000 are free
• $10,000-$100,000 pay 0.5% annually
• $100,000-$500,000 pay 0.4% annually
• Accounts over $500,000 pay 0.35% annually

For example, a portfolio of $25,000 would pay $125 in fees, while with a $75,000 portfolio you would pay $375.

ETF MERs

In addition to the annual fees, investors pay the MER that is built into the ETFs. ModernAdvisor ETFs average about 0.25%, 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 $50-125 depending on which custodian is holding their funds.

ModernAdvisor Portfolios

ModernAdvisor offers a selection of 7 regular ETFs and 6 socially responsible ETFs. Each portfolio is made up of a selection of ETFs, which are chosen based on your personal investment profile. Their selection covers 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

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)
• BMO Emerging Market Bond ETF (ZEF)

We appreciate the fact that ModernAdvisor also offers socially responsible investment options (SRIs). 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 (ESGDE)
• iShares Global REIT ETF (REET)
• iShares Short-term Government Bond Index ETF (CLF)

You can look at sample portfolios and their performance over the past 4 years 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
• TSFA
• Individual and Family RESP
• LIRA
• RRIF
• Joint and individual taxable accounts

Corporate accounts are available by contacting ModernAdvsior directly.

ModernAdvisor Review: Features and Ease of Use

Free Trial Account: ModernAdvisor allows you to open a trial account with $1,000 of play-money via a program called Springboard. If you join ModernAdvisor and fund the account within the trial period, you can keep any gains (and if you didn’t make any gains, your account is still free for up to $10,000).

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.

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.

Free Portfolio Check-up: ModernAdvisor’s website allows you to enter your mutual fund information, and they’ll tell you how much you’re paying in fees and how much you could save with a robo-advisor.  

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. 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.

ModernAdvisor vs Wealthsimple

Our ModernAdvisor review wouldn’t be complete without a look at how it compares with Wealthsimple, our most recommended robo advisor.

Like all robo advisors, both ModernAdvisor and Wealthsimple 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.

Fees: Wealthsimple and ModernAdvisor both operate with a percentage-based annual fee. ModernAdvisor is free for accounts under $10,000, while Wealthsimple charges smaller accounts 0.5% annually.

ModernAdvisor also offers clients investing over $500,000 a 0.35% annual fee, which is lower than Wealthsimple. However, Wealthsimple offers investors with over $100,000 some significant perks such as financial planning and tax loss harvesting.

ETF Selection: ModernAdvisor offers investors a choice of 7 standard ETFs and 6 socially responsible ETFs. Wealthsimple offers fewer SRIs but also has a selection of Halal investments.

Ease of Use: Both ModernAdvisor and Wealthsimple have websites that are easy to navigate and apps that are easy to use. On the whole, we found that the user experience on Wealthsimple’s platforms is smoother and more fully featured. 

Perks: ModernAdvisor has a free trial period where potential customers can try out a $1,000 investment portfolio and fund the account later. They offer on-demand financial advice and a free portfolio review.

Wealthsimple also offers round the clock access to financial advice. They also offer perks to $100,000+ account holders that make the service well worth its 0.4% fee.

Rebalancing: Both companies rebalance accounts when they stray from their optimal allocation. ModernAdvisor rebalances accounts when they’re more than 5% outside the optimal range, while Wealthsimple is a less active manager and doesn’t rebalance until accounts are 30% off.

There are different theories regarding whether a more active approach is ideal. Wealthsimple has based its approach on the Nobel Prize-winning Modern Portfolio Theory.

Range of services: ModernAdvisor offers robo-advising plus management services for financial professionals. Wealthsimple offers robo-advising plus additional services including:

• Wealthsimple Trade (a DIY online brokerage with commission-free trading)
• Wealthsimple Roundup (a service that allows you to invest your spare change from everyday purchases)
• Wealthsimple Crypto (a crypto investing service)
• Wealthsimple Tax (a tax filing service)

While ModernAdvisor has some excellent features, we still prefer Wealthsimple for ease of use and range of services. For a more in-depth look at Wealthsimple, check out our Wealthsimple Review.

ModernAdvisor Review: FAQ

ModernAdvisor Review: Our Verdict

In our ModernAdvisor review, we shared that you can give it a test drive with $1,000 in virtual cash, and keep the gains if you end up funding the account with real cash later on. This, coupled with the fact that ModernAdvisor offers a no-fee robo advisor service for portfolios up to $10,000, makes it a great way to foray into the robo advisor scene if you are new to it and want to give it a shot. 

In addition, the ETFs that make up ModernAdvisor’s portfolios will give you great diversification both sector-wise and geographically. 

In terms of convenience, it also scores points there, as its mobile app and web version make it easy for you to check out your account and make simple changes if you need to.

One of the biggest drawbacks is that you won’t be able to start investing until your account reaches at least $1,000. This means you need to wait to earn money on your investments. With Wealthsimple on the other hand, there is no minimum account balance to get started.

For this reason, along with the fact that the rebalancing might take place a bit too often, we think there are better robo advisor options out there.

To find out our take on the Best Canadian Robo Advisors, check out our full write up. You can also find out why Wealthsimple remains our absolute top choice in our full Wealthsimple Review.