what if your robo-advisor goes out of business?


​Robo-advisors have partnerships with brokerage firms through which they trade the ETFs in your portfolio. The name of the broker should be on the robo-advisor’s website.  


​Broker accounts are insured by the Canadian Investor Protection Fund (CIPF). 

  • The insurance covers shortfalls in the value of account holdings if the institution goes bankrupt.
  • ​If your ETFs decline in value, this insurance won't cover it.  That is investment risk. 
  • CIPF coverage is $1 million per account. 


You should check if the brokerage firm's name appears on the CIPF website to confirm that they have insurance for client accounts.​

at the beginning


​ Make sure you've set up pre-authorized transfers (if your account set-up allows it).

  • Money from your chequing account will be regularly added money to your investment account.
  • You may have already arranged it when filling out your application.
  • ​​If not, check if you need to start this process with the robo-advisor or at the bank where you have your chequing account. 
  • Either way, ask for help if you're not sure how to do it.  Robo-advisors charge you an annual fee so expect some assistance.​



​​Once a  year


Monitor your account, but not too frequently.  Once a year at least, every month may be too often - remember, these are long-term investments.  Always check the following:

  • Have the ETFs paid distributions as expected?
  • Are your pre-authorized transfers going through as expected?
  • Are you charged the correct fees?  Any there unexpected fees?



How is your investment doing?

The share price of your ETFs is a good place to start.

  • Check the current price of your ETFs and compare it to your purchase price.
  • This becomes more relevant when you're to cashing out. When you sell at a higher price than you bought, you make money (called a capital gain).  When you sell at a lower price than you bought, it's a capital loss.
  • Price does not account for distributions you've received. 


Total return measures how your investment has done over a period of time, usually a year. 

  • It considers both distributions and capital gains / losses (changes in price).
  • Capital gain / loss is calculated as if you bought the fund a year ago and sold it today. Unless you actually sell the investment, the difference between those two prices is called 'paper capital gain / loss'.
  • Your total return for that year is the paper capital gain / loss plus distributions. It is expressed as a percentage (distributions and gain / loss, divided by the amount you started the year with) - the higher the better.
  • Total return is reported after the MER is paid.


Login to your account to see the total return of each ETF in your portfolio. You'll also be able to see your portfolio's total return. Find out if your portfolio returns are calculated after all costs (account / other fees) are paid. Compare your portfolio's total return to some alternatives. Look online for funds similar to yours. Consult our research tables and find funds with: 

  • Similar asset mixes, from different providers.
  • Different asset mixes, from your provider.


Your robo-advisor will likely compare your portfolio’s total return with some commonly used references, called 'benchmarks', like a well known big equity market.  One such market is US equities.

​
You need to assess if your asset mix is still appropriate. Your risk appetite and investment horizon may have changed (perhaps you need the money sooner or can't afford any short-term losses).

  • Make it a goal to think about your investment strategy once a year. 
  • Always reassess your strategy whenever your financial / personal circumstances change.

​


​​If you opened a TFSA, you won't pay income tax.


If you opened a RESP or RRSP, you won't pay income tax until you withdraw money.  Because of this, you need to have a plan before you withdraw.​​​

follow your budget - add money regularly


You'll invest new money by buying additional shares of the ETFs in your portfolio . You can do it anytime.

  • You have no transaction cost and robo-advisors allow reasonably small increments.​​

keep up with your robo-advisor account

​If you have taxable accounts, you'll need to learn about investing and tax.