Exploring Fee Transparency in Financial Planning Services

When robo-advisors first came onto the scene, they were pitched as an easy way to access index funds. These digital platforms provide algorithm-driven financial planning and investment services, with little to no human supervision, and typically use passive investment strategies. But while this technology has revolutionized access, not all robo-advisors are created equal. In today’s episode, Mark, Ben, and Cameron sit down to discuss the role of robo-advisors as passive investors, and the performance disparity in robo-advisor returns, as they investigate different robo-advisors, from Wealthsimple to Wealthfront. Next, in this week’s version of ‘Would you rather?’, we have robo-advisors pairing off against active bank mutual funds, with each of our hosts debating the pros and cons of these two approaches. For our aftershow section, we discuss listener feedback, interesting community discussions, Ben’s addiction to Excel, and much more. Tune in for a deep dive into robo-advisors and how to navigate this technology!

Key Points From This Episode:

(0:04:20) The history of robo-advisors and how they are used today.

(0:08:30) Why there is such a marked dispersion among robo-advisor portfolios; an overview of Wealthsimple’s portfolios and the changes they’ve made over time.

(0:16:00) Wealthsimple's investment returns, fees, and an attribution analysis.

(0:24:19) Why Wealthfront pulled value out of their factor-tilted portfolios in 2022.

(0:26:13) PWL’s investment approach and why no strategy is truly passive.

(0:30:43) What the average investor needs to understand when using a robo-advisor.

(0:32:02) Wealthsimple’s value proposition and why people are drawn to it.

(0:33:33) Our ‘Would You Rather?’ Question: Would you rather put all your money with a robo-advisor or in a big bank actively managed mutual fund?

(0:40:30) The growth of passive investing vs active management in the financial industry.

(0:44:12) AI's impact on financial planning and an update on new calculators we’ve released.

(0:52:38) Aftershow section: listener feedback, community discussions, leasing versus buying vehicles, Ben’s addiction to modelling, and more.

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ 

Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/

Rational Reminder on X — https://x.com/RationalRemind

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ 

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/

Cameron on X — https://x.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFPWealthsimple — https://www.wealthsimple.com/en-ca

Wealthfront — https://invest.wealthfront.com/

Rational Reminder Episode 308: Dan Bortolotti — Episode 299: The Most Important Lessons in Investing — https://rationalreminder.ca/podcast/299

The Money Scope Podcast — https://moneyscope.ca/Episode 251: Covered Calls — https://rationalreminder.ca/podcast/251

Ashleigh Madison: Sex, Lies & Scandal — https://www.netflix.com/za/title/81602884

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Papers From Today’s Episode: 

‘Are Banks Better Money Doctors?’ — https://www.researchgate.net/publication/377037694_Are_banks_better_money_doctors_An_analysis_of_mutual_fund_flows_of_bank_and_non-bank_funds_using_Canadian_data