This is a Nest Wealth review for those considering investing through the robo-advisory service for Canadians.
Gone are the days when investing was seen as exclusive to a few individuals with investing experience and high net worth in Canada. The emergence of robo-advisors has led to an equal playing field for everyone interested in investing.
Whether you have investment experience or not, you can now have an investment portfolio through a robo-advisor and reap handsome returns like expert investors. And that’s exactly what Nest Wealth helps you achieve.
But is Nest Wealth right for you and how does it compare to the other robo-advisors in Canada?
At the end of this Nest Wealth review, you should be able to determine whether it’s the perfect robo-advisor for you or not.
What is Nest Wealth?
Nest Wealth Asset Management Inc, popularly known as Nest Wealth, is a Toronto-based robo-advisor that uses a passive strategy to automate the entire investing process.
Founded in 2014, Nest Wealth is one of the pioneer Canadian robo-advisors that cater to individual investors, financial institutions, employers and financial advisors.
In addition to its regulation of the Investment Industry Regulatory Organization of Canada (IIROC), Nest Wealth is also regulated in each of the provinces it operates in Canada.
Nest Wealth is backed by reputable companies like National Bank of Canada and NAventures.
How Does Nest Wealth Work?
Nest Wealth works like other robo-advisors in Canada. That is, it invests automatically on your behalf based on your personal objectives and risk tolerance.
To this end, Nest Wealth will require you to provide the following information when signing up:
- Your age
- The amount you have saved
- Your Investment objective
- Your investment time horizon
- The amount you aimed to save annually; and so on
With this information, Nest Wealth will automatically match you with a personalized portfolio.
Whether you’re looking to build your retirement fund, save for your child’s education or save for a home, Nest Wealth has the perfect portfolio for you.
The Nest Wealth portfolios are constructed based on the Modern Portfolio Theory alongside David Swensen’s investment theory.
As a result, the portfolios are diversified, invested in low-cost index funds and ETFs and rebalanced regularly.
Your only job is to give the robo-advisor your personal information and funds and it will handle everything (i.e investing, monitoring and rebalancing) on your behalf.
Is Nest Wealth Safe?
Nest Wealth is safe because it’s regulated by the IIROC and complies with the laws in all the provinces it operates in Canada.
The robo-advisor could hold your assets in any of its two custodians (National Bank Independent Network and Fidelity Clearing Canada) using your name.
Since both custodians are members of the Canadian Investor Protection Fund (CIPF), your assets are insured for up to $1 million.
As per your personal information, the robo-advisor uses bank-level security measures to protect it against fraudsters.
With backing from top financial institutions including the National Bank of Canada, you can be sure that you’re dealing with a safe robo-advisor that’s trusted by financial advisors and other financial institutions.
Nest Wealth Portfolios
As of the time of writing this Nest Wealth review, the robo-advisor’s ETF portfolios are built using seven low-cost ETFs from Vanguard, iShares and BMO.
Each ETF is used to get exposure to each of the asset classes the portfolios invest in. Below is a highlight of the ETFs with their asset classes.
| Asset Class | ETF Portfolio |
|---|---|
| Short-term bonds | Vanguard Canadian Short-Term Bond Index ETF (VSB) |
| Medium-term bonds | BMO Aggregate Bond Index ETF (ZAG) |
| Real return bonds | iShares Canadian Real Return Bond Index ETF (XRB) |
| Canadian equities | iShares Core S&P/TSX Capped Composite Index ETF (XIC) |
| U.S. equities | iShares Core S&P 500 Index ETF (CAD-Hedged) (XSP) |
| Global equities | iShares MSCI EAFE ETF (IEFA) |
| Real estate | Vanguard REIT ETF (VNQ) |
Based on your risk tolerance, investment objective and time horizon, Nest Wealth will build your portfolio with a mix of the above asset classes – bonds, stocks and real estate.
Compared to the portfolios of other robo-advisors in Canada, Nest Wealth portfolios are limited by their collections and diversifications.
Nest Wealth Investment Accounts
Nest Wealth supports a wide range of registered and non-registered accounts highlighted below:
- Individual accounts
- Joint accounts
- Trust accounts
- Corporate accounts
- Tax-Free Savings Account (TFSA)
- Registered Education Savings Plan (RESP)
- Registered Retirement Savings Plan (RRSP)
The robo advisor supports all investment accounts excluding Registered Disabilities Savings Plans (RDSPs).
Nest Wealth Fees
Nest Wealth has management fees and MERs like other robo advisors out there.
While Nest Wealth charges the management fee, the management expense ratios (MERs) are charged by the companies that provide the underlying ETFs. As a result, the MERs vary as you can see below.
| ETF Portfolio | MER |
|---|---|
| Vanguard Canadian Short-Term Bond Index ETF (VSB) | 0.11% |
| BMO Aggregate Bond Index ETF (ZAG) | 0.09% |
| iShares Canadian Real Return Bond Index ETF (XRB) | 0.39% |
| iShares Core S&P/TSX Capped Composite Index ETF (XIC) | 0.05% |
| iShares Core S&P 500 Index ETF (CAD-Hedged) (XSP) | 0.10% |
| iShares MSCI EAFE ETF (IEFA) | 0.08% |
| Vanguard REIT ETF (VNQ) | 0.12% |
Unlike other robo advisors that charge a percentage of your assets, Nest Wealth management fees are fixed monthly amounts based on your investment amounts as shown below:
| Account size | Management Fee |
|---|---|
| Below $10,000 | $5 per month |
| $10,000 to below $75,000 | $25 per month |
| $75,000 to below $150,000 | $50 per month |
| $150,000 to below $325,000 | $100 per month |
| $325,000 and above | $150 per month |
According to the robo-advisor, its custodians may charge additional fees to cover the costs of your account administration.
Nevertheless, Nest Wealth has competitive fees compared to the fees of other robo-advisors in Canada depending on where your account balance falls in each of the account size ranges.
For example, consider the $10,000 to $75,000 account size range:
Imagine 2 investors, one with an account size of $10,000 and the other with a balance of $74,999. They’ll both be charged a monthly fee of $25 or $300 per annum. This equivalent to just 0.40% for the investor with the higher balance, but a whopping 3% for the investor with lower balance.
And for the next range, investors pay anywhere between 0.40% to 0.80%.
So depending on your account balance, Nest Wealth could compare favourably with the other robo-advisors or be on the high end of the robo-advisors fee spectrum.
Pros and Cons of Nest Wealth
Like other robo-advisors in Canada, Nest Wealth has its drawbacks and benefits as shown below:
Nest Wealth Pros
- No minimum balance: Unlike other robo advisors out there, Nest Wealth doesn’t require a minimum investment balance. This allows you to start investing with any amount.
- Professional support: Nest Wealth has a team of professional wealth managers ready to help you make informed investment decisions.
- Lower fees: The monthly management fee model of Nest Wealth makes it relatively cost-effective for those with high balances compared to other robo-advisors that charge a flat percentage per year.
Cons
- No mobile app: Nest West doesn’t have a mobile app which limits its accessibility.
- Limited portfolios and diversification: If you’re looking for a robo advisor with multiple portfolios and diversification, you may want to consider Nest Wealth competitors.
- Higher Fees: The fixed monthly fees translate to higher fees for investors with lower balance.
Is Nest Wealth Perfect For You?
From the above Nest Wealth review, you probably have everything you need to decide whether the robo-advisor is perfect for you.
Obviously, Nest Wealth competes well with other robo advisors in terms of professional support, account type and fees. However, this doesn’t guarantee that it will be the perfect option for you.
Nest Wealth may be the perfect option for you if you’re looking for a passive robo-advisor without regard to portfolio collections and diversifications.
On the other hand, if you’re looking for an active or passive robo-advisor with multiple portfolios with greater diversification, you should consider Nest Wealth alternatives covered in the subsequent parts of this review.
How to Open a Nest Wealth Account
Opening a Nest Wealth account is stress-free as everything is done online. All you need is to visit the Nest Wealth sign-up page to start the application.
At the onset, Nest Wealth will require information about your age, amount you have saved, investment objective, time horizon and your target annual savings amount.
After providing these information, you will then be required to enter your full name and email address to proceed with the application.
In other to verify your application, Nest Wealth will require you to submit your application with the following documents:
- Government-issued photo ID
- A copy of a void cheque or online banking login information
If you have any investment account(s) that you want to transfer to Nest Wealth, you will also be required to provide the transfer statement.
Once your application is approved within a couple of business days, you can fund your account with any amount and the robo-advisor will take it from there.
Nest Wealth Alternatives
If Nest Wealth doesn’t suit your needs, Wealthsimple Invest and Questwealth Portfolios are some of the top alternatives to consider.
Let’s take a closer look at how Nest Wealth compares with Wealthsimple Invest and Questwealth Portfolios.
Nest Wealth vs Wealthsimple Invest
| Characteristics | Nest Wealth | Wealthsimple Invest |
|---|---|---|
| Management fee | $5 – $150 monthly | 0.4% – 0.5% annually |
| MER (ETF) | 0.08% to 0.39% annually | 0.13% – 0.16% annually |
| Accounts types | Individual, joint, trust, corporate, TFSA, RESP, RRSP accounts | Individual, joint, business, TFSA, RESP, RRSP, RRIF, LIRA accounts |
| Minimum deposit | None | None |
| Management style | Passive | Passive |
| Mobile app | N/A | Yes |
| Promotion | N/A | $25 after depositing $500 |
Like Nest Wealth, Wealthsimple Invest is also a passive robo-advisor with no minimum investment requirement. It is also regulated by the IIROC and supports registered and unregistered accounts.
However, Wealthsimple Invest supports multiple portfolios than Nest Wealth ranging from standard ETFs to Halal and SRI portfolios.
Unlike Nest Wealth, Wealthsimple Invest is accessible on a mobile app across Google Playstore and App Store.
In terms of management fees, Wealthsimple Invest outshines Nest Wealth though the differences are not material. With Wealthsimple Invest, the pricing is 0.50% for balances below $100,000 and drops to 0.40% afterwards.
Also, the management expense ratio (MER) of the ETFs on Nest Wealth are relatively higher than Wealthsimple Invest.
Finally, new Wealthsimple Invest clients get a $25 cash bonus when they sign up using a referral link and deposit at least $500. Nest Wealth has no such promotions.
Learn more: Wealthsimple Invest Review
Nest Wealth vs Questwealth Portfolios
| Characteristics | Nest Wealth | Questwealth |
|---|---|---|
| Management fee | $5 – $150 monthly | 0.20% – 0.25% annually |
| MER (ETF) | 0.08% to 0.39% annually | 0.17% – 0.22% annually |
| Accounts types | Individual, joint, trust, corporate, TFSA, RESP, RRSP accounts | Cash, corporate, TFSA, RESP, RRSP, RRIF, LIF and LIRA accounts |
| Minimum deposit | None | $1,000 |
| Management style | Passive | Active |
| Mobile app | N/A | Yes |
| Promotions | N/A | $10,000 managed free in the first year |
Questwealth Portfolios differ considerably from Nest Wealth as you can see from the above table.
Questwealth Portfolios is the low-cost leader among the Canadian robo-advisors and its management fees is just a fraction of what you’ll pay at Nest Wealth.
While Nest Wealth doesn’t have a minimum balance, Questwealth requires a minimum investment amount of $1,000.
However, Questwealth portfolios have more collections of portfolios that are more diversified than Nest Wealth collections.
Overall, Questwealth Portfolios is an excellent low-cost robo-advisor and the ability to build a self-directed portfolio on the same Questrade platform is a big plus over Nest Wealth.
Learn more: Questwealth Portfolios Review
Verdict on Nest Wealth Review
Investment platforms are designed for different investors. Nest Wealth is not an exception! Based on the above review, you can now easily decide whether Nest Wealth is for you or not.
The bottom line of my Nest Wealth review is that the portfolio is perfect for investors looking for a passive robo-advisor without regard to portfolio collections and diversifications.
This simply means that you can’t make the wrong choice with Nest Wealth once its drawbacks mean nothing to you.
But if you’re still in doubt, kindly drop your concerns in the comment section or consider some of the best robo-advisors in Canada such as Wealthsimple Investor or Questrade’s Questwealth Portfolios.
Related:
Nest Wealth Review
Summary
Nest Wealth Asset Management Inc, popularly known as Nest Wealth, is a Toronto-based robo-advisor that uses a passive strategy to automate the entire investing process.
