What’s The New Buzz Out There?

There has been a lot of buzz these days about Robo advisors out there and they are the new cost-efficient way to invest.  There are a few main companies in Canada now that offer Robo advice so they call it. The most dominant companies out there are Nest Wealth, Wealth Simple and Wealth Bar to name a few.

If you have been considering the possibility of entering the investment market and not ready to select a financial advisor, you may have read about services from a “robo-advisors”.

Here is what they do and again when comparing them to a real true high net worth advisor (not the ones sitting in the small bank offices) you will miss out on true live financial planning and coaching.

What is a Robo-Advisor?


Robo-advisors are online services that are automated and ask you a set of questions about your personal financial goals and preferences when you sign up.  They provide you with investment advice in terms of a portfolio based on your answers.

For example, they ask you questions such as: Can you can afford to leave funds tied up for many years?  If so, you will receive different recommendations than someone who needs quick access to their funds or Can you handle large swings in the market?

Some investments that are riskier (such as sector specific funds – Emerging Markets Exchange Traded Funds (ETFs) or REIT Funds) carry the potential for higher returns, but may not be appropriate for a pharmacist that is relying on these funds in the short term (to build their pharmacy, start a new one or purchase a new pharmacy).  This could be similar to a retiring pharmacist vs. a younger pharmacists in their mid-stages of their careers.

Once the robo-advisor determines your investment style and portfolio through its algorithm, it then proceeds to invest the funds you deposited for a lesser cost than a traditional investment advisor.

How Much Dose A “Robo-Advisor” Costs?   

The costs that may of the “Robo-Advisor” charge can range from typically 0.3% for large portfolios (typically over $1M) to 0.6% for the smaller portfolios.  Again, this is only the “Robo-advisor” cost, not your all-in cost as the investments they purchase also have a cost called Management Expense Ratios (MERs) associated with them for the ETFs.

This cost can be an additional 0.4% to 0.6%.  This means your total costs will range from 0.7% to 1.2% which is below the cost of an average advisor with all-in costs around 2%.

Robo-advisors also do not provide the many additional services human advisors offer, such as retirement advice, tax strategies and estate planning or a big picture financial plan.  Sometimes Robo-advisor companies do have real humans on staff to speak with, but these people rotate typically and are a lower level vs. your typical financial planner.

These planning items are very important to most pharmacists such as yourselves as you want to make sure you are paying down your personal debts quickly, saving tax and growing your net worth.  Basically, make sure that you are following your financial plan (which Robo Advisors cannot track due to the complexities of your lives).


What Advantages do Robo-Advisors Offer?

Unfortunately, not every financial advisor out there is committed to their clients due to time or they don’t reach out to their clients. Also, you pay a financial advisor a premium and they should provide you not only investment service but look at your big picture.

If they don’t then why not use a robo-advisor or change to an advisor that is attentive.  Robo-advisors are always re-balancing and working for their clients.

Robo-advisors also take care of the manual details of portfolio management, for their low cost and providing you the pharmacist with continuous access to the markets.  Some of them will even provide tax-loss selling services to reduce end of year personal tax (they take the emotion out of investing for you).



Is a Robo-Advisor Right for You?

Many pharmacists have complex issues and the investment side is only one side of your overall big picture.  Therefore, our preference is that you work with a live team of advisors that can provide you with information and advice, so you can make better informed decisions.

But if you are younger and are used to conducting your financial life online, you may feel more comfortable with a robo-advisor for the investment component.  If this is the case, make sure you have a proactive accountant that is looking at your big picture vs. just preparing and filing your tax returns.

Robo-advisors open new doors to investors, giving them access to stock markets and again typically automated guidance that would not be available through traditional channels.

Also, the efficiencies of automation mean that transaction costs are often only a fraction of what a human advisor would charge and hence why the costs they charge are much lower.

On the other hand, if you feel the need to ask questions and to have emotional support before making financial decisions, you will want to work with a live financial planner.

This relationship can prove its value during challenging times in the stock market when you might be tempted to sell unwisely.



Robo advisors are not as personalized to you. By being a pharmacist, you have more complex issues than just an investment portfolio. You have many goals, both for the near and long-term.

While robo advisors allow you to set and your goals and objectives using their planning software you also have more money related issues and concerns which may benefit from a chat with a human such as: How fast can I pay my mortgage off?  Should I open a new pharmacy? How can I increase cash flow in my pharmacy? How do I protect myself and family in a catastrophic even? Etc.

This is why the best financial planners serve as mentors, teaching you the skills you need to move forward with growing your net worth.

Your investment needs and big picture most likely will include any number of unique personal factors that a robo-advisor questionnaire has not included.

Our view is that the innovation of a robo-advisor has opened up exciting money-saving options for smaller investors.  The technology will bring big changes to the world’s financial markets.

Whether you decide on a live financial planner or automated advisor to help you with investing decisions, it is very important to do your homework.

No advice comes for free so always have do your research before purchasing any financial product.





Adam Tenaschuk

Adam Tenaschuk

CIM, MBA | Partner

Adam is a founding partner of Pharma Tax and focuses on providing tax planning strategies to health care professionals. His goal is to provide simplicity and convenience to clients by coordinating all areas of personal wealth management so that his clients don’t have to. This means working with external professionals on: investments, insurance, business planning, retirement planning, and estate planning.

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