Canada | Investing

Can robo-advisers spark millennial interest in investing?

With lower fees and account balances, these digital wealth management tools are providing investment advice for those who can’t afford a traditional financial adviser

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Young lady, using laptop while waiting for laundry while at laundromatGiven that they are digitally based and easy to use, robo-advisers may appeal to young professionals in a way that traditional financial institutions and consultants cant, say financial planning experts. (Getty Images/Hero Images)

Don’t let the name fool you—robo-advisers aren’t actually robots. But these online investments platforms do use complex algorithms to administer investment portfolios. And, while some may be completely automated, others offer additional access to human expertise.

Many assumed that early robo-advisers—like Betterment, recognized as the first in the industry and launched in 2010—were targeting tech-savvy millennial investors. But interest in these platforms is growing and gaining momentum. There are now more than 274,000 users in Canada, according to the market research website Statista, a more than 50 per cent increase since last year.

These numbers suggest robo-advisers have turned from a fad into a trusted investment option. More than that, they’re meeting a need in the Canadian marketplace—providing guidance to passive investors or those who can’t afford a traditional financial adviser. 


As it stands, most young people aren’t investing at all, says Bridget Casey, an Alberta-based millennial finance expert and founder of the financial literacy website Money After Graduation.

“[Investing] is important to them, they’re just really intimidated by it,” Casey says. “A lot of millennials were either coming of age during the financial downtown in 2009, or it was recent enough that they still remember it. So, there is this perception that the stock market is super risky.

“They also just don’t think they have enough money to invest—and that’s because they have other financial obligations, like paying off student loans.”

While the appeal reaches far beyond millennials, robo-advisers might attract young professionals in a way that traditional financial institutions and consultants can’t.   

“In the young professional demographic, they’re not as attracted to our traditional banks as the previous generation,” says Rona Birenbaum, CFP and founder of Caring for Clients. “It’s not an automatic thing that you would, if you want to invest your money, go to a bank…I think the younger generation is looking for organizations that speak more directly to them—both in terms of tone, style and convenience.”

Casey hopes robo-advisers will be a game-changer for millennials. “The payoff can really be significant once people are aware how easy it really is to become financially secure because of robo-advising.”


Deciding whether to invest with a robo-adviser depends entirely on your needs as an investor. However, there are a few pros and cons to be aware of. 

PRO: Low fees and minimum balances

At least for smaller accounts, robo-advisers beat their human counterparts in the price comparison, charging an annual fee of 0.5 per cent or less. Casey points out that your bank is going to try to sell you into a mutual fund that’s charging three or four per cent. Those add up, she says. “I don’t think millennials know how big of a difference those fees make—but they know fees are bad.”

With many robo-advisers, you can open an account with just $100—some offer no minimum at all. “Traditional online brokerages typically would require more than $1,000 to open a brokerage account,” Casey adds. “Open an account with $100 and then just put $50 or even $25 a month into it and that still makes a big difference.”

CON: No human touch

Robo-advisers don’t provide the same level of in-depth financial advice. “They’re not really set up for full-scale financial planning,” Birenbaum says. “You’re not going to have a very personalized one-on-one relationship with any one individual in a robo-advisory firm because they’re serving the masses.” While many robo-advisers do offer live customer service with a real person—that can’t compare to the relationship you have with your own financial adviser.

PRO: Easy to use

The other big advantage is that they do the investing for you, Casey says. Based on answering a few simple questions, robo advisers will select investment classes for you and build a portfolio based on your risk tolerance and time horizon. “You don’t have to learn how the stock market works,” she explains. “You don’t have to research securities to buy and sell. You just have to put your money in and it’s going to be invested in the stock market for you. That removes one of the largest barriers—which is needing to understand what’s going on.”

CON: Personalization

Robo-advisers don’t know about your life changes or specific financial goals. And while you may have answered some preliminary questions, it cannot go beyond their pre-programmed questions when creating your portfolio. Robo advisers can also be more limited in terms investment offerings. “They, generally speaking, provide packaged portfolios, so customization of a portfolio isn’t their sweet spot,” Birenbaum adds.


Robo-advisers aren’t the only way to make investing easier for tech-savvy Canadians—read about these three Canadian apps to better manage your finances and investments. Or for even more investment advice, check out these five Canadian money podcasts.