BMO SmartFolio Review 2022: Invest With a Big Bank Robo-Advisor

BMO SmartFolio is a Robo-advisor owned by the Bank of Montreal, the oldest bank in Canada that’s ranked as the fourth largest bank by market capitalization.

Robo-advisors employ technology and a team of financial experts to offer online investment services at low cost.

They allow investors to automatically build a portfolio of low-cost ETFs, hence cutting the high fees charged by traditional wealth managers and bridging the skills gap required for self-directed investing.

They are the go-to investing service for hands-off investors who want to build wealth over time without actively managing their own portfolios.

In this BMO SmartFolio review, I cover how the Robo-advisor works, its investment accounts & products, BMO SmartFolio returns, pros & cons, and more.

How Does BMO SmartFolio Work?

BMO SmartFolio works pretty much like other robo-advisors, and you’ll first need to open an account to get started.

Simply fill out a questionnaire to provide your details, including your investment objectives, risk tolerance, investment time frame, and more.

The system and portfolio managers will match you up with a portfolio of low-cost ETFs based on the information you provide.

Then choose an account to hold your portfolio and deposit a minimum of $1,000 to start investing right away.

BMO SmartFolio offers the following account types:

  • RRSP, including Spousal RRSP
  • RESP
  • TFSA
  • RRSP
  • Individual and Joint accounts

Investment Products

BMO SmartFolio offers five investment portfolios designed to fit the investment needs of different investors. The one you choose comes down to your risk tolerance.

  • Capital Preservation: Invests in 88.7% Fixed Income and 10.18% Equities and is made for investors with low-risk tolerance looking to receive an income while investing for the intermediate to long term.
  • Income: Invests in 68.9% Fixed Income and 29.5% Equities. It is a good choice for investors with low-risk tolerance looking to receive regular income while investing for the intermediate to long term.
  • Balanced: Invests in 42.8% Fixed Income and 55.6% Equities and is suitable for investors with medium risk tolerance looking for some income and long-term growth.
  • Long-Term Growth: Invests in 23.4% Fixed Income and 75.4% Equities. It is great for investors with higher than average risk tolerance looking to get some income while investing for the long term.
  • Equity Growth: Invests in 4.1% Fixed Income and 93.9% Equities. Suitable for investors with high-risk tolerance looking to invest for the long term.

Investment Strategy

BMO uses a hybrid investing strategy that combines both passive and active investment approaches to maximize gains while also letting your portfolio grow undisturbed for the long term.

BMO SmartFolio Fees

BMO SmartFolio fees are among the highest in the Canadian Robo-advisory industry.

Fees are calculated cumulatively based on how much you’ve invested and range between 0.4%-0.7%, as shown in the table below.

Invested amountFee
First $100,0000.70%
Next $150,0000.6%
Next $250,0000.5%
Above $500,0000.4%

In addition to the advisory fee, you’ll also incur an in-build Management Expense Ratio (MER) fee of 0.20% to 0.35% of the value of your account. That means for an investment of 100,000; your total fees can range between 0.9%-1.05.

You may also incur up to a 1.5% FX fee and a $135 account transfer out fee.

BMO SmartFolio Performance and Returns

BMO SmartFolio returns and performance for each of their portfolios are published on their website from 3 months to 5 years, and the overall performance since inception.

The table below shows how the various portfolios have performed over 1, 3, and 5 years.

Portfolio Type1 year3 year5 years
Capital preservation-8.75%1.90%3.59%
Income-8.94%0.5%2.27%
Balanced-8.75%1.90%3.59%
Long Term Growth-7.54%3.54%4.90%
Equity Growth-6.33%5.17%5.97%

When you login into your account, you’ll see your portfolio performance and growth from your dashboard.

Is BMO SmartFolio Legit and Safe?

Yes, BMO SmartFolio is a safe and legit Robo-advisor, and your investment account is just as safe as money in your bank account.

First, the Robo-advisor is owned by the Bank of Montreal (BMO), the oldest bank in Canada, giving you the confidence of investing with the fourth-largest bank in Canada that has survived the test of time.

Your portfolio is invested and managed by BMO Nesbitt Burns, which is regulated by the Investment Industry Regulatory Organization of Canada (IIROC).

It is also a member of the Canadian Investor Protection Fund (CIPF), which protects your account for up to $1 million in the event that the broker goes bankrupt.

BMO SmartFolio vs BMO InvestorLine

BMO SmartFolio is a Robo-advisor, an online investment management service that invests and manages your portfolio for a fee. Your portfolio is invested and managed by BMO financial experts.

BMO InvestorLine is a self-directed stock trading platform. It offers trading features and tools for DIY investors who want to invest and manage their own portfolios.

Pros and Cons of BMO SmartFolio

Pros

  • Multiple investment accounts
  • Five portfolios to choose from
  • Owned by a big, reputable bank

Cons

  • Levies the highest fees among Canadian Robo-advisors
  • Doesn’t offer RI or SRI portfolio options
  • Has a minimum investment of $1,000
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BMO SmartFolio vs Wealthsimple Invest

Wealthsimple Invest is the most popular Robo-advisor in Canada, with over $15 billion in assets under management. Below is how BMO SmartFolio compares with Wealthsimple.

Portfolios

BMO SmartFolio offers 5 portfolios to choose from, namely Capital preservation, Income, Balanced, Long Term Growth, and Equity Growth.

Wealthsimple Invest offers 3 portfolio types, namely Conservative, Balanced, and Growth.

Fees

Wealthsimple Invest charges lower fees than BMO SmartFolio. Wealthsimple fees range between 0.4%-0.5%, while BMO SmartFolio fee comes in between 0.4%-0.7%.

ETF MERs

BMO SmartFolio MER ranges between 0.2%-0.35%, which is quite high compared to Wealthsimple MERs of 0.12%-0.15% for the same portfolio types.

Account options

BMO SmartFolio offers TFSA, RRSP, RESP, RRIF, and non-registered Individual and Joint accounts.

Wealthsimple Invest offers TFSA, RESP, RRSP, Spousal RRSP, LIRA, and non-registered personal accounts.

SRI Portfolios

BMO SmartFolio doesn’t offer Socially Responsible Investing (SRI) portfolio options.

Wealthsimple Invest offers SRI portfolio options to allow you to invest in companies that share your value and Halal portfolios that are in line with Islamic laws.

Minimum investment

BMO SmartFolio has a minimum investment requirement of $1,000. Wealthsimple Invest doesn’t have a minimum investment, and you can start investing with as little as $1.

Transfer fee

BMO SmartFolio has an account transfer out fee of $135 when transferring your account to another firm. 

Wealthsimple Invest doesn’t charge an account transfer out fee and covers the transfer fee up to $150 when transferring $5,000 or more from another firm to your Wealthsimple account.

Investment strategy

BMO’s hybrid approach combines passive and active investment strategies. Wealthsimple Invest uses a passive investment strategy.

VIP perks

With BMO SmartFolio, you enjoy the prestige of investing with the oldest and the fourth-largest bank in Canada.

That said, Wealthsimple Invest offers several VIP perks that BMO SmartFolio doesn’t offer, especially for clients whose asset balance exceeds $100,000. 

They include:

  • Tax-loss harvesting
  • Reduced management fee (0.4%)
  • Free financial planning sessions
  • Tax-efficient funds
  • 50% discount on a Comprehensive health plan from Medcan if your asset balance is $500,000+

Other BMO SmartFolio Alternatives in Canada

BMO SmartFolio fees are quite high. Luckily, there are other BMO SmartFolio alternatives in Canada that charge lower management fees. 

The table below breaks down how BMO SmartFolio stacks up against other Robo-advisors in Canada.

BMO SmartFolioWealthsimpleQuestwealthJustwealthRBC InvestEase
Fees0.4%-0.7%0.4%-0.5%0.2%-0.25%0.4%-0.5%0.5%
Minimum investment$1,000As little as $1$1,000$5,000$100
Account typesTFSA, RRSP, RESP, RRIF, RDSP, RIF, LIF, cashTFSA, RRSP, LIRA RESP, RRIF, and non-registered  personal accountTFSA, RRSP, LIRA, LIF, RRIF, non-registered accountsRRSP, RESP, TFSA, LIRA, LIF, RRIF, non-registered accountsTFSA, RRSP, non-registered investment account

FAQs

What is BMO SmartFolio?

BMO SmartFolio is a bank-owned Robo-advisor that employs modern financial technology and a team of experts to offer digital investment management services at a fee.

It is owned by the Bank of Montreal (BMO) and allows time-strapped and hands-off investors to build wealth with low-cost ETF portfolios.

What is BMO adviceDirect?

BMO adviceDirect is an online investment service that offers personalized financial advice and support to help self-directed investors make informed trading choices. You get advice from their investment experts, but you make your own trading decision.

Are Canadian Robo-advisors worth it?

Absolutely! Robo-advisors in Canada help investors slash the high fees charged by mutual funds and bridge the knowledge and skills gap for self-directed investing. 

Thus, they allow time-strapped, hands-off, and conservative investors to put their money on autopilot and build wealth with low-cost ETF portfolios without the hassles of everyday portfolio management.

How do I make a withdrawal from BMO SmartFolio?

To make a withdrawal from BMO SmartFolio, visit the nearest BMO branch or call the number on the back of your bank card. They will help you complete the necessary transfer forms.

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