I was screwed by my old financial advisor and that was the kick in the butt I needed to go DIY. I wanted to manage things myself since no one would care more about my money than me. It worked out for me since I’m not really an emotional investor, but I admit I have made mistakes along the way.

Many people want to get into DIY investing, but are still intimidated by the process. Don’t worry there’s nothing wrong with enlisting some help since the whole point is to reduce your fees, and to keep your investments simple.

Tangerine Investment Funds

As many people here know, I’m an index investor and I use the couch potato strategy. This method works for me because I’m disciplined and I don’t mind taking 5 minutes of my time every year to re-balance. If you want absolutely nothing to do with your investments then the Tangerine Investment Funds are for you.

The Tangerine investment funds are index mutual funds. You pay a higher management expense ratio of 1.07% compared to (.20 – .50%) if you did it yourself, but what you get is convenience. The difference in MER can be significant, but it doesn’t take away the fact that these funds are great since it requires zero effort from the investor. Simply deposit your money on a regular basis and Tangerine will take care of the rest.

There are only 4 portfolios available and which one you’re recommended is based on your risk profile.

• Tangerine Balanced Income Portfolio
• Tangerine Balanced Portfolio
• Tangerine Balanced Growth Portfolio
• Tangerine Equity Growth Portfolio

Even at 1.07%, there’s a lot of value here for investors who want to index without having to worry about maintenance.

Robo-Advisors

Robo-advisors are aimed at people who are interested in paying lower fees, but still need a little bit of help to get everything going. Although the name implies everything is done via robots, there is human interaction if you desire; it just won’t always be done in person. Just about everything can be done online, through the app, or even over the phone, making robo-advisors appealing for those who are tech savvy.

Wealthsimple, Justwealth and Nest Wealth are just some of the companies you work with. To get started, fiill out their questionnaire, and a custom asset allocation will be created for you. There’s nothing stopping you from taking that recommended allocation and investing on your own via ETFs or index funds, but there are advantages of working with robo-advisors.

The custom portfolio tends to be the biggest draw. Plus there’s no rebalancing required on your end, everything is done automatically based on their algorithms. If you ever have any questions about your portfolio, you can always talk to a real person via webchat or phone. Fees are reasonable since ETFs are used to build your portfolio. There is additional fee based on your portfolio size that you have to pay on top of the standard MERs, however the more you have invested, the less of a percentage in fees you pay. In the end the overall cost to you falls somewhere between DIY and using Tangerine investment funds.

Assuming the robo-advisor you’re working with is partnered with a member of the Canadian Investor Protection Fund (CIPF) and you meet all required qualifications, your account would be eligible for up to $1 million in coverage by the CIPF, in the event the CIPF member firm goes bust.

Final thoughts

I used to think that anyone could start DIY investing on their own since it’s so easy, but I recognize now that it’s really not that simple. Some people have zero interest in managing their money and would rather pay a fee, while others get intimidated by the entire process. If you’re first starting off don’t be afraid to seek out some help, but also remember that financial planning and investment management are not the same.

But what is FinTech? FinTech is short for Financial Technology – an online or technology-based business that provides financial services. Similar to how Airbnb has disrupted the hotel business, and Uber has changed how we rideshare, FinTech makes anything related to your money easier.

The main types of FinTech in Canada are banking, lending, and portfolio management, but there also new apps out there that help with saving and financial education. With technology, there’s always going to be new products and services available, but let’s look at some of the established categories.

Online Banking

Oddly enough, it was an international company that got FinTech in Canada on the radar. ING Bank (which is Dutch) entered the market and offered interest rates that were significantly higher than the traditional banks (like 3% more). PC Financial launched around the same time, but ING’s tagline, “Save your money” was catchy and Canadians still remember it.

The business model of ING (now known as Tangerine) and PC Financial is pretty straight forward. They offered banking services online, and since they had no physical stores, they were able to offer higher interest rates. They also didn’t charge a fee for accounts which appealed to many people.

The traditional banks realize how important FinTech has become which is why they’ve introduced better products. BMO has PlanShare which gives you up to 20 accounts for a single fee, while CIBC’s Smart Account has a cap on charges.

With almost a dozen online banks available to Canadians, it can be tough to keep up with all the different features of each one. Regardless of which one you chose, make sure they’re a Canada Deposit Insurance Corporation member since your deposits will be insured up to $100,000.

Robo-advisors

Robo-advisors have been around for a few years now, but the public is only now starting to understand the benefits – that being lower fees. Don’t think lower fees matter, think again. The average mutual fund charges about 2.5% in management fees whereas robo-advisors average .5 – 1%. In the long term, this savings could add up to hundreds of thousands of dollars.

Robo-advisors are no joke, they’re completely changing the industry. Now you can get a professionally managed portfolio at a fraction of the price of mutual funds. It’s not like it’s actual robots running your portfolios, there are real people behind the scenes that have designed portfolios based around ETFs.

The general idea is that you answer a series of questions and then a portfolio will be recommended to you. The portfolios are passive and change only happens when certain preset conditions are met. It’s still cheaper to be a DIY investor, but there’s no denying that robo-advisors are a good alternative. Your investments are also protected under the Canadian Investor Protection Fund. Don’t worry if you have lots invested, many robo-advisors have additional insurance available that is free.

There are more than a dozen Canadian Robo-Advisors online right now each offering similar yet unique services. To be honest, they’re all good, but off the top of my head, I like what Justwealth, Wealthsimple, WealthBar (now CI Direct Investing), ModernAdvisor, NestWealth, and Smartfolio are doing. I realize that I just named half the robo-advisors out there but that’s just how good they are. If you want to learn more about robo-advisors in Canada, check out this complete guide.

Peer-to-Peer lenders

Fintech in Canada is much more simple when it comes to peer-to-peer lending. There are only three major players: Borrowell, Grow, and Mogo. These online lenders offer loan approvals to people without ever having to leave their homes. Once approved, the funds are deposited in your account within 48 hours.

Interest rates vary and can range from 4.8% to 45.9% depending on your individual credit rating. Obviously, people who have a better credit rating get the best rates whereas if you’ve had some credit issues, you’ll be quoted some rates which are even worse than credit cards.

The loans are attractive to people who’re looking to get rates better than what they’re credit cards are offering or if they’re having difficulty getting loans elsewhere. Since the repayment schedule is on a fixed term, the idea is that the loans will help you get out of debt eventually – in theory, that is.

Borrowell is definitely worth checking out since they offer a free Equifax credit score without applying for a loan. To learn more about Canada’s 3 online lenders, head over to Boomer and Echo to read his review.

Final word

If you’ve been resisting FinTech in Canada, now is the time to get on board. People resisted computers and cell phones when they were first introduced but they completely changed our lives. FinTech is no different, the options available have already made our lives easier and saved us money at the same time. To learn more about the differences between traditional vs. online banks, check out stocktrades.ca.