The discount broker, known best for its customer service, is bringing wealth management to the masses. It announced
Monday that it was launching Portfolio IQ, a customized investment portfolio created entirely online.
CEO Edward Kholodenko, who recently was named Ernst & Young’s Entrepreneur of the Year
, stated in the announcement, “With the typical wealth management model, you need $250 to 500 thousand of investable assets – just to start. We dramatically reduced that – a dollar to open an account and $2000 to get a customized portfolio. This is an entry point just about anyone can afford. It's the democratization of investing."
It sounds like the greatest thing since sliced bread. But is it really?
Upon closer review it’s clear that Questrade
isn’t nearly as attractive as their website would lead do-it-yourself investors to believe. For example, if an investor has a $50,000 portfolio, he or she would pay $350 annually (0.70%) for the Portfolio IQ service itself along with the MERs of the selected ETFs. Its competitors
providing automated investment advice charge on average $250 annually for the same or similar services.
provide enough extras to justify the additional $100 in fees? That’s still to be determined.
maintains that clients will be able to speak to its portfolio managers over the phone or by setting up an appointment in person therefore making it more full-service investment advisory rather than computerized robo-advisor.
Ultimately, its Portfolio IQ service is a hybrid of the two. While this might be attractive to certain investors it’s doubtful those with smaller portfolios will find much use for Questrade
’s newest innovation.
Democratization of investing it’s not.