This is a sponsored post written by me on behalf of BMO. All opinions are 100% mine.
It’s been an exciting month for the release of new banking products, and BMO’s new online portfolio management tool: SmartFolio is the latest innovation.
Traditionally, the Canadian big banks have stayed away from online portfolio management, and BMO is taking a big step by dipping their toes in this pool. The official name for this product is the BMO SmartFolio. The BMO SmartFolio is an ETF portfolio that is managed by BMO’s brokerage division Nesbitt Burns on your behalf, with complete digital access, lower fees, and a unique investor profiling system that tailors the content of your portfolio to your needs.
As a millennial, I do 100% of my banking digitally, including managing my investments, so the BMO SmartFolio is right up my alley.
How BMO SmartFolio Works
The signup process for the BMO SmartFolio is pretty straightforward. You start out by answering a ten-part questionnaire. The questionnaire asked about my age, my income, my net worth, my investment horizon (10+ years) and then I answered a series of questions designed to determine how much risk I should take on.
Once the questionnaire is complete, the website suggests a model ETF portfolio with a mix of equities and fixed income that matches your risk tolerance.
There are five different model ETF Portfolios to choose from, and these portfolios are constructed using BMO’s proprietary ETFs. Here they are ordered from least risky to most risky.
- BMO SmartFolio Capital Preservation Portfolio
- BMO SmartFolio Income Portfolio
- BMO SmartFolio Balanced Portfolio
- BMO SmartFolio Long Term Growth Portfolio
- BMO SmartFolio Equity Growth Portfolio.
I’ve completed a few of these questionnaires since I started investing a few years ago, so I knew what the questionnaire should suggest, and it was correct. BMO suggested the BMO SmartFolio Long Term Growth Portfolio for me. This portfolio is made up of 70% equities, and 30% fixed income. That’s almost exactly how my money is currently invested, so the questionnaire is pretty accurate.
Fees and Minimum Balances
You need to have at least $5,000 to get started with the BMO SmartFolio. The fees are based on the size of your portfolio and include trades so you can add money weekly (as I do) without being charged extra fees.
You’ll be charged a fee of between 0.70% and 0.40% of your portfolio, depending on the total value. Larger portfolios are charged smaller fees. You’ll also be charged a MER (management expense ratio) on your ETF’s ranging from 0.20% to 0.35%, and a quarterly fee of $15. The $15 fee is waived if you deposit $250 in the account per calendar year, so if you are making regular contributions, the $15 fee won’t apply to you.
Who Should Try the BMO SmartFolio
I’m a millennial, I do my banking online, and I’m looking for a no-hassle, customized investing service. I don’t need to sit in an office and talk with a mutual fund manager; I’m happy to have my portfolios managed by BMO experts that I’ll never meet. Also, I’m looking for an affordable option to maximize my returns. I also have been investing for a few years and have over $5,000 to put into an account. This product is aimed at me.
Is this a good option for newbie investors? It would be, except in my opinion the minimum $5,000 account balance would be a deterrent. The SmartFolio won’t work if you’re new to investing and only have a few hundred dollars to stash. Because of this, I think the BMO SmartFolio is a good second step in investing after you’ve been doing it for a year or two.
The BMO SmartFolio is a good option for investors looking for a digitally accessible ETF portfolio without the hassle of making trades and rebalancing your portfolio yourself. This new product is another step in the evolution of effortless investing.
Photo Credit: Thomas Lefebvre