Dale Jackson

Personal Finance Columnist, Payback Time

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Scrounging up a decent RRSP contribution before the March 1 deadline can be difficult. Deciding where to invest it can be even harder.

Not everyone is cut out to manage their own registered retirement savings plan, and that’s where pre-packaged, or autopilot, portfolios come in.

Most banks and mutual fund companies offer them – normally three or more mutual funds arranged to diversify across sector and geographic lines. In most cases, an advisor will help investors determine whether they want a conservative, moderate or aggressive portfolio. Instead of rushing to make contributions, regular payments can be automatically withdrawn from the client’s account and invested as the cash comes in.  

Advisors will monitor and rebalance the portfolio on a regular basis. There’s a cost, though. Annual fees range from 1.8 per cent to three per cent.

Investors looking for lower cost, set-it-and-forget-it RRSP portfolios can turn to robo-advisors. There are just over 10 major services, and big banks like BMO are joining in. Services vary and are evolving, but here are the basics:

Investors fill out a questionnaire that gathers information about their investment goals, when they want to retire and their tolerance for risk.

• The computer system analyses the information and recommends a model portfolio of exchange-traded funds. ETFs are the initial investments offered, but more products may be available as the service develops.
•  Customer support is provided through live chat, email and telephone.
• But it’s the fees that give robo-advisors the greatest appeal. They vary from service to service and often decrease as your savings grow, but are usually less than half of a per cent of assets invested each year. Some offer a flat monthly price.

On the downside, robo-advisors don’t give you the personal connection of flesh-and-blood advisors who come to know their clients over the years.