BMO Advice Direct is Awful (review)

TLDR : BMO AdviceDirect puts you into a profile based on a 30 minutes KYC with one of their advisors and then acts like a stock screener and you pay 750$ to 3750$ per year for that service.Hello all, sorry for the long post but I had a bad experience using BMO AdviceDirect and I would like investors to get all the information possible before possibly choosing this service for their investment needs. This information is accurate as far as I know, if you find any mistakes or inaccuracies let me know so that I can correct it. This information could have changed since when I was a client over there about 6 months ago and I suggest you make your own research to corroborate or invalidate the information below.What is Advice Direct?The pitch of BMO AdviceDirect is to be a hybrid between a self-directed brokerage account and a fully managed account. The system gives you advice, but you have the option of disregarding it. When you open your account, they do your KYC and based on your answers you are put into a profile. Based on that profile, the system would make recommendations it thinks would be suitable for you. The metrics used to determine if a stock that is recommended is also considered suitable for your profile are not disclosed. I was told that for example it would not recommend small cap stocks to a conservative investor which makes sense. The way that the appropriate profile is determined is the pretty standard Time Horizon, Risk tolerance, Investment goals, etc.How does the website choose which stocks to recommend?BMO AdviceDirect uses data from a service called MarketGrader that analyzes fundamental indicators (growth, liquidity, value, etc) of companies. Depending on these indicators, it then gives it a grade from 0 to 100. The stock would be recommended as a BUY if the rating is 60 to 100, HOLD for a rating of 50 to 60 or SELL for a rating below 50. They pitch it as being completely free of bias because it is purely based on fundamental analysis.In my opinion, the problem with a system like this is that it doesn’t take into account anything that would not be reflected purely by the numbers. If a stock is moving based on the expectations of the result of a lawsuit, new management being put in place, a crazy tweet by the founder or any other subjective data, it would not be reflected in the rating. This is by far the biggest downside of this system in my opinion. It does not analyze things in the context of the real world, only based on ratios derived from the financial statements.Their phone lines :After calling their phone line to get more information, I was told that one of the big advantages of the service is that I can call in to speak with one of their professional advisors for questions or assistance. One fact that is not disclosed from the start is that their advisors are unable to go against the MarketGrader rating. Even if they personally do not agree with the website’s analysis, they will have to tell you to BUY, HOLD or SELL based on the rating so there is no real value gained from calling them, you might as well go see the rating online. The only thing I could think of is that they would tell you to rebalance your portfolio if it is out of balance.If you have under 500k of assets with them, you do not get a dedicated advisor and you have to call their main phone line. This means that there is no personal relationship and you have to start from scratch most of the time to explain your issue. Above 500k of assets, you are attributed to a dedicated advisor without being able to choose and without knowing their qualifications and other pertinent information unless you ask.Fees :There is an advisory fee of 0.75% of invested assets (money market funds and cash not included) with a minimum annual fee of 750$ and a max of 3750$ per year. There is no commission on trades up to a certain amount depending on assets. This would be the equivalent of 75 to 375 trades a year equivalent on their self-directed platform at 10$ a trade.​Overall, I do not understand why anyone would want to use that service. The advice is sub-par in my opinion as it is basically a stock screener. Why would I want to pay high fees for that? Let me know if any of you used that service, I have switched to a self-directed account since then. via /r/PersonalFinanceCanada https://ift.tt/3gkhyFj