Planswell Review (2024): Recovering from a Scandal

Planswell is a controversial financial planning company. The Toronto startup was forced to completely halt all operations in November 2019 due to a harassment claim from one of its employees.

The company lost $20 million in funding and was forced to declare bankruptcy. This Global News article contains details about the incident. This Betakit article also has a look into the situation, along with details about the company’s financials before the bankruptcy claim. 

The 2019 rise and fall at Planswell reminds me of this quote:

“It takes 20 years to build a reputation and five minutes to ruin it.” – Warren Buffett

Planswell has now picked up the pieces and started up again in 2020. 

For this Planswell review, I’ll give my take on the financial planning service they provide, give details about what has changed with Planswell since relaunching and share some insight from my conversation with Planswell’s CEO.

What is Planswell?

Planswell is a Canadian fintech company that the CEO Eric Arnold founded in 2016. The team at Planswell used to include over 40 employees. After closing in late 2019, Eric Arnold and other partners have repurchased the company. They have relaunched with under 10 employees now during the first half of 2020.

Planswell entered the Canadian financial planning segment with a unique approach to differentiate itself from most of its peers. Its main selling point is its online software, where investors can fill out a relatively short survey and get a free financial plan. 

How Does Planswell Work

Planswell’s bread and butter are to offer a free financial plan to Canadians online. To get a free financial plan:

1. Go onto the Planswell website, and click start now
2. Fill out around 30-40 questions
3. Verify your email 
4. You will then get access to your free financial plan. 
5. Within 24 hours of filling out the questionnaire with Planswell, you will get a phone call from one of their advisors. Without having to listen to high-pressure sales pitches, you get a chance to ask any questions you have regarding their services.

After signing up for the service, I took a look at the financial plan. I plugged in some fake data because I wanted to include everything, such as a spouse, children, mortgage, and loans, to see what the financial plan recommended. Here’s what the plan looks like:

I wouldn’t say it’s a full financial plan, it’s more like a financial cheat sheet or checklist. It gives you a birds-eye view of your current financial situation, with quick recommendations for investment accounts such as your RRSP, TFSA, and RESP if you have children, insurance, mortgages,

You have the option of just using this free financial plan forever. You can even get free human support from a licensed advisor, who will walk you through your plan. But they will likely try to have you sign up with one of Planswell’s advisors. I’ll go over this more in the next section. 

Planswell Advisors

Planswell had a large change to its business model after the relaunch. Previously, if you decided to sign up with one of its advisors, Planswell provided a lot of its services in-house.

Planswell was its own licensed insurance and mortgage company, and if you decided to invest with Planswell, it used to be managed similarly to a robo-advisor by a third party named Higgins Investment Group. That has all changed now. 

Planswell is partnered with hundreds of advisors across Canada across different companies. If you decide to enter into an investment, mortgage, or insurance deal with one of Planswell’s advisors, you will receive that individual advisor’s fees and advice. 

It’s tough to do a review of the human financial planning services that Planswell provides because that will vary by each individual financial advisor. Planswell Investing, Planswell mortgages, and Planswell insurance will now all be dependent on the individual advisor, and whatever company they work for. 

Planswell Fees

For the online financial plan and support, you don’t need to pay any fees. However, if you sign up with one of their advisors, you will be subject to the fees that that individual advisor negotiates with you. 

For mortgages and insurance, I assume that the fees are the standard commissions that are received by a mortgage or insurance broker. You won’t generally see those fees and are baked into the price of the products. 

For your investments, I don’t know what each individual advisor charges, but the industry standard should have it in the range of at least 0.8% of your total investments per year. 

Example: If your Planswell advisor charges you a 0.8% management fee and you invest $100,000 with him, you will pay him $800 in fees per year.  

How Does Planswell Make Money

Planswell makes money by charging those advisors they are partnered a flat monthly fee. In return, Planswell provides access to you, the customer. Essentially, Planswell is kind of like a lead generation company now but with added features. The company earns a flat fee for introducing you to the advisor, as well as for use of their financial planning software.

Planswell Investment

The investments Planswell will place you in if you sign up with one of its advisors will depend on the advisor you are placed with. I’m willing to bet that the majority will recommend high-cost mutual funds, and not low-fee ETFs or an individual stock portfolio. I’m not sure about this and it will depend on the advisor though. 

Planswell Insurance

Completing a Planswell financial plan will also open up the opportunity for you to go for an insurance plan which matches your investment style and financial situation. The advisors at the company will walk you through how the insurance plan you choose will affect your cash flow currently and in the future.

Once you finalize your plan, you can choose to be referred to an insurance representative through Planswell or choose your own insurance provider through a third party.

Planswell advisors should provide you with three types of insurance that you can choose from:

• Disability insurance
• Term-Life insurance
• Critical illness insurance

All three can play a vital role in your financial plan. Most Canadians do not have insurance, according to a study conducted by investment firm Edward Jones. Not having the appropriate insurance in case you experience unforeseen life events can critically hamper your financial wellbeing. 

Planswell Mortgages

When you fill the questionnaire provided by Planswell, you will also answer questions regarding your mortgage and other debt you may be carrying. Planswell collects the information and devises a strategy to help you pay down the high-interest debt you owe more quickly.

You will also get a mortgage plan appropriate for you based on your financial goals and situation. You can choose to apply for a mortgage using one of their advisors after that point, or take the information and use it yourself. 

Safety and Security

Your personal information is stored and protected using bank-level encryption to ensure your privacy. BBS Securities Inc. is a third-party custodian that takes on the responsibility of storing your funds.

Social Proof

I scoured the internet to find reviews of customers who have been using Planswell for their financial planning needs. I found several positive reviews on Reddit and a few that were not so good. Google reviews show an overall score of 4.7 out of 5; however, if you look at the latest reviews, they are not flattering and seem to confirm my idea that Planswell has become an aggressive lead source for advisors:

The Good

The Canadian Investor Protection Find (CIPF) insures BBS Securities Inc. In case it goes bankrupt, BBS is also insured by Lloyd’s of London with coverage of up to $10 million per account.

This review is from someone who signed up for Planswell and did not end up using the insurance they were providing. What caught my attention was a lack of pushy sales pitches that you might usually expect with insurance providers. This was part of the Reddit AMA by the CEO of Planswell.

The Not So Good

One Reddit review on the not-so-good side was a client who did not have an outstanding initial experience, but her financial expertise managed to help her get good use from the robo-advisor.

I’d also like to point out that any reviews I could find were mostly from a year ago, before the company had to shut down and reopen. If they can maintain this level of customer satisfaction going forward, Planswell might have a good chance at recovery.

Financial Planning and Updates

Planswell has a more hands-on approach. After it helps you come up with a complete financial plan from your home’s comfort when you open an account, it takes things a step further.

Planswell reminds you to update your plan twice each year to make sure that the plan remains relevant to your financial needs as they change.

Planswell Alternatives

I wanted to compare Planswell traditional financial advisor investing with Canadian robo-advisors. Note that this is only for investing and not insurance and mortgages. Generally, robo-advisors should cost at least less than half the cost of a traditional financial advisor model that Planswell is providing. If you’re interested in investing for cheaper, you must look at robo-advisors also. 

Planswell vs. Wealthsimple

Wealthsimple is the most popular robo-advisor product in Canada. It is among my favourites in the market. It provides you with an excellent combination of benefits, features, and low fees.

Read my full Wealthsimple Review here.

Planswell vs. Questwealth

Questwealth is among the latest entrants in the robo-advisor product market in Canada. Its parent company, Questrade, has been around in Canada for more than two decades, and it is not a newbie in the world of wealth management.

Questwealth came into the market with the increasing popularity of robo-advisors. It offers several benefits you can expect from robo-advisors, and it provides you with the option of choosing Socially Responsible Investment portfolios. 

Read my full QuestWealth Review here.

Planswell vs. CI Direct Investing

CI Direct Investing (Formerly WealthBar) was the first robo-advisor to enter the market in Canada. Founded in 2013, its AUM grew to more than $225 million within five years. It offers a wide variety of accounts like Planswell and several features and benefits.

Read my full CI Direct Investing review here.

A Conversation With Eric Arnold, Planswell’s CEO

After I wrote my initial review, Planswell’s CEO Eric Arnold reached out to me. I had made an error in classifying Planswell as a robo-advisor. With its new business model of partnering with financial advisors, Planswell no longer even resembles a robo-advisor. 

Eric also wanted to tell his side of the story of what happened during the company’s harassment controversy last year. He wanted to express that he was going to correct the culture going forward to make sure something like that would not happen again. 

He also wanted me to consider not writing about what had happened since it is now a new company. I decided to include it because I believe you can’t tell the full Planswell story without detailing why it went bankrupt. I think it will pose a series of problems for Planswell going forward, and also some questions such as:

1. Can Planswell maintain the same level of customer satisfaction with much less staff on board now?
2. Can Planswell gain back the reputation it once had?
3. Will Planswell customers and clients be able to look past what happened with the bankruptcy and still trust the company with financial information?
4. Will the new corporate structure and business model be sustainable?
5. Will Planswell be able to receive funding if needed in the future?

All these questions are unanswered, and only time will tell if Planswell can recover from this and move on in the future. 

Final Verdict – Planswell

The free financial plan that Planswell offers is an interesting service for Canadians and one that you might want to try out, but be aware that you stand a good chance of getting cold-called or emailed about signing up with an advisor.

But if you sign up for the paid version of Planswell, you will be signed up with a traditional financial planner with a standard fee, similar to walking into a bank and getting an advisor. 

I used to be a financial advisor, and I just don’t think that the fees are worth it for most people. It’s a large amount to be spending on your investments every year and will eat into your returns. 

Only if you need a complex financial plan and lots of human interaction would I recommend a traditional financial advisor, and even then, I would recommend only a fee-based one and not one that charges an annual fee. 

So to summarize, I would say try out the free Planswell plan, but try to avoid signing up with a high-cost financial advisor. 

If you’re willing to learn a little about investing, I would recommend going with a discount broker, which is the cheapest option. If you need advice, a robo-advisor will generally be much cheaper than a traditional advisor. 

If you’re starting out and you want to learn more, check out my how to start investing in Canada article.