Last Updated on January 7, 2022 by Yetty Akindele
Wealthsimple has been gaining a reputation within the growing Robo-advisor and Self-directed investment world. Now that the platform is arguably one of the most popular online brokerages in Canada, it’s worth taking a look at what this platform has to offer.
What Is Wealthsimple?
Wealthsimple is one of the largest Robo-advisor and self-directed online investment management platforms in Canada. The Toronto-based company was founded in 2014 but has grown to become popular across the USA and Canada.
According to CEO Michael Katchen, the goal of Wealthsimple is to make investing more accessible to everyone, regardless of their net worth. To meet that goal, Wealthsimple offers low fees for smaller accounts. However, it also purports to offer great usability, great value, and unique features that make it a good choice for investors of all sizes.
A large part of the company’s success to date is credited to the professionals behind the platform. Many of the company’s 235 employees have experience working for big tech companies like Google and Amazon. Now the platform’s users number over 100,000 and over $3 billion in assets are managed through it.
Wealthsimple is one giant platform that offers various financial services. These include;
- Invest (Robo-advisor)
- Trade (Self-directed investing)
- Cash ( High interest Savings account)
- Crypto (Crypto trading)
- Tax (Easy tax filing for free)
In this post, we will focus on one of Wealthsimples’ products- Wealthsimple Invest. This is the companys’ Robo-advisor investment platform. However, the good thing with Wealthsimple is that you only need one sign up to access all of its products.
How Wealthsimple Invest Works
Wealthsimple Invest as a Robo-advisor uses Henry Markovitz’s Modern Portfolio Theory. That means the platform uses a passive approach that provides relatively reliable long-term growth.
In general, Wealthsimple designs portfolios of low-cost ETFs that track the larger market. The strategy minimizes risk by removing the volatility that individual stocks are always subject to.
In essence, the strategy also piggybacks on the successes of all the winners by investing in many stocks at once. This optimizes the potential for returns over time.
Wealthsimple Invest Features
At a glance, there are many features that help explain Wealthsimple’s Robo-advisor rise in popularity. The fact that all of them come at a very competitive cost to the user helps complete the picture.
WealthSimple offers tax-loss harvesting free of charge. While it only benefits users with taxable accounts, it’s worth considering. If you’re investing outside of an RRSP or TFSA, you will want access to it.
Tax-loss harvesting helps investors legally pay less in taxes by offsetting gains with investment losses. Most similar platforms only provide it to accounts investing more money. All WealthSimple Investors have access to free tax-loss harvesting.
Socially Responsible Investments
Many young investors are also concerned citizens who want to invest according to their ethical values. Socially Responsible Investing (SRI) is an option that allows you to single out ETFs for companies that meet a certain standard.
You can use the SRI feature for free to only consider companies that align with interest such as;
- Low-carbon output
- Cleantech innovations
- Human rights activist and
- Halal certified
You can also use the feature to single out the Canadian bonds with AAA ratings.
If you are a Wealthsimple Black client (Read “Wealthsimple Program Tiers), you have access to a financial advisor. They will help you create a goals-based portfolio.
Even if you don’t subscribe to the Black tier, you have unlimited access to experts who provide financial advice.
But wait… why do I need a financial advisor? Isn’t Wealthsimple Invest a Robo-advisor platform?
Wealthsimple does keep its approach for clients very hands-off. However, Robo-advisors do require input. You can provide this input yourself, but your results can be optimized with the help of a financial advisor.
Transfer Fees Covered
Are you worried about needing to pay to transfer an existing account from another provider into your investment account on Wealthsimple? If you need to pay any transfer fees, Wealthsimple will cover them for a transfer of $5,000 or more. Apart from one quick survey, there are no strings attached to this reimbursement.
Wealthsimple comes with customizable features that allow you to save money faster. One example is their ‘overflow’ feature. You can use overflow to send a portion of your chequing accounts into Wealthsimple investment accounts. There’s also a ‘roundup’ feature, similar to Moka in Canada and Acorns in the US. This feature rounds up your debit and credit card purchases and automatically saves your spare change.
Wealthsimple Invest Fees
If there’s one area where Wealthsimple stands apart, it’s in their fees. The platform keeps its fee structure straightforward and transparent. Their fees are also very reasonable when compared to their competition.
Wealthsimple charges according to your client tier. We delve deeper into their tier system soon, but for now, all you need to know is that your tier is based on your investment balance.
ETF MERs: Between 0.1% and 0.2% annually
SRI MERs: Between 0.25% and 0.40% annually
Wealthsimple’s rates for ETF MERs are one of the lowest among all Robo-advisors. When you include management fees, the total cost lands between 0.5% and 0.7%. With SRI MERs, the total cost lands between 0.65% and 0.90%.
When you consider the money-saving features all clients have access to, Wealthsimple is an affordable option. Financial-planning and tax-efficiency features help you save more while you invest at a low cost.
If you would like a more hands-on approach, after signing up, you can invest via their Self-directed investing platform – Wealthsimple Trade. Remember one login details is all you need to use any of Wealthsimples’ products.
Additionally, there are no commissions for buying or selling ETFs/stocks on Wealthsimple Trade. It is totally free.
Wealthsimple User Experience
Without a doubt, Wealthsimple has one friendly user interface. Its usability is generally in line with the platform’s philosophy. You don’t need to be an expert to use the platform and its most important resources.
Wealthsimple is user-friendly and never overwhelms clients with too much information at once. From the main menu, you can choose from one of four options. 2 of those options are informational displays.
Getting started with Wealthsimple is as simple as clicking the “get started” option on your interface. From there, all you need to do is fill in the Robo-advisor questionnaire to provide your investment needs and risk tolerance. The questionnaire will ask you simple questions, such as your investment’s timeframe.
Wealthsimple Program Tiers
Wealthsimple’s tiering system determines how much you pay in fees and what perks you can use. Higher tiers net you greater perks and lower fees. Your tier is based on your deposit.
Your deposit can be combined with the deposits of family members. So, you don’t need to have all the money in one account, but your combined family total must meet the minimum requirement.
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Wealthsimple basic is the default account for clients with deposits of under $100,000. It comes with a 0.5% fee.
You still have access to most of Wealthsimple’s important features with a basic account. You can set up any of the important Canadian retirement and saving accounts, including:
The best part is that you can still access the ethical and money-saving features with a basic account. That includes access to professional financial advisors.
Wealthsimple Black is the 2nd tier, which is accessible to clients who deposit $100,000 or more.
Once you qualify for a black account, you have access to premium features such as:
- Tax-loss harvesting
- Tax-efficient funds
- A financial planning session with a financial advisor
- Airport lounge access at over 1,000 airport lounges
Also, once you graduate to Wealthsimple Black, your management fee is lowered from 0.5% to 0.4%.
Wealthsimple Generation is the final step on the platform’s ladder. The account is accessible with a combined family deposit of over $500,000.
If you want extensive support in making financial decisions, Wealthsimple Generation has what you need. With a generation account, you have access to:
- In-depth financial advice from an entire team
- Tailor-made portfolios
- Personalized reports
- Retirement planning
Pros & Cons
Wealthsimple is a robust Robo-advisor. But you should consider these factors in your decision of whether it’s right for you.
- Access to both robot and human advisors
- Very reasonable fees
- Large ethical investment selection
- Automatic tax-loss harvesting
- Accessible to beginners
- The option of self-directed investing using Wealthsimple trade
- Not many portfolio options
- Hard to qualify for higher client tiers
You are in control of how much risk you are willing to subject yourself to. However, with the Wealthsimple Robo-advisor, your portfolio will be based on 1 of the 3 templates Wealthsimple offers.
A growth portfolio includes more stocks than the other choices. Up to 90% of assets in a growth portfolio are in Canadian stocks, US stocks, other foreign stocks, dividend stocks, and real estate. Many of these assets are in high-growth but higher-volatility emerging markets.
If you have a risk appetite and are seeking faster growth, this is the portfolio template you should choose.
A conservative portfolio will primarily hold low-volatility bonds. Up to 70% of assets may be holdings in government bonds, high-yield bonds, and short-term bonds.
If you’re aiming for lower risk and greater security at the expense of higher returns, you will want a conservative portfolio.
Wealthsimple’s balanced portfolio splits your assets 50/50 between bonds and equities. If you have a very moderate risk appetite and want a bit of what each of the other portfolio templates offers, you should choose a balanced portfolio.
You can use Wealthsimple Robo-advisor to purchase stocks or ETFs. The platform’s site offers some contradictory information on what other assets they offer, but they do indeed offer bonds.
It’s worth noting that only common shares are supported on Wealthsimple. In case you’re more focused on investing in international equities, bonds/GICs, or precious metals, you might want to consider using Questrade another low-cost reputable online brokerage for Canadians.
How Does Wealthsimple Compare?
Compared to other Robo-advisors, Wealthsimple offers the following benefits;
- Easy to sign up and get started with. You also get a $10 bonus when you sign up and deposit $100
- Reasonably priced
- Easier to access due to a lack of minimum balances (most of the competition sets high minimum deposits)
- User-friendly interface suitable for both beginners and advanced investors
- Decent portfolio templates
- Very feature-rich
How Do You Sign Up?
The signup process for Wealthsimple takes about 15 minutes. After that, linking your bank account to your new Wealthsimple account will take more time. The exact time will depend on your bank.
During the signup process, you will need to provide some basic information such as your;
- Phone number
- Bank details
If you have all of the above on hand, you’re ready to sign up. You just need to:
- Fill out the 15-minute application form
- Authenticate and connect your bank account
- Access your WealthSimple account
Normally, your Wealthsimple account will take 5 business days to become accessible and operational.
Wealthsimple Invest is a great Robo-advisor platform to get started investing on. It’s not a very hands-on option. However, that’s not what the platform is going for anyway.
You can create a cost-effective portfolio with the help of professionals. You also don’t need to be a wealthy, well-known investor to do so. Wealthsimple was made for everyone from those who just want to save for retirement to those who want to invest in large, long-term goals.
In the end, if you’re looking for a well-reputed robo-advisor in Canada, this Toronto-based company has a great solution for you.