WealthSimple Review

Wealthsimple Review 2019

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Last updated on June 26, 2019 Views: 547 Comments: 2

It’s hard to believe that just a few years ago robo-advisors sounded like something out of a farfetched, futuristic science fiction novel. The term gave rise to images of robots in $1000 suits sitting at desks and drawing up personalized investment portfolios, nodding patiently as you told them about your retirement savings goals.

Boy how things have changed. Now you’d be hard pressed to find anyone in Canada (including seniors, robos aren’t just for Millennials!) who hasn’t heard the term or considered investing some part of their portfolio with these automated advisors. I’ll admit I was somewhat slow to embrace the robo-centric investment model, and was skeptical that software, apps and algorithms could potentially outperform a traditional broker. However, after the performance and low fees of robo-advisors consistently received accolades, I decided it was time to give them a try by opening up a Wealthsimple account.

What Is Wealthsimple?

Wealthsimple is the largest robo investing firm in Canada, founded in 2014. Presently the online-only financial service organization oversees over $4B worth of investments and has expanded to the UK and the United States.

Wealthsimple has a variety of accounts available, including RRSPs, TFSAs and a Smart Savings account. They also offer socially responsible investing accounts that highlight companies that prioritize human rights, low-carbon emissions and cleantech. Wealthsimple even has a unique Halal portfolio that adheres to Islamic investing principles. They have also just launched a new product, Wealthsimple Trade, which offers commission-free stock trading for Canadians.

Integration with other financial accountsInconsistent email response times
Low fees (0.4%-0.5%)No physical branches
Speedy customer service response times on Twitter
Transfer fee reimbursement

How Wealthsimple Works

Wealthsimple’s mandate is to save clients money by allowing them to invest passively in a variety of low-cost exchange-traded funds (ETFs). When you sign up you’ll be asked to fill out a questionnaire about your retirement goals, your timeline for how long you have to build up your savings, and how risk averse you are. Based on your responses, Wealthsimple uses investing algorithms to match you to a portfolio that fits into one of three categories: Conservative, Balanced or Growth.

In my case, because I am comfortable with some risk and moderate but relatively reliable returns, both the RRSP and TFSA I have with Wealthsimple fall into the “Balanced” category. If you’re looking for more growth and are willing to accept more risk to do so, you would likely be given a “Growth” portfolio.

After you fill in the questionnaire and Wealthsimple matches you to a portfolio, your role becomes that of a passive investor. You don’t need to do any research or closely follow the stock markets if you don’t want to. You also won’t do any buying or selling of stocks; Wealthsimple does it all for you.

The company creates (and then continues to rebalance) your personalized ETF portfolio based on “modern portfolio theory,” a Nobel Prize winning investment strategy developed by Harry Markowitz. Without going into complex details, the theory prioritizes portfolio diversity to minimize risk. The belief is that the best way to secure investment savings is to stick with a basket of slow-but-steady earning stocks; that way you’re unlikely to get massive windfalls, but you also won’t suffer massive hits either. Wealthsimple’s wholly-owned Brokerage, Canadian Shareowner Investments Inc., is a member of the Canadian Investor Protection Fund, which protects your account up to $1,000,000 if an investment firm becomes insolvent.

To make investing (and saving) easier, Wealthsimple also offers a feature called Overflow. With Overflow, account holders designate a minimum balance they want to keep in their regular bank account and Wealthsimple takes any money over that amount—the Overflow—and transfers it automatically once a month to your Wealthsimple Smart Saving or investment account. I also like Wealthsimple’s app Roundup, which rounds up every purchase you make with your debit or credit card to the nearest dollar, then takes the difference between the sale price and the rounded figure and deposits it into your Wealthsimple account.

Interface and Usability

Because Wealthsimple is an online-only financial service, they’ve put a lot of time and money into creating a user-friendly and attractive website. It’s filled with colorful graphs that make it easy to understand where your money is invested and how it’s growing. The dashboard provides a comprehensive look at your overall financial picture and its interface allows you to move effortlessly between your accounts if you have more than one. I especially like the interactive slider graphs that let you see an estimate of what your savings will be at any point in the future.

I’m not the only one who gets warm fuzzies looking at their website. Wealthsimple won a Webby award (which honours internet excellence) in 2016 and 2017 for Best Financial Services and Banking Website.

Customer Service

Like other robo-advisors, Wealthsimple accounts are in fact managed by humans. While your portfolio investments are automated, there are human financial advisors operating behind the scenes. That said, as an online financial services firm, there is no physical brick-and-mortar building to visit if you actually want to speak to a human financial expert for advice. Wealthsimple customer service is therefore limited to phone, text, social media and email.

If you do need to reach out for help, it’s reassuring to know that you will be speaking to a licensed Portfolio Manager with experience managing the investments of high net worth clients.

As I have an aversion to waiting on hold, I have personally never used Wealthsimple’s phone service. I have emailed them and have not always been happy with the speed of their replies; I’ve waited as long as five days (though sometimes as little as 24 hours) for a response. I have, however, been very satisfied with their responses via Twitter and sometimes have had my queries answered in less than an hour via that platform.

Cost and Fees

Wealthsimple has two fee structures. Wealthsimple Basic is for clients with net deposits up to $100K. Clients with the Basic account are charged a fee of 0.5% of their account value (all the fees are an annual rate, but are charged monthly). The fee includes your portfolio set up, automatic rebalancing, automatic dividend reinvesting and unlimited financial advice from licensed experts.

Wealthsimple Black is for clients with net deposits of $100K+ and comes with a reduced management fee of 0.4%. It has some added bells and whistles, like a one-on-one detailed financial planning session, tax assistance and VIP airport lounge access.

*Readers should be aware of a special Wealthsimple promotion offered to those who apply through our link: GreedyRates readers will get their first $10,000 worth of investments managed without fees for 1 year on Wealthsimple. It’s also worth noting that if you transfer your investment account from another bank to Wealthsimple, you’re eligible for a transfer fee reimbursement if the account is greater than $5,000 in value. I can personally vouch for this perk: I transferred my RRSP from TD bank to Wealthsimple and was charged $75 by TD, but Wealthsimple covered the fee. 

The Verdict

Wealthsimple is an excellent choice if you’re comfortable banking online and looking for a straightforward, low-cost way to invest your money that doesn’t require much personal participation or stock savvy.

Use It If…

…you don’t want to be an active investor. Wealthsimple’s tagline is “investing on autopilot” and it is exactly that: a passive way to participate in the stock market. It offers a straightforward and accessible way to enter the world of investing that requires very little financial knowledge on your part. Wealthsimple is ideal for those who are intimidated by the stock market or for those who know the basics but don’t have the time to spend hours (or days or months) figuring out how to build and manage a DIY portfolio. While I do have some stocks outside of Wealthsimple that I more actively manage, I very much like having a chunk of savings in ETFs that I can set aside and not think much about.

Don’t Use It If…

…you like to follow the markets closely and enjoy doing your own buying and selling. If your idea of a fun Sunday afternoon is poring over a company’s annual report, Wealthsimple may not be for you. It’s also not for someone: who doesn’t feel comfortable handling financial matters over the internet; wants intensive financial planning sessions; or who values a lot of interactive, face-to-face time with an investment advisor.

Article comments

Phoenix Kiula says:

Lack of physical branches is not a weakness at all. Can’t remember the last time I really wanted to visit a branch. Only reason to do is because banks like TD force me to. As for investment quality and fees, it’d have been a more interesting article if it compared QuestWealth, NestWealth, Planswell etc. A bunch of them now. WealthSimple was itself a copy of WealthFront in the US, not really a novel idea, and it’s now far behind what others offer.

The GreedyRates Team says:

Hey Phoenix,

Great comment. We agree that online banks are absolutely perfect for many cardholders these days, especially now that people are used to communicating and enjoying services from their phones exclusively. There are very few reasons why someone would need to go into a physical bank branch, and by cutting out these largely outdated brick and mortar locations, banks like Meridian (motusbank) are able to offer significantly more lucrative financial products. Totally worth it in our opinion!