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Wealthsimple Review

Wealthsimple Review

Wealthsimple Review

Introduction

When it comes to robo-advisors, there are a variety of big names in the industry. That being said, Wealthsimple is probably the biggest and best-known option – especially in its home country, Canada.

Founded in 2014, the platform was voted Best Financial Services Website in 2016 and 2017 by The Webby Awards; beating its more established American competitors by miles. Today, Wealthsimple continues to serve more than 100,000 customers.

And it's easy to see why. There are plenty of things about Wealthsimple that customers love – especially its diverse portfolio choices (which even include halal-compliant and socially responsible options). Their clear pricing and unlimited access to certified financial planners, regardless of your account balance, is a huge bonus too.

But of course, there's always a price to pay. In Wealthsimple's case, that's a 0.40% to 0.50% advisory fee, which makes them a little pricier than some of their competitors. However, that extra money could be well-worth spending, especially for values-based investors.

If you're considering using Wealthsimple to invest, our review is designed to help you make an informed decision on whether the platform is right for you.

Quick Facts

Wealthsimple is Best For…

Here's a good indication of the type of investors who will benefit the most out of Wealthsimple:

  • Those looking to be socially responsible with their investments
  • Those needing Halal choices in order to comply with Islamic law
  • First-time investors

Wealthsimple is also best for the following features:

  • Automated account rebalancing
  • Tax-loss harvesting
  • Access to fully certified financial planners (humans supplementing the robo-advisor)
  • 0% commission stock and EFT trading for Canadian citizens
  • Roundups for Canadian citizens (similar to Acorns for Americans)

Pros

As mentioned in our introduction, there's a lot to love when it comes to Wealthsimple. Let's take a look at the finer pros of the platform:

+Socially Responsible Investment Options

One of the all-inclusive offerings by Wealthsimple is their socially responsible investment opportunities. The platform gives investors three risk-weighted SRI portfolios to choose from, which all draw from six exchange-traded funds (ETFs).

These focus on companies involved in clean technology innovation, efforts to lower carbon exposure, and promoting greater gender diversity in seniority roles. Affordable housing promotion through government-issued, mortgage backed securities, and local investment opportunities supported by municipal bonds, may also be included.

+Halal-friendly Portfolio

Another pioneering move by Wealthsimple is their Shariah compliant option for Muslim clients. There are approximately 50 individual stocks available, all of which have been appropriately screened by an independent, third-party committee of Shariah scholars.

Absolutely no companies that profit in any way from alcohol, firing arms, gambling, tobacco, or any other industries prohibited by Islamic law are included. Companies that earn any significant income from loans interests are similarly excluded.

This option is 100% in line with the growth portfolio offerings by Wealthsimple, as the company itself is designed to track performance by the broad market. They're also fully invested in equities.

Investing in bonds and other interest-bearing assets are also forbidden in Islamic law. Wealthsimple is upfront about advising customers with a low risk tolerance to withhold a given percentage of their portfolio(s) in cash for this reason.

+Low Account Minimum (and no extra fees)

Wealthsimple offers three packages that are based on your investment. A deposit ranging anywhere from $0 to $99,999 puts you in the Wealthsimple Basic range. And it's a very low hurdle for those looking to get started.

Even with Wealthsimple Basic, you'll get free automated deposits, dividend reinvestment, and automatic account balancing. You won't have to pay any transfer fees (in or out), nor will you be charged for trading and/or tax-loss harvesting.

Once you reach $100,000 and above, you'll qualify for Wealthsimple Black. Here, you'll pay a lower management fee (dropping from 0.5% to 0.4%). And in addition to all the features included in Wealthsimple Basic, you'll enjoy a few others.

+Wealthsimple Service Extras

Already the largest robo-advisor in Canada by 2017, Wealthsimple chose that year to open their services to American citizens as well. Since then, the company has been steadily adding to their services. For example:

  • VIP Priority Pass Exclusively available for Wealthsimple Black clients, this complimentary perk gives the account holder and one travel companion unlimited access to over 1,000 airline lounges worldwide, in about 400 cities.
    • Smart Savings With a 1.75% interest rate (true at time of publishing; subject to change), Wealthsimple's Smart Savings account offers a higher-yield than what most traditional banks offer. While there is a 0.25% management fee (deducted at the end of each month), you'll enjoy unlimited transfers without having to worry about maintaining a minimum balance.

      Whether you simply want to stash some extra cash away for a specific goal, as an emergency fund, or even as a long-term savings account, your money will be readily accessible whenever you need it. But, it's also far enough from your spending account(s) that you won't find the temptation too irresistible.

      • Roundup As mentioned briefly earlier, Wealthsimple's roundup feature works similarly to that offered by Acorns. All you need to do is link your credit or debit card to your account. Every time you make a purchase, Wealthsimple rounds up the total to the next full dollar and automatically deposits the “change” into your investments account.

        However, instead of doing so immediately after each purchase, Wealthsimple tracks your spending and debits the week's roundup total. Roundup is a fantastic way to supplement your direct investment deposits, as well as helping you remember that every little bit adds up over time. This feature is currently only available to Canadian citizens.

        • Free Portfolio Review Wealthsimple offers a free portfolio review to anyone and everyone – you don't even have to be an existing customer. Simply upload a copy of your latest statement from any current investment accounts you have, and a Wealthsimple expert will analyze it for you.

          They'll take a look at your tax efficiency, account fees, and investment allocation. Taking your goals and time horizon into consideration, they'll then call you and discuss their results. Without any obligation to sign on as a Wealthsimple customer after, they'll also let you know whether they can improve on your current portfolio.

+Financial Planners Access

Most of Wealthsimple's competitors (especially in the robo-advisors service industry) put a cap on how much hands-on assistance customers receive, such as only one meeting a year. Alternatively, they might limit you to email-only correspondence, for example.

In such cases, you have to be a premium client maintaining a high account balance in order to get any one-on-one investment advice. Wealthsimple stands out from the crowd in this regard by allowing all customers to schedule phone calls with their certified financial planners. This could justify their higher service fees for you.

+Free Tax-Loss Harvesting

A strategy designed to lower an investor's taxes on investment gains (or any other revenue stream), tax-loss harvesting offsets those taxes with investment losses. Typically, only premium clients are offered tax-harvesting, or it's sold as a separate add-on at premium prices.

However, no matter what level client you are, Wealthsimple's analysts will review your investment accounts – even those with other brokers – to identify tax-loss opportunities.

+Simplicity

Last but not least, Wealthsimple is – in every aspect of its service – one of the simplest, most user-friendly platforms available.

From their intuitive, no-frills website design and mobile applications (available for iOS and Android), to their straightforward approach to pricing and their first-timer-friendly customer experience, it's easy to see where the “simple” in Wealthsimple comes from.

Their Help Center is also full of information – answering just above every question you're likely to have.

Cons

Of course, as with all things in life, there are also a few areas where we feel Wealthsimple falls a little short in comparison to their competitors.

-Account Management Fees

As mentioned in the previous subsection, there are certain features that Wealthsimple offers that can offset the high account management fees. But considering this is the area where both customers and providers make or break their fortunes, it's still a definite let-down.

To put it into perspective, here are the management fees charged by some of Wealthsimple's biggest competitors:

-SRI Fund Management Fees

To be fair, this isn't a Wealthsimple specific issue – socially responsible investments' management fees are notoriously high everywhere. Still, these expenses are taken out of your returns as an investor.

Therefore, we feel it's certainly worth mentioning that even though Wealthsimple looks for the lowest-cost SRI opportunities, the average weighted expense ratio is 0.25%. By comparison, Wealthsimple's non-SRI portfolios have a weighted average of between 0.09% and 0.12%.

-Personal Finance Tools

Wealthsimple is sorely lacking in this regard, largely due to having stripped a lot of these tools (calculators, planners, money command central, and extensive educational resources) to achieve that beautifully streamlined interface.

While this won't be too much of an issue for most, if you're an investor who likes to play around with “what-if” retirement planning scenarios, it can be a major disadvantage.

Is Wealthsimple Right For You?

Our biggest contention with the platform is their comparatively high account management fees. As we've shown in the previous section, Wealthsimple charges double the percentage that Betterment and Wealthfront charge. Once you hit a steady $100,000 in your account, it does get a little better. But even then, you're still paying more than you would for Fidelity Go (the most expensive competitor we've mentioned).

Considering the massive effect management fees can and do have long-term investments, this becomes nothing less than a crucial factor.

In contemplating whether or not Wealthsimple is right for you, you'll certainly have to give their management fees some serious thought. Our best advice is to make use of their free portfolio review. Once you've sat down with one of their analysts, you'll be in a better position to make the right choice for your unique situation.

Conclusion

Wealthsimple is most certainly a clear winner in many regards, as you've now seen. Their values-based investing opportunities alone – particularly with their multiple SRI and Sharia compliant offerings – put them streaks ahead of most competitors.

And those competitors are seriously big-name investing platforms with higher brand-name recognition. This is especially true in the US, considering Wealthsimple is first and foremost a Canadian company. Add to that the fact that Wealthfront and Betterment actually pioneered the robo-advisory industry, and Wealthsimple's rise becomes even more impressive.

But their many pros definitely put them in the same league as those bigger, more established competitors. We feel it's a well-deserved place.

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