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First $10,000 Managed Free (using our link)
No minimum deposit
Free tax loss harvesting and automatic rebalancing
Wealthsimple Financial Inc. was established by Michael Katchen in Toronto, Canada, in September 2014. The firm has $10 billion in assets under management (AUM) and over 1.5 million clients as of November 2020. The growth was driven by the introduction of Wealthsimple in the US market back in 2016, as well as adding new financial services such as Wealthsimple Trade (a commission-free stock trading platform), Cash & Save (a high-yield savings account), and most recently, Crypto – an online cryptocurrency trading platform. Being one of the only robo advisors with socially responsible and halal portfolio options has also helped its growth.0.
This Wealthsimple review will determine how the service fares in terms of low fees and deposit limits, account and investment types, flexibility, and ease of use. We will also find out if they score high enough to become one of the best robo advisors in terms of affordability and ease of use.
We always discuss the fees and deposit limits before proceeding to other criteria. In this regard, Wealthsimple gets a high score because the service comes with a $0 minimum investment. If this is the case, your account will fall under the Basic offering and will come with free dividend reinvestment, automatic rebalancing, and automated deposits.
There’s more good news: Wealthsimple charges zero fees on trading, tax-loss harvesting, and transfers, which allows you to save money on hidden fees.
Wealthsimple has a 0.5% management fee on account balances between $5,000 and $100,000. If your account balance is above $100,000 (categorizing it under Wealthsimple Black, which is appropriate for larger investments), the management fee is 0.4%. Although this is higher than the management fees, the extra features offered with Wealthsimple Black might be worth the extra cost.
Taking it one step further, accounts with over $500,000 to invest qualify for Wealthsimple Generation. This plan includes all Black features plus much more in-depth and personal financial planning, individualized portfolios, a dedicated team of advisors, and half off a Medcan health plan. Generation has the same 0.4% management fee as Black but includes many more features and personal financial planning.
If you sign up using our link, Wealthsimple will manage your first $10,000 investment for free for the first year. There are no hidden charges, and you don’t need to do anything special.
Canadian investors should note that Nest Wealth might be a better choice for you if you’re investing over C$150,000. Due to their fee structure and lower overall Management Expense Ratio (MER), Nest Wealth becomes increasingly less expensive to invest with.
Are you paying higher fees elsewhere on your RRSP, TFSA, or other accounts? You don’t have to. Transfer any accounts worth $10,000 to Wealthsimple, and they’ll cover any transfer fees your bank charges you.
So far, Wealthsimple offers no minimum deposit but has slightly higher management fees. It would have been great if the management fee was on par with the charges levied by the top services. However, they offer many features such as Smart Savings with a high interest rate, Microinvesting, and extended portfolio options that many other services do not. If you’re Canadian and investing a larger amount, you should also take a good hard look at Nest Wealth.
We do, however, really like the tiered structure – if you have a larger amount to invest (over $100,000), they reduce the management fees to 0.4% and offer extra features. We think more robo advisors should do this.
Wealthsimple Performance & Returns
Wealthsimple is a relatively new robo advisor, with its inception being in early 2017. You can find their performance reviews for various portfolios here.
There are three different risk tolerance levels, Conservative, Balanced, and Growth, for the standard account, socially responsible investments, and Halal investments.
There is a chart of how the investment portfolio performed over the past month, three months, six months, and previous years for each portfolio. You will also see a breakdown of the funds that each portfolio will be investing in.
While past performance can’t determine future success, this data can give you an idea of the different portfolios’ average returns over the past few years.
Here’s an example of the performance for their Balanced (slightly conservative) portfolio since inception (January 30, 2017)
Wealthsimple Invest is a fully-automated wealth management service. Although the service comes with automatic rebalancing and dividend reinvestment, this is not the type of service that is ideal for hands-on investors.
This comes as no surprise since the Wealthsimple app will put all your investments on autopilot by utilizing the Modern Portfolio Theory. The service is also tweaked for younger investors who prefer to automate their investments using a beginner-friendly customer experience. If you happen to be a hands-off investor with large taxable accounts, Wealthsimple might be the right choice.
Ease of Use
Signing up consists of a simple process that involves completing an online application on their website, entering your email address, giving your E-signature on the required Investment Management Agreements, and entering your account information, including your bank account, to make a transfer. After this, your new Wealthsimple account will be ready in a few days so you can begin investing.
Wealthsimple offers free 401(k) assistance, tax-loss harvesting, portfolio rebalancing, automatic weekly, bi-weekly, monthly deposits, and socially responsible investing in a fully automated account. It might not be as flexible as some services, but Wealthsimple shines when it comes to ease of use.
Account Types and Services
Wealthsimple Invest consists of two types of accounts: Wealthsimple Basic and Wealthsimple Black. The former is ideal for investors with a minimum balance of $100,000 and comes with extra financial services and lower fees, which we’ll talk about below.
Remember, the first $10,000 in your account is managed for free for the first year if you use our link.
Wealthsimple Black is appropriate for investors with account balances of $100,000 and up. Clients under this plan will pay a lower management fee of 0.4% and get goal-based investing. You also get dedicated financial planning from expert financial advisors so you can meet your financial goals.
If you have over $500,000 to invest in Wealthsimple, you’re automatically upgraded to their “Wealthsimple Generation” account type, which gives you comprehensive financial planning, individualized portfolios, and a dedicated team of advisors.
Wealthsimple offers taxable, traditional IRA, and SEP IRA accounts. It also offers joint, trusts, Roth IRA, and Rollover IRA accounts. All taxable accounts get free tax-loss harvesting. Non-taxable accounts benefit from portfolio rebalancing and human-assisted financial advice.
Your investment portfolio will consist of ETFs from 16 asset classes. You also get individual stocks for halal portfolios. Wealthsimple also shines in this regard since it gives American investors the opportunity to invest in SRI portfolios, and halal investing products. If you are a socially responsible investor or if you are seeking halal investment choices, you will definitely love your investment options with Wealthsimple.
Other Services & Features
Wealthsimple Cash & Save
High-Yield Savings Accounts have been all the rage lately amongst robo advisors, with all the major players offering one.
Wealthsimple is no exception. In fact, they offer two different savings accounts – one for Canadian customers called Wealthsimple Cash, which was launched in January 2020, and one for American clients called Wealthsimple Save.
Due to the differing laws and economies, the two accounts offer two different APYs (annual percentage yield – this is what you earn from the money sitting in your account). They have basically the same features otherwise: A safe place to put your Rainy Day Fund when you aren’t investing it that earns a (much) higher APY than the market average. Additionally, both accounts offer unlimited free transactions, no account minimum, insurance, and a high level of security.
The Canadian Cash account takes it a step further by offering a beautiful tungsten metal card that will surely make you feel more important, free withdrawals, ATM fee reimbursement, and no foreign transaction fees, making Cash a hybrid savings/spending account.
Wealthsimple also has a brilliant micro-investing service that the company calls Wealthsimple Roundup. The service allows you to invest spare change in a smart portfolio using low-cost ETFs. It is simple and easy to use. All you need is to turn on the Roundup feature in the Wealthsimple mobile app. Every time you make a purchase using your debit or credit card, the service will round up the purchase to the nearest dollar and invest the spare change.
For example, if you spent $19.25 on your favorite ride-sharing service, the purchase will be rounded up to $20 and the spare $0.75 will be automatically invested. The portfolio will grow as you spend more. We think is a great addition to an already impressive robo advisory service.
Wealthsimple Trade (Canada Only)
Canadians are a lucky bunch, as they not only get Wealthsimple’s super high 0.75% APY on their Cash accounts, but they also get commission-free stock and ETF trading with their Wealthsimple Trade accounts.
While most major banks and brokerages charge $5-$10 per trade, Wealthsimple’s new Trade feature disrupts this model by introducing a trading platform that allows for unlimited $0 trades.
While there are some obvious huge benefits here, there are a few things to consider before signing up:
Wealthsimple, along with most other robo and financial advisors, suggest that trading stocks directly is too risky for a healthy, diversified portfolio
Day Trading is highly discouraged on the platform
No real-time quotes (they’re delayed about 15 minutes)
No penny stocks
A 1.5% USD <-> CAD conversion fee (this is how they make money)
If those are manageable caveats for you, then Wealthsimple Trade might be the perfect trading platform for you.
Investing Master Class
Wealthsimple also launched their free Investing Master Class in 2019 to help new investors get a handle on their personal finances and investments in a jargon-free, easy-to-understand way.
The Master Class consists of 10 short videos, covering topics such as the Stock Market, Investing 101, Saving vs. Investing, Automating Your Finances, and more. The videos will get you from zero-to-investor, and they’ll only take a total of 45 minutes to do.
We highly recommend watching these videos.
Suitability for Different Investment Budgets
Even though the account minimum is $0 for the Wealthsimple Basic service and will charge 0% advisory fees for the first year if your account balance is from $0 to $10,000, the service will impose a 0.5% fee for anything above that, up to $100,000.
The $0 account minimum is great, but the high management fee is a letdown. The good news is Wealthsimple will only charge 0.4% of your account balance is above $100,000. In this regard, your account will be classified under Black or Generation. The advisory fee may be lower than Wealthsimple Basic, but it is still higher than the industry standard since Betterment and Wealthfront will only charge you 0.25% (although Betterment also charges 0.40% for their $100,000+ Premium service.) However, Wealthsimple does come with many more personalized features those others don’t, so they may be worth the extra cost if they are important to you.
And if you’re Canadian, any amount over C$150,000 might be better invested over at Nest Wealth, based on their fee structure. However, keep in mind that Black and Generation have some features that other Canadian robo advisors may not.
The automated investment service is great for investors with both high and low budgets. The service also offers a lot of features, but all of it comes at a price.
Wealthsimple is one of the best robo advisors for beginners, socially-responsible investors, high-net-worth investors, and especially Canadian investors. The service is easy to use and offers a plethora of free premium features (automatic rebalancing and tax loss harvesting) along with access to human financial advisors.
If you want a more hands-on investing experience, you may want to look elsewhere. But if you’re a values-based investor or want a hands-off automated investing experience, Wealthsimple will be a good choice for you.