Investing
January 7, 2018

Wealthsimple Review

Simple. Thrifty. Living.

The past several years witnessed a surge of platforms offering automated investing services, making investing in stocks and other financial vehicles accessible to all, including beginners, seasoned investors and people with little capital, as well as those with significant funds for investing. These robo advisors often offer similar features, but differences do exist. So how do you know which robo advisor is best for your needs? Keeping your personal circumstances and goals in mind, check out our review of Wealthsimple, one of the newest entrants in the robo advisor marketplace.

Wealthsimple Review

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  • Best for: Wealthsimple is best for investors with at least $100,000 to invest, beginning investors with less than $5,000 to invest, people who want their investment choices to align with their values, and people who value human interaction.
  • Price: Wealthsimple charges an account management fee between 0.4 and 0.5 percent annually, depending on whether you have a Basic account with a balance of less than $100,000, or a Black account. Neither account is charged trading, account transfer or rebalancing fees. Wealthsimple charges only an investment management fee, though managers of the funds you invest in will likely charge a fee that annualizes to about 0.2 percent.
  • Features: All Wealthsimple accounts feature automatic portfolio rebalancing, dividend reinvesting, automatic deposits, live financial advice from experts and tax-loss harvesting. Wealthsimple Black accounts, for investors with more than $100,000, also provide financial planning sessions and VIP airline lounge access in more than 400 cities around the world.
  • Customer Service: The Wealthsimple Relationship Management team can answer questions regarding opening and funding accounts, your application, investment portfolio or financial plan, and they’ll connect you with a Portfolio Manager through a scheduled call when they cannot answer your question. Customer service is available by phone, Monday through Friday from 8 a.m. to 8 p.m. Eastern Standard Time, and by email.

Signing up for a Wealthsimple account is simple and straightforward: create an online account, verify your identity and connect your bank account. You’ll complete a short risk assessment questionnaire that assigns you with an initial risk profile. Based on your risk tolerance, timeline, investment history, level of investment knowledge and financial goals, a recommended portfolio mix will be suggested.

Wealthsimple invests your account in a diversified portfolio of exchange traded funds, ETFs, that focus on low-cost index-based funds of varying positions. The advantage of ETFs is that your portfolio can be invested in thousands of different companies and across many major sectors around the globe. Alternatively, you can focus your portfolio on socially responsible investments (more on that below).

Wealthsimple’s investment algorithms are based on Modern Portfolio Theory, developed by Nobel Prize-winning economist Harry Markowitz, who determined that investors can minimize their risk and maximize their return by diversifying their investments across industries and markets.

There are conservative, balanced and growth portfolios that offer varying splits of stocks and bonds, and your custom mix of growth, international, fixed income, cash and other asset classes is based on your risk comfort level and financial situation, as determined by your answers to the short risk questionnaire completed during sign-up. The conservative portfolio is a 65/35 stock/bond split, while the growth portfolio is 80/20 favoring stocks, and the balanced portfolio is a 50/50 split. Six of the 10 ETFs Wealthsimple offers in its portfolios are from Vanguard.

If you are the type of investor that will add small amounts into your account over time, then you’ll appreciate that Wealthsimple buys fractional shares of ETFs. This means that your money is used right away, instead of being wasted by sitting in a low-interest-bearing cash account until you deposit enough to purchase a full share. Your entire deposit can be invested in full immediately.

If you roll over any 401(k), 403(b) or IRA funds, then Wealthsimple will not only assist with completing the transaction, it will pay any transfer fees charged by your bank or other financial institution.

Though Wealthsimple features many of the items found commonly with other robo advisors, it distinguishes itself from the rest of the competition in several ways. First, Wealthsimple offers socially responsible investment portfolios for customers who want to feel good about where their money is invested. The socially responsible investment portfolio has six options, including portfolios that prioritize low carbon emissions, advance clean-tech innovations and promote sustainable growth in emerging markets. The portfolio investments are used only in targeted, approved businesses and municipalities.

The newest addition to Wealthsimple’s offerings is a Halal investing portfolio that contains around 50 individual stocks, and does not contain ETFs like the other portfolios. These stocks are screened by a third-party committee of Shariah scholars to ensure no companies that profit from gambling, weapons, tobacco or other restricted industries are permitted in the portfolio. The scholars also screen out companies that earn significant income from loan interest and will not allow their inclusion in the portfolio.

Another distinguishing feature of Wealthsimple is its transparency in pricing. There are no hidden extra fees. Even with a low account minimum, Wealthsimple provides free automated deposits, automatic rebalancing and dividend reinvestment. Wealthsimple charges no fees on transfers, trading, rebalancing or tax-loss harvesting, though most competitor’s robo advisors charge fees for these tax efficient services.

The most outstanding feature for many Wealthsimple customers is the access to an actual human for support or advice. The point of robo advisors is to automate as much of the investing process as possible. There are times, though, when it’s easier speaking to a person or more helpful to speak directly with a person. And for some, the personal interaction is a necessary feature for any comfort or confidence.

In addition to the standard email and phone support at Wealth simple, Basic clients get a 15-minute phone call when they start to get a walk-through on the basics of investing, financial planning, their investments and any questions they might have. Wealthsimple Black customers unlock more extensive features, such as getting a more formal financial plan in a written document. Additionally, any customer can request a phone appointment with a member of the customer support team, even outside of business hours.

Overall, Wealthsimple receives mixed reviews. It is almost universally criticized for its high account management fees, particularly for the Wealthsimple Basic account. Where Wealthsimple charges 0.5 percent annually for amounts under $100,000, other robo advisors charge as little as 0.25 percent. Wealthsimple Black customers pay a fee comparable to or even lower than other robo advisors. Wealthsimple tends to receive three to four stars, with human availability, a simple platform and no minimum balance requirement especially praised. Reviewers also highlight the socially responsible investment options. There is some criticism that Wealthsimple is too simple; they criticize the lack of more advanced features such as educational tools, planners or financial calculators. For this reason, Wealthsimple is recommended more often for people who are just learning about investing or those who want a more hands-off approach to their investments.

The answer depends on what is important to you. If talking to a human is important to you, then Wealthsimple might be a good choice for you in a market where very few robo advisors provide access to live support and financial advice one-on-one. If you are looking for the cheapest investing option available, then keep searching because you won’t find it here. Although Wealthsimple charges considerably less than traditional financial advisors, its account management fees for the Wealth simple Basic account are on the higher end, twice the costs charged by some competitors. The fees are more competitive with the Wealthsimple Black account, so investors with more than $100,000 might consider Wealthsimple a good value. Investors who wish to do good in the world while earning money will appreciate the socially responsible investment offerings.

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