Wealthsimple was established in Canada in September of 2014. The firm provides investment and savings programs which are governed by algorithms. Its services are available through the firm’s Toronto, London and New York offices. Canadian financial giant Power Financial has invested a minimum of $74 million within the fast-growing robo advisory service. New clients can transfer taxable and retirement accounts or deposit funds into new accounts. The account minimum is $0, making it easy for brand spanking new investors to get their start. A small pool of low-fee ETFs is employed to populate relatively generic portfolios that are further customized by the knowledge you set into the platform (this is completed with mutual funds within the U.K.).
Overall rating: 3.5/5
- Minimum investment corpus in the account: $0
- Fees: 0.50% of assets under management (0.40% at $100,000)
Let’s start by outlining the pros and cons of Wealthsimple:
- Canadian, American, and UK accounts
- Excellent educational resources
- Savings account with competitive interest
- Tax loss harvesting
- No minimum account balance requirement
- Must disclose personal data to look at setup
- Algorithms follow generic buy and hold strategy
- Limited choices in portfolio creation
Account setup – 4.2/5
To set-up a Wealthsimple account, you’ll need to provide your personal information upfront. What this means is that you can’t check out the questionnaire or review portfolio allocations before giving out detailed personal information. The questionnaire consists of questions on a potential investor’s financial goals, time horizon, risk tolerance, past investment experience and level of investment knowledge.
Your responses will help generate a portfolio and ETF list customized in response to the finished profile. You can change proposed allocations, but the system may invite reasons if alterations conflict with prior responses. Accounts are funded through checking account links and may be accomplished with a one-time payment or recurring deposits.
Wealthsimple’s account types vary along with which region you reside in. In America, Wealthsimple provides support for individual and joint taxable accounts, trust accounts and also the standard range of retirement accounts.
In Canada, Wealthsimple offers a full range of accounts, including tax-free savings accounts (TFSA), corporate accounts, joint accounts, retirement savings plans (RSP), locked-in retirement accounts (LIRA), registered retirement income funds (RRIF), registered education savings plans (RESP) and taxable accounts.
Across the Atlantic in the United Kingdom, Wealthsimple offers pension accounts, individual savings accounts (ISA), junior individual savings accounts (JISA) and private taxable accounts.
In addition to a daily investment program, Wealthsimple offers a sensible bank account that pays higher interest than traditional savings accounts by using low-risk ETFs. The account is taxable and incurs a 0.25% fee rather than a 0.50% fee, lowering net interest. The Smart bank account is insured through the Securities Investor Protection Corporation (SIPC) insurance instead of the FDIC.
Goal Setting: 3.4/5
Wealthsimple provides you unlimited financial planning sessions and a one-time session for non-clients who submit account statements beforehand. You also get the option to with a personal advisor upon request. During the setup process, new account holders are asked to select from a goal planning list that has home ownership, retirement, education, long-term growth, and income. Multiple goals are often created under one account, offering greater sophistication and variety if required. You’ll be able to review transactions and relative performance statistics, sub-divided by goals, on account management pages after funding is complete.
Account Services: 3.3/5
To transfer funds to your Wealthsimple account, you need to log in to your account management interface and request a deposit or create a recurring deposit through a linked checking account. Withdrawals are often requested with a couple of clicks, but it can take up to 10 business days to receive the funds if your account has unsettled transactions. As another incentive, Wealthsimple pays transfer costs on new accounts funded with a minimum of $5,000. You’ll also have the option to activate Roundup after linking credit and debit accounts, which calculates and deposits “spare change” accumulated by rounding up charges to the subsequent integer.
Individual and joint taxable accounts cannot use margin or borrow from the account, and Wealthsimple offers no additional banking services at this point.
For filing their tax returns, Canadian clients of Wealthsimple have the option to utilize the integrated SimpleTax tax preparation service to file their returns. This partnership was announced in late September 2019, and combines two Canadian fintech firms under one virtual roof.
Portfolio Content: 2.5/5
The nature of the system generated portfolio, whether conservative, balanced or growth oriented, depends on your profile data. Portfolio exposure is taken solely through ETFs within the U.S. offering. Mutual funds could also be mixed in with Canadian accounts and are the first vehicle within the U.K. offering. There are not any individual stocks or direct fixed-income products available in regular accounts. You’ll also be able to further customize your portfolio by choosing a socially conscious portfolio that excludes non-qualified ETFs. Wealthsimple also offers a Halal account that complies with the Islamic Shariah Law , buying pre-screened stocks but no ETFs or fixed-income products.
The Investor Policy Statement helps you review your current allocations. The statement is accessible through the account management interface. For the U.S. offering, there’s a comparatively small universe of 10 funds populating the ETF list, divided into an equal number of asset categories. The Canadian version has an equivalent number of funds, but contains a true estate fund that doesn’t have an American counterpart. The U.K. offering has 12 funds that will populate the portfolio.
Each Wealthsimple portfolio can include eight to 10 instruments, giving the impression that the majority of the customization is completed through percentage changes instead of ETF selection. The funds are all from the usual suspects for the U.S. offering, including iShares, Vanguard, VanEck and WisdomTree. The Canadian offering has ETFs from Vanguard and iShares also, with additional offerings from Purpose Invest and BMO. The U.K. version offers funds from Vanguard in addition to Legal & General, PIMCO, BlackRock and Amundi Asset Management.
Wealthsimple’s portfolio contents and construction are selected consistent with Modern Portfolio Theory (MPT) principles, similar to most robo-advisories. The limited fund universe can still create a diversified portfolio, but similarly sized rivals have gone to greater lengths to create checks against asset or geographical concentration and more robust target date functions.
Portfolio Management: 3.7/5
Wealthsimple manages your portfolio with the help of tested market strategies such as diversification across asset classes, passive buy-and-hold investing, dividend reinvestment and client feedback through the profile and risk scoring process. As you get closer to your goals, the system provides some coaching that advises you to increase the amount of funds or keep doing what you are doing. Changing the risk score associated with your profile at any time will trigger a portfolio rebalancing.
Wealthsimple automatically rebalances your portfolio based on deposits, withdrawals, and changes in asset values. You cannot request rebalancing, nor make changes to ETFs beyond the socially responsible and Halal options. Tax loss harvesting strategies are executed on behalf of Wealthsimple by the Apex Custodian. What that means, is that your taxable portfolios will occasionally see substitutions of equivalent investments for tax purposes.
User Experience: 3.8/5
Wealthsimple’s mobile website, along with the iOS and Android apps are quite easy to read and use. They also feature enhanced account management features. The iPhone and many Android devices provide biometric identification, and both apps support two-factor authentication. There are not any tablet-specific apps or apps for Windows Phone or other secondary operating systems
The website features the important account features, explains the company’s philosophy, and contains a comprehensive FAQ section which covers most areas of interest pretty well. New account holders are required to enter personal details at the start of the account setup process, so you can’t peek at the portfolio options in advance. The FAQ doesn’t elaborate this hidden material very much. It just states that applicants must give “basic information, answer a couple of questions on previous investment experience, and e-sign one or more Investment Management Agreements.”
The Wealthsimple U.S. site shockingly lacks the SEC mandated ADV-2A investment advisory brochure. The rule states that advisors are “required to deliver to clients and prospective clients a brochure disclosing information about your firm.” Wealthsimple does have an ADV-2A on the SEC website, so it is bizarre that it is not explicitly linked on the site. The ADV-2A is meant as a consumer protection document, and company disclosures within those brochures are vitally important in establishing trust between advisor and client, so this is a major omission.
Customer Service: 3/5
As mentioned earlier, clients can speak with a financial advisor upon request, although contact information may be a bit harder to seek out than it should be. You can contact Wealthsimple by phone and email, but there’s no live chat for prospective or accounting holders. The contact number for Wealthsimple can be found on the bottom of some webpages as well as in the help center. There isn’t a particular “contact us” page outside of an FAQ. Phone hours are listed as 9:00 AM to 8:00 PM Eastern time Monday through Thursday and 9:00 AM to 5:30 PM Eastern time on Friday for the United States. In Canada, the call center opens an hour earlier. The U.K. call center lists no working hours.
Education and Security: 3.5/5
The highlight of the Wealthsimple website in this department is definitely the Investing 101 glossary, a broad-brush investment FAQ and a superb monthly magazine/blog with dozens of “how-to” articles. However, it’s difficult to locate subjects of interest because there’s no internal search function for the educational content. In addition, many of the tutorials lack the quantitative tools needed to help you with short-term goal planning and long-term financial planning.
ShareOwner plays the custodian role in Canada and SEI Investments does the same thing in the United Kingdom. The U.K. and Canada also have differing levels of account protection through the Canadian Investor Protection Fund (up to $1 million) and the U.K. government’s Financial Services Compensation Scheme (up to £85,000).
Commission and Fees: 4.4/5
Wealthsimple’s fees vary by region as mentioned, but they’re in line with industry averages. In the U.S. and Canada, 0.50% fee includes all investment advice, portfolio management, and trading costs. The fee drops to 0.40% for accounts at and above $100,000. In the United Kingdom, the fee is 0.7% with a drop to 0.5% with £100,000 in assets under management.
The Smart Savings program fee is lower at 0.25%. Disclosures state that average ETF fees run around 0.15%. Wire transfer charges and charges for transferring the account to another broker are levied by Apex.
Wealthsimple Inc. is a millennial focused online investment management service from Canada. The firm was founded in September 2014 by Michael Katchen and its head office is in Toronto. As of August 2019, the firm holds over C$5 billion in assets under management. Wealthsimple is primarily owned by Power Corporation indirectly at 83.2% through investments made through their holdings in Power Financial, IGM Financial and Portag3.
Founder Michael Katchen worked for 1000Memories, a Silicon Valley-based startup prior to founding Wealthsimple. After Ancestry.com bought 1000Memories in 2012, Katchen developed a spreadsheet with tips to assist his colleagues figure out investment portfolios. Interest within the spreadsheet helped inspire the thought for Wealthsimple. In 2014, he returned to Toronto to launch the company.
In December 2015, Wealthsimple acquired Canada’s very first robo advisor, Canadian ShareOwner Investments Inc. Through the acquisition Wealthsimple became the owner of one of Canada’s 14 discount brokerages (as of 2015) alongside other owners of discount brokerages including Bank of Montreal and Royal Bank of Canada. The acquisition of Canadian ShareOwner Investment Inc. resulted in the assets under management comprising CAD $400 million across 10,000 customer accounts.
In March 2016, Wealthsimple started offering socially responsible investment options to its clients.
In May 2016, the firm partnered with Mint, which allowed its clients to sync their Wealthsimple investment account to Mint’s budgeting software.
Also in May 2016, Wealthsimple launched Wealthsimple for Advisors, an automatic platform for financial advisors. The service is intended for advisors who wish to maintain clients with accounts below their minimum requirements.
On April 5, 2018 ,the firm launched Wealthsimple Save, a high interest savings account with a rate that will always be higher than traditional banks.
Wealthsimple Trade, a zero-commission stock and exchange-traded fund (ETF) trading mobile app, was available in the beta version in August 2018 and publicly launched in March 2019.
In January 2020, Wealthsimple launched Wealthsimple Cash for Canadian customers, a hybrid savings/chequing account offering high interest on balances. Spending features such as a visa debit card, e-transfers, bill payments and pay cheque/cheque deposits are planned to be rolled out through 2020.
As of March 2020, Wealthsimple trade became unable to handle the volume of trades their customers were placing and began capping the number of users and putting some investors onto wait lists.
Wealthsimple combines a robo-advisor platform with access to measure advisors. Each client is provided an investment advisor who helps match investments to the client’s long-term goals and risk tolerance. The firm doesn’t occupy retail space; instead its advisors are available via phone, text message, email or video chat. There is no account minimum required and no charge per transaction. An annual fee is charged starting from 0.4% to 0.5% supported account size. Portfolios are monitored on a daily basis and rebalanced in case they go beyond certain thresholds.
Wealthsimple also has a platform for advisors called Wealthsimple for Advisors and a platform for companies called Wealthsimple for Work.
In April 2018, the company began offering a savings account with a 1.7% interest rate. Their site now promotes the rate at 2.0%.
In September 2018, the company started offering a micro-investing service called Roundup, which automatically rounds up purchases and invests the extra change into your Wealthsimple investment account.
In March 2019, the company offered a stock and ETF trading account with zero-commission fees in the U.S. and Canada.
In September 2019, Wealthsimple acquired the famous Canadian tax software company SImpleTax. The acquisition of SimpleTax added online tax-return preparation and filing service to Wealthsimple’s suite of financial products.
Wealthsimple Cash offers a higher savings rate than Wealthsimple Save, with full service checking account features planned to be in service by the end of 2020.