A Wealthsimple Review for 2020

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by Ratehub.ca February 18, 2020 / No Comments

Table of Contents

Though robo-advisors and other alternative methods of investing are still somewhat novel among many Canadians, Wealthsimple has done an exceptional job in bridging the gap between passive investing and the general public, all while eliminating expensive portfolio management fees in the process. The name really says it all: Wealthsimple genuinely makes wealth management simple. This review provides a complete breakdown of its services and why many consider it to be one of Canada’s best wealth management platforms.

Wealthsimple Invest review

Wealthsimple offers three major wealth management platforms: Wealthsimple Invest, a robo-advisor service, Wealthsimple Cash, a hybrid chequing account, and Wealthsimple Trade, an online brokerage. 

is renowned for its user-friendly platform, cost-friendly investing options, flexibility and approachability for inexperienced investors. It offers a very appealing mobile interface that makes decision making easy to wade through, without any investing jargon.

One of Wealthsimple’s many clever slogans is “Investing on Autopilot,” which aptly represents how the robo-advisor works. It allows users to invest without active involvement.

It uses a Nobel-Peace Prize-winning algorithm shared by several other robo-advisors across the planet. Passive investing is an investing strategy that does not require constant monitoring or active trading.

The algorithm makes trading decisions on behalf of the investor, who sets their risk tolerance profile during the sign-up process.

Investors will also be required to choose a type of savings account to hold their investments. Savings account options are also available and include High-Interest Savings Accounts (HISA), Registered Retirement Savings Plans (RRSP), and Tax-Free Savings Accounts (TFSA).

Registered Retirement Savings Plan (RRSP) can hold various investments, which allows investors to save more money for retirement while building their savings at a faster rate. Wealthsimple RRSPs can hold ETFs, stocks, and bonds, among other investments, which grows tax-free.

Tax-Free Savings Account (TFSA) is a tax-shelter that can hold investments that can grow at no additional cost.

Some additional features that come with Wealthsimple Invest include:

  • Auto-deposit: You can take the set-it-and-forget-it approach with the auto-deposit feature, which allows customers to set auto-deposits according to their investing goals.
  • Roundup: The Roundup feature lets investors invest spare change with every purchase that they make. Roundup automatically rounds up the spare change from purchases using their chequing account up to the nearest dollar and invests it. This unique feature allows investors to put more of their money away without active monitoring or saving.
  • Overflow: Another unique feature that the robo advisor offers investors. Overflow allows clients to automatically invest all of their money while keeping the money that they need in their accounts.

This approach to investing reduces the trading frequency and the cost of trading. Passive investing also eliminates frequent decision making, though it comes with less freedom and lower returns than self-directed investing.

Once you’ve picked a savings account, Wealthsimple requires new investors to adjust their risk tolerance. Risk tolerance is an investor’s ability to tolerate risk.

Fees and Features

Wealthsimple charges fees based on three minimum deposit tiers: Basic, Black, and Generation. Each deposit level offers specific investing features and advantages. All investment levels come to charge a Management Expense Ratio (MER). Below is a breakdown of the deposit requirement, costs, and features that come with each level of investing.

Basic

  • Deposit Requirement: $0 to $100,000
  • MER: 0.5%
  • Trading Fees: None

A Basic portfolio comes with all of the basic features, including automatic portfolio rebalancing and dividend renewal. It also comes with expert advice and a personalized investment portfolio. Basic members can also can enjoy access to expert advice and consulting.

Black

  • Deposit Requirement: $100,000 to $500,000
  • MER: 0.4%
  • Trading Fees: None

A Black portfolio requires deposits between $100,000 and $500,000. In addition to all of the Basic features, Black comes with an expanse management ratio of 0.4% MER. Other features include various tax benefits such as loss of harnessing and efficiency on funds. Wealthsimple Black members also get to speak with experts and advisors about their financial plans and goals.

Generation

  • Deposit Requirement: $500,000 +
  • MER: 0.4%
  • Trading Fees: None

In addition to all of the Basic and Black advantages, the Wealthsimple Generation package offers investors with deposits of $500,000 or more access to various financial planning options. Additional features include asset allocation and a portfolio management team that provide consultation when required.

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    Portfolio Options

    Below are the three leading portfolio options that are available, though variations of each exist. The ones listed below will grant you a general understanding of which ones are available and what each ETF portfolio offers.

  • Conservative Portfolios hold little risk and invest in more traditional investments. These investments include short-term, government, and high-yield bonds. It also places a portion of investments in dividend stocks.

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  • Balanced Portfolios offer a diverse combination of investments, in which risk and reward are equally dispersed. Portfolios include US Bonds, short term bonds, and government bonds. It also includes investments in foreign stocks, Canadian stocks, dividend stocks, emerging markets, and high-yield bonds.

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  • Growth Portfolios contain investments with higher volatility. They are designed to bring higher returns but are at higher risk to loss. These investments include US and Canadian stocks, Foreign Stock, Emerging Markets, and Short-term and government bonds.

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Wealthsimple Cash review

Wealthsimple Cash, formerly known as Wealthsimple Save, recently transitioned from a savings account to a hybrid account. A hybrid account is a bank account that offers the interest of a high-interest savings accounts with the flexibility of a chequing account.

Wealthsimple Trade review

Trade is a discount brokerage and online brokerage that facilitates ETF and stock trading. It facilitates these trades on major US and Canadian markets. The account uniquely does not charge a commission on trades or trading fees. There is also no minimum balance requirement, meaning anyone can start investing and trading.
Trade offers a personal, non-registered account for trading, as well as registered accounts such as the TFSA and RRSP.

Wealthsimple Trade comes with its own app dedicated to wealth management.

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The Pros and Cons of Wealthsimple

Many benefits come with this wealth management platform, including top-notch user experience, no balance requirements, excellent customer services, ethical investing options, tiered rate options and perks, and mobile and desktop accessibility.

Pros

Wealthsimple offers several unique and celebrated features, most of which are listed below.

  • No minimum investment requirement: There is no minimum balance requirement upon sign-up, making it available to any Canadian who is interested in investing. New clients can open an account with a minor deposit. Since robo-advisors are geared towards beginners and rookies, means no minimum balance makes the platform accessible before investing.
  • Exceptional user-experience and interface and web interface and mobile app: Keep an eye on your investments with a cutting-edge mobile app and a desktop interface that provides easy accessibility and consistent reliability. Both mobile and desktop platforms are enjoyable to use as well, with very sharp, clean graphics and images and a touch of modern minimalism. Wealthsimple is hyper-focused on the user experience, accessibility and straight-forwardness, focusing heavily on things like imagery and adjustable calculators to provide information to its users. A glance over the wealth management’s website will show many bright colours and dazzling branding; this is not something that leaves once you move forward with the robo-advisor.
  • Outstanding customer service: Wealthsimple customer service is noted to be among the best available from any financial institution in Canada. Reviews commonly agree that the wealth management service provides excellent telephone and prompt e-mail customer service.
  • Access to experienced financial advisors: Wealthsimple offers financial advice from (human) finance experts that can answer all of your investing questions and provide insight into your future goals. They are also fiduciary, meaning they are required to provide the best, most honest financial advice to their clients.
  • Socially responsible and halal investing options: Socially Responsible Investing allows investors to put their money in portfolios that are ethical or reflect their values. The wealth management platform also offers a unique Halal Portfolio option. This allows investors the opportunity to invest in ETFs that align with Islamic values.
  • Tiered investing option: Tiered Investing Options provide clients with discounts, features, and perks that enhance the experience of being a Wealthsimple customer: Basic, Black, and Generation.

Cons

Nothing in life is perfect, and robo-advisors are no different. One commonly expressed disadvantage about the robo-advisor is listed below.

  • Higher fees than it’s competitors: While the wealth management platform’s fees are very reasonable, prices are commonly cited to be more expensive than the competition.

What is Wealthsimple?

Wealthsimple is a digital wealth management platform that offers a robo-advisor, online brokerage, and hybrid account. It also offers an online tax filing service known as SimpleTax.

The institution operates in Toronto, Canada. Since 2014, Wealthsimple has established itself as one of Canada’s leading wealth management platforms.

Wealthsimple provides an opportunity for people of all financial backgrounds to increase their wealth and secure their financial futures. There is no requirement of extensive knowledge on how investing or the stock market works. That’s what makes the investing service so appealing to passive investors.

How does Wealthsimple work?

As mentioned above, Wealthsimple Invest is a robo-advisor. It uses a Nobel Peace Prize-winning algorithm to manage investments on behalf of a client.

When using a robo-advisor like Wealthsimple, investors are required to choose a savings account to deposit and hold their funds. They also have to choose their risk capacity to understand the risk associated with their investing.

The algorithm makes trading decisions on behalf of the investor, who sets their risk tolerance profile during the sign-up process.

Wealthsimple Invest manages money on behalf of the client, which is known as passive investing. It is an investing strategy that does not require constant management.

Investors will also be required to choose a type of savings account to hold their investments, which is either an RRSP or a TFSA.

Wealthsimple Cash offers a high-interest chequing account that comes with a fixed interest rate.

Is Wealthsimple right for me?

Wealthsimple is a suitable option for Canadians who want to invest or save their money with ease.

As a wealth management platform, Invest is an appropriate platform for novice investors or anyone seeking low-cost ETF management. It’s also a good option if you’re looking for long-term investing with affordable management fees. The robo-advisor also allows customers to adjust their investments to the risk capacity of their choosing.

Wealthsimple Trade offers an affordable means of self-directed investing, making it a cost-effective option for experienced traders. There are no trade commission fees, which makes the platform suitable for persons who find themselves trading often.

Wealthsimple Cash is suitable for people who could benefit from using a hybrid account and don’t mind using a digital bank account. In any case, anyone using a high-interest savings account can benefit from the excellent interest rate provided by the account.

Ratehub.ca readers who sign-up for an Invest account today can enjoy their first year of investing for free on deposits up to $10,000. To take advantage of this offer, click the link below.

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