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Though robo-advisors and 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.
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 Wealthsimple so appealing to passive investors. This Wealthsimple review presents a complete breakdown of the wealth management platform, the services it offers, and why many consider it to be one of the best robo-advisors in Canada.
What is Wealthsimple?
Wealthsimple is a robo-advisor and digital wealth management platform founded and headquartered in Toronto, Canada. Since 2014, Wealthsimple has established itself as one of Canada’s leading wealth management platforms. Its staple product is its robo-advisor platform but also offers additional financial tools such as the Wealthsimple High-Interest Savings Account (HISA) and Wealthsimple Trade, an online discount brokerage that facilitates self-directed stock trading.
Wealthsimple is renowned for its user-friendly platform, flexible investing options, and approachability for inexperienced investors. It offers a very appealing mobile interface that makes decision making easy to wade through, without any investing jargon.
How Does Wealthsimple Work?
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).
High-Interest Savings Account (HISA) are savings accounts that offer higher interest than regular savings accounts. A Wealthsimple high-interest savings account comes with an interest rate of 2%, which keeps up with inflation.
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.
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.
There are mainly three different portfolio risk tiers, though combinations of each portfolio are also available:
- 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.
- 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.
- Growth Portfolios contain investments with high 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.
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.
No Minimum Investment: 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: 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.
Wealthsimple Roundup: Wealthsimple Roundup lets investors invest spare change with every purchase that they make. Wealthsimple 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.
Wealthsimple Overflow is 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.
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 Options: Tiered Investing Options provide clients with discounts, features, and perks that enhance the experience of being a Wealthsimple customer: Basic, Black, and Generation.
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.
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 Competition: While the wealth management platform’s fees are very reasonable, Wealthsimple prices are commonly cited to be more expensive than the competition.
Wealthsimple 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.
- 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.
- Deposit Requirement: $100,000 to $500,000
- MER: 0.4%
- Trading Fees: None
A Wealthsimple Black portfolio requires deposits between $100,000 and $500,000. In addition to all of the Basic features, Wealthsimple 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 a financial planning session and access to Wealthsimple’s airport lounges.
- 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. The bonus also includes a 50% discount on Medicare health plans.
Is Wealthsimple right for me?
Wealthsimple is a suitable option for investors who prefer taking a more passive route when it comes to investing.
A wealth management platform like Wealthsimple is an excellent option for novice investors seeking to save their money over several years of investing. If you’re new to investing, want some of the lowest prices available in Canada, Wealthsimple might be right for you.
Ratehub.ca readers who sign-up today can enjoy their first year of use for free on investments up to $10,000. That means no MER fee for the first year of investing.
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