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Wealthsimple

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For our Canadian audience we recommend you read Young & Thrifty’s review. This review is for US users only.Wealthsimple is an automated investing service — or robo advisor — and the largest such service in Canada. This review is an American Wealthsimple product review, if you are Canadian we recommend you to read Young & Thrifty’s review.It was launched in 2014 and made available to U.S. clients on Jan. 31, 2017, after six months of beta testing. (It’s also available in the U.K.) The company is based in Toronto, with offices in New York and London. It now has more than 120,000 global clients and over $4 billion in assets under management.

Wealthsimple is backed by a team of world-class financial experts and some of Silicon Valley’s best technology talent. The company has raised $78 million in capital. Its staff is made up of software engineers, designers and data scientists who have previously worked at such companies as Amazon, Google and Apple.

What Is Wealthsimple?

Wealthsimple provides world-class, long-term investment management with no account minimums. Your account is invested in a diversified portfolio of exchange-traded funds (ETFs) that focus on low-cost index funds. This enables the development of a portfolio that is invested in thousands of different companies and across many major sectors around the globe.

The service includes automatic rebalancing, dividend reinvesting and tax-loss harvesting. In addition, Wealthsimple’s financial advisors are available to you whenever you need them. This can be an exceptional platform, particularly for new and small investors, who historically have been unable to afford access to these services.

  • Portfolio Review — Wealthsimple offers a portfolio review service, which is a free, objective evaluation of your non-Wealthsimple financial accounts. They’ll evaluate the fees you’re paying, the tax efficiency of the account and the portfolio allocation of any third-party accounts you have.
  • Halal Investing Portfolio (New) — A simple and low-cost portfolio that aims to grow your money for the long term while complying with Islamic investing principles.
  • Smart Savings (New) — With Wealthsimple’s new fixed-income portfolio, you can earn interest. There’s no minimum account size, and the platform allows for unlimited, free transfers.
  • Free Stock Trades for Canadians (New) — With the new Wealthsimple Trade app for iOS and Android, Canadian investors can now buy and sell more than 8,000 stock and ETFs on major Canadian and U.S. exchanges for $0 in commissions. This brokerage service is currently available only to Canadians
  • Roundups for Canadians (New) — Similar to the services offered by microsavings apps such as Acorns and Qapital, Wealthsimple’s Roundups take the spare change from a purchase and invest it in your savings or investment account.
  • Investing Master Class (New) — Enjoy a 10-video educational course designed to teach you the basics of investing in just 45 minutes.
  • Free Retirement Calculator (New) — Wealthsimple has unveiled a free retirement calculator designed specifically to help Canadians understand how much they need for retirement.

How Does Wealthsimple Work?

Wealthsimple’s investment approach is based on Modern Portfolio Theory. That’s an investment theory developed by Nobel Prize-winning economist Harry Markowitz, who demonstrated that you can minimize risk and maximize return by diversifying your investments. Wealthsimple’s automatic rebalancing and dividend reinvesting complement that strategy.

The sign-up process includes a short risk assessment questionnaire to determine your initial risk profile, after which you are given a recommended portfolio mix. Your portfolio is based on your financial goals, time horizon, risk tolerance, past investment experience and level of investment knowledge.

However, when these change, you may want to adjust your portfolio accordingly. You may even want different portfolios for each account, as you may have different time horizons and goals. Wealthsimple allows clients to call or email to discuss these and to make changes to their portfolio based on their desires.

Easy Sign-up Process

Signing up for Wealthsimple is a simple three-step process:

  1. Complete the online application, with some basic information, as well as answering a few questions about your previous investment experience;
  2. E-sign one or more Investment Management Agreements;
  3. Bank verification — via online by entering your account information




Once completed, your account should be up and be running within five business days.

Portfolio

Wealthsimple’s portfolios are comprised of varying positions in low-cost index-based ETFs. There are three portfolios, including conservative, balanced and growth. 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.

Stocks

Sector ETF Ticker
US Vanguard US Total Stock Market VTI
US Vanguard Mid-Cap Value ETF VOE
US Vanguard Small-Cap Value ETF VBR
Foreign Vanguard FTSE Europe ETF VGK
Foreign WisdomTree Japan Hedged Equity Fund DXJ
Emerging Market Vanguard FTSE Emerging Markets ETF VWO

Bonds

Sector ETF Ticker
Municipal iShares National Muni Mond ETF MUB
US Inflation Protected iShares TIPS Bond TIP
US Govt and Corporate IG Vanguard Total Bond Market ETF BND
High Yield VanEck Vectors Fallen Angel High Yield Bond ETF ANGL

Socially Responsible

Wealthsimple provides this option for investors who are interested in feeling good about their investments. The socially responsible portfolio prioritizes low carbon emissions, advances clean-tech innovation and promotes sustainable growth in emerging markets.

Sector ETF Ticker
Lower Carbon Exposure iShares MSCI ACWI Low Carbon Target CRBN
Clean-Tech PowerShares Cleantech Portfolio PZD
Socially Responsible US Companies iShares MSCI KLD 400 Social Index Fund DSI
Gender Diversity SPDR Gender Diversity SHE
Local Initiatives PowerShares Build America Bond Portfolio BAB
Affordable Housing iShares GNMA BD ETF GNMA

Halal Portfolio

A new option for Muslim investors, this portfolio adheres to Islamic Halal rules (debt-based investments and companies that profit from gambling, alcohol, pork, etc., are excluded).

Company Ticker
Johnson & Johnson JNJ
Exxon Mobile Corp. XOM
Novartis AG NVS
The Procter & Gamble Co. PG
SAP SE SAP
Canadian National Railway Co. CNR
Total SA TOT
Pfizer PFE
Canon Inc. CAJ
Unilever UN
Chevron Corp. CVX
Royal Dutch Shell RDS-A
Alibaba Group Holding BABA
Merck & Co. Inc. MRK
DowDuPont Inc. DWDP
Thomson Reuters Corp. TRI
Texas Instruments Inc. TXN
Pembina Pipeline Corp. PPL
Imperial Oil Ltd. IMO
Intel Corp. INTC
Sanofi SNY
CGI Group Inc. GIB-A
Suncor Energy Inc. SIJ
Koninklijke Philips NVR PHG
NTT Docomo Inc. DCM
ABB Ltd. ABB
Metro Inc. MRU
BHP Billiton Ltd. BHP
Magna Intl. Inc. MG
Danaher Corp. DHR
Chunghwa Telecom CHT
Unilever PLC UL
TJX Companies Inc. TJX
BP PLC BP
CRH PCL CRH
Saputo Inc. SAP
Broadcom Ltd. AVGO
Starbucks Corp. SBUX
Agrium Inc. AGU
Union Pacific Corp. UNP
SNC-Lavalin Group Inc. SNC
FedEx Corp. FDX
Exelon Corp. EXC
Eli Lilly & Co. LLY
Gildan Activewear INc. GIL
Barrick Gold Corp. ABX
Bristol-Myers Squibb Co. BMY
Potash Corp. of Saskatchewan POT
The Kraft Heinz Co. KHC
Tesla Inc. TSLA


Wealthsimple Black Program

Wealthsimple offers the Black Program for investors with higher account balances. With $100,000 or more, you will enjoy the following perks:

  • A reduced annual management fee of 0.40%.
  • A financial planning session with one of Wealthsimple’s expert advisors to help you meet your financial goals.
  • VIP access to more than 1,000 airport lounges in more than 400 cities; this will include a Priority Pass membership for you and one traveling companion.
  • Additional tax-efficiency features, including tax-loss harvesting and tax-efficient funds.

This kind of investment service level is typically available to investors with much larger portfolios and at much higher annual fees at traditional investment brokers and advisors.

Wealthsimple Generation (New)

For high-net-worth investors serious about growing and preserving wealth, Wealthsimple now offers a third tier called “Generation.”

Generation requires a minimum deposit of $500,000 or more. Clients will receive access to a dedicated team of financial advisors who will provide advice on call for a 0.40% management fee. Your advisory team will design a personalized financial report to help them establish a long-term strategy.

Along with all the benefits of the Black plan, Generation members will receive:

  • In-depth financial planning
  • Asset location
  • Access to a team of advisors
  • A personalized financial report
  • Tailor-made portfolios
  • 50% off a Medcan health plan

Pros and Cons

Pros

  • Socially Responsible Portfolio — This is a somewhat unique option among robo advisors. Though recently Betterment and Wealthfront now offer SRI portfolios as well.
  • Live Support — This is a welcome benefit in an industry sector that often provides little or no direct assistance, let alone financial advice.
  • Portfolio Review — A complete portfolio review of outside investment services is unique in the robo advisor space. It can help you determine if your money is currently being efficiently invested.
  • No Minimum — Weathsimple isn’t the only investment service offering no minimum account balance. But it’s a noteworthy benefit and perfect for new and small investors who may have little or no capital to start investing.
  • VIP Airline Lounge Access — If you’re a frequent traveler and you like to make use of airline lounges, this could be a nice perk.
  • Fee-Free Stock Trading for Canadians — Canadian investors now pay $0 in fees to trade stocks with Wealthsimple.

Cons




  • High Fees — The basic fee of 0.50% is at the higher end of the robo advisor fee spectrum, but you can do a lot better. For example, Betterment and Wealthfront each charge 0.25% for basic service, and Betterment now offers premium services at 0.40%/year.
  • No Goal Setting — This is a feature offered by Wealthfront, Betterment and Personal Capital, and one that would enhance Wealthsimple’s platform.

Summary

The basic portfolio model of Wealthsimple is solid and not unlike that offered by other robo investing platforms in its mix of index ETFs invested in both foreign and domestic stocks and bonds. But like some other robo advisors, the service can benefit by adding investments in commodities and real estate investment trusts in order to provide even broader diversification.

Wealthsimple excels in that it has no minimum required account balance and that it provides ongoing live customer support. The socially responsible option is also an attractive choice for investors who want their investing activities to match their personal beliefs.

Where Wealthsimple comes up short is in its pricing. The annual management fee of 0.50% on balances under $100,000 is at the higher end of the robo advisor fee range. That’s virtually double the fees charged by Betterment and Wealthfront. Wealthsimple doesn’t offer a product sufficiently strong enough to justify charging twice the fee of the primary competition. This is especially true since it’s a newcomer to the U.S. market.

The platform does, however, become more competitive on account balances over $100,000, with a 0.40% management fee. This matches Betterment’s Plus program and is lower than the fee on Betterment’s Premium plan. In addition, Wealthsimple provides tax-loss harvesting to all U.S. clients, making it a complete investment service.

We recommend investigating Wealthsimple if you have at least $100,000 to invest. Smaller investors will be better served by checking out other robo advisors that have lower fees.

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