Today’s long list of robo-advisors make it easier than ever to launch an investment portfolio. The days when you needed years of experience, a seemingly endless supply of cash and many connections from people in “high places" are over.
Now, investing doesn’t need to be associated with nail-biting days in which you worry about portfolio allocation, rebalancing or high investment fees.
You can passively invest with tailored portfolios that are automatically rebalanced and have dividends reinvested. And of course, fees have been slashed through automation. They are significantly lower than an in person financial advisor.
In this article, we will specifically be looking at the popular robo-advisor known as Wealthsimple.
Summary
Wealthsimple aims to offer something for everyone, and they have done a great job at this.
For short term savings, you might consider the low risk Wealthsimple Save account to earn a better interest rate than a bank savings account.
If you want to be in the drivers seat, you can trade stocks and ETFs through the Wealthsimple Trade account.
However, if you want to passively invest via the robo-advisor, Wealthsimple Invest offers this with access to financial advisors to ask questions. Fees are a bit higher than average, but it might be worth it when you consider the value of having access to a team to ask questions.
Pros
Cons
Wealthsimple, the largest financial robo-advisor in Canada, headed south three years ago to the US. It now has offerings for both US and Canadian investors.
They are managing over $5 billion in assets among 175,000 investors.
Wealthsimple has offices now in Toronto, London and New York. They are on a mission to give people a streamlined platform via website and mobile app that’s user-friendly and easy to navigate.
Those new to the world of investing and saving can find educational resources on general topics such as tax savings harvesting in a link called Finance 101.
You might want to consider taking advantage of Wealthsimple’s free portfolio analysis. You don't even have to be a Wealthsimple customer to take advantage of this offer!
Wealthsimple offers this complimentary service even before (or even if you do not) you sign up for an account. You will need to upload your most recent investment paperwork. Then, you can book a call with one of their financial staff members.
In their review, the analysts aim to provide:
When the analysts share their findings, they are likely to discuss whether the Wealthsimple can improve on what you already have. However, there is with no requirement that you must sign up after this financial review.
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Wealthsimple was designed for first-time millennial investors.
In fact, more than 75% of its members are under age 45 and most are new to the investment field.
Many of its clients are socially responsible investors, meaning they have money invested in Wealthsimple’s SRI portfolios. These portfolios support companies that address environmental and social concerns. They also take a positive stand on local commerce, human rights, affordable housing and gender equity.
Let’s take a closer look at the services you can get from Wealthsimple.
Wealthsimple Trade is a brokerage that allows you to buy and sell stocks and ETFs with no trading commissions or account minimums. It is a self-directed platform, however, and doesn't offer any financial advice or recommendations. It is also available only on the mobile app.
Wealthsimple Trade is meant for more seasoned investors that are already following a well mapped out financial path.
The platform supports thousands of publicly traded common stocks and exchange-traded funds (ETFs) listed on major Canadian and U.S. exchanges.
There are no withdrawal, inactivity or maintenance fees.
This is an automated investing service that manages your investments for you using a personalized portfolio of low-fee ETFs.
It can be ideal for passive investors that want to have the footwork done for them. You will not need to sift through an enormous number of options or managing your portfolio from moment to moment. You won’t need to buy or sell or even check the progress of your investments daily, weekly or even monthly.
For Wealthsimple Invest, they will charge you a 0.5% management fee. However, this fee drops to 0.4% when you deposit more than $100,000.
Wealthsimple Invest is for people looking to grow their savings over the long-term. This is done with a diversified, low-fee portfolio that is rebalanced regularly. The accounts are primarily centered around a group of ETFs that carry a low-cost index.
You can put your portfolio into various types of accounts, including:
Wealthsimple calls this putting your money on autopilot. This includes:
This is a savings account offering:
This savings account is meant for the money you are not investing for the long term. It offers a 0.9% interest rate (subject to change), which is more than most traditional banks offer.
It is important to understand that this account is a brokerage account — covered by the Securities Investor Protection Corp., not the Federal Deposit Insurance Corp. The company charges a 0.25% management fee on this cash. This amount is deducted from your balance at the end of each month.
This free perk is for Wealthsimple Black and Generation clients. It gives clients plus a travel companion unlimited use of more than 1,000 airline lounges in 400 cities around the world.
They also offer access to a team of financial professionals. This is available whether your account balance is $10 or $100,000. Members can reach these experts by email and by phone for advice on:
One of the key differentiators between Wealthsimple and other robo-advisors is the level of access you have to financial advisors. They do charge more in fees, but this is a service you may make use of.
This new feature can be activated instantly and serves to round anything you buy up to the nearest dollar. So, if you buy iced coffee for $3.80, the remaining 20 cents will be funneled into your Wealthsimple account.
How exactly does this work? The money is actually tracked and added up each week, then debited from your bank account. It's a smart way to keep your investment moving forward. It also serves as a reminder that even small contributions can add up over time. The feature is integrated into the Wealthsimple website and mobile app.
You can use any number of debit or credit cards for this feature; there is no limit.
Wealthsimple will not charge you any additional fees associated with using roundups.
Wealthsimple has a goal of helping you build a more socially responsible portfolio. They take industries known to have harmful effects on the environment out of the options offered by removing the top 25% carbon-emitters in each industry. Wealthsimple takes this step so the funds support companies that have a lower carbon footprint.
They also support gender equity. Every company in its fund has 25% (or at least 3) women on their board of directors. Portfolio options can also include US and international stocks that exclude fossil fuels, tobacco, weapons or other controversial products. Or select longer-term, inflation-linked government bonds that provide diversification in case of falling growth.
Other financial products are from companies advancing the growth of their local vendors and businesses.
Wealthsimple aims to offer something for everyone, and they have done a great job at this.
For short term savings, you might consider the low risk Wealthsimple Save account to earn a better interest rate than a bank savings account.
If you want to be in the drivers seat, you can trade stocks and ETFs through the Wealthsimple Trade account.
However, if you want to passively invest via the robo-advisor, Wealthsimple Invest offers this with access to financial advisors to ask questions. Fees are a bit higher than average, but it might be worth it when you consider the value of having access to a team to ask questions.
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