Launched in September 2014, Canada’s Wealthsimple provides algorithmic investment and savings programs through its New York, Toronto, and London offices. Canadian financial giant Power Financial has invested at least $74 million in the fast-growing advisory. New clients can transfer taxable and retirement accounts or deposit funds into new accounts. The account minimum is $0, making it easy for new investors to get started. A small pool of low-fee ETFs is used to populate relatively generic portfolios that are further customized by the information you put into the platform (this is done with mutual funds in the U.K.). This review is primarily written from the perspective of a U.S. based investor, but we have tried to incorporate relevant information from the U.K. and Canadian platforms as well.
Canadian, American, and UK accounts
Excellent educational resources
Savings account with competitive interest
Tax loss harvesting
$0 to open account
Must disclose personal data to view setup
Algorithms follow generic buy and hold strategy
Limited choices in portfolio creation
To set-up a Wealthsimple account, you have to hand over your personal information upfront. This means you can’t look at the questionnaire or review portfolio allocations before giving out detailed personal information. The questionnaire asks you a series of typical questions about financial goals, time horizon, risk tolerance, past investment experience and level of investment knowledge.
Your responses are used to generate a portfolio and ETF list customized in response to the completed profile. You can change proposed allocations, but the system may ask for reasons if alterations conflict with prior responses. Accounts are funded through bank account links and can be accomplished with a one-time payment or recurring deposits.
Wealthsimple’s account types vary according to which region you live in. In the United States, Wealthsimple provides support for individual and joint taxable accounts, trust accounts and 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.
In the United Kingdom, Wealthsimple offers pension accounts, individual savings accounts (ISA), junior individual savings accounts (JISA) and personal taxable accounts.
In addition to a regular investment program, Wealthsimple offers a Smart Savings account that pays higher interest than traditional savings accounts by using low-risk ETFs. The account is taxable and incurs a 0.25% fee instead of a 0.50% fee, lowering net interest. The Smart Savings account is insured through the Securities Investor Protection Corporation (SIPC) insurance rather than the FDIC.
Wealthsimple provides you unlimited financial planning sessions and a one-time session for non-clients who submit account statements in advance. You can also talk with a human advisor upon request. During the setup process, new account holders are asked to choose from a goal planning list that includes home ownership, retirement, education, long-term growth, and income. Multiple goals can be created under a single account, offering greater sophistication and diversity if required. You can review transactions and relative performance statistics, sub-divided by goals, on account management pages after funding is complete.
Funding your Wealthsimple account simply requires logging into the account management interface and requesting a deposit or setting up recurring deposits through a linked bank account. Withdrawals can be requested with a few clicks, but it can take up to 10 business days to receive the funds if your account has unsettled transactions. As an added incentive, Wealthsimple pays transfer costs on new accounts funded with at least $5,000. You can also activate Roundup after linking credit and debit accounts, which calculates and deposits “spare change” accumulated by rounding up charges to the next whole number.
Individual and joint taxable accounts cannot use margin or borrow from the account, and Wealthsimple offers no additional banking services at this time.
Canadian clients can use 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 a single virtual roof.
The system generates a conservative, balanced, or growth portfolio in response to your profile data. Portfolio exposure is taken solely through ETFs in the U.S. offering. Mutual funds may be mixed in with Canadian accounts and are the primary vehicle in the U.K. offering. There are no individual stocks or direct fixed-income products available in regular accounts. You can further choose to customize your portfolio by opting for a socially conscious portfolio that excludes non-qualified ETFs. Wealthsimple also offers a Halal account that complies with Islamic law, buying pre-screened stocks but no ETFs or fixed-income products.
You can review your current allocations on an Investor Policy Statement that’s accessible through the account management interface. For the U.S. offering, there is a relatively small universe of 10 funds populates the ETF list, divided into an equal number of asset categories. The Canadian version has the same number of funds, but contains a real estate fund that doesn’t have an equivalent in the U.S. version. The U.K. offering has 12 funds that are used to populate the portfolio.
A screenshot of a socially conscious portfolio contained just six “green” funds, but others may be undisclosed.
Each Wealthsimple portfolio can include eight to 10 instruments, giving the impression that most customization is done through percentage changes rather than 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 as well, with additional offerings from Purpose Invest and BMO. The conflict of interest disclosure for Canadian accounts notes that two institutions providing mutual funds have personal or business relationships with Wealthsimple principals. 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 according to Modern Portfolio Theory (MPT) principles, as is the case with most robo-advisories. That said, there seems to be little to differentiate Wealthsimple’s approach from lower-capitalized rivals. The limited fund universe can still be used to create a diversified portfolio, but similarly sized rivals have gone to greater lengths to build in checks against asset or geographical concentration and more robust target date functions.
Wealthsimple’s manages your portfolio through tried and true market strategies that include diversification across asset classes, passive buy-and-hold investing, dividend reinvestment and client feedback through the profile and risk scoring process. Progress toward your goals generates coaching from the system to either increase funding or stay the course. Changing the risk score associated with your profile at any time will trigger a portfolio rebalancing.
Even without a change in your profile, Wealthsimple automatically rebalances your portfolio after deposits, withdrawals, and changes in asset values. You cannot request rebalancing, nor make changes to ETFs beyond the socially responsible and Halal options. The Apex custodian executes tax-loss harvesting strategies on behalf of Wealthsimple, meaning that your taxable portfolios will sometimes see substitutions of equivalent investments for tax purposes.
Wealthsimple offers an easy-to-read, mobile-ready website and mobile apps for iOS and Android with enhanced account management features. iPhone and many Android devices provide biometric identification, and both apps support two-factor authentication. There are no tablet-specific apps or apps for Windows Phone or other secondary operating systems
The website highlights major account features, explains the company’s philosophy, and provides a comprehensive FAQ covering most areas of interest. 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 shed much light on this hidden material, beyond stating that applicants give “basic information, answer a few questions about previous investment experience, and e-sign one or more Investment Management Agreements.”
The Wealthsimple U.S. site provides no ADV-2A investment advisory brochure as mandated by the SEC. 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 intended as a consumer protection document, and company disclosures within those brochures are vitally important in establishing trust between advisor and client, so this marks a major omission.
As mentioned, clients can speak with a financial advisor upon request, although contact information is a bit harder to find than it should be. You can contact Wealthsimple by phone and email contact, but there is no live chat for prospective or current account 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 an explicit “contact us” page outside of an FAQ. Phone hours are listed as 9:00 a.m. to 8:00 p.m. Eastern time Monday through Thursday and 9:00 a.m. to 5:30 p.m. Eastern time on Friday for the United States. In Canada, the call center opens an hour earlier. The U.K. call center lists no hours.
Several calls to the U.S. phone number during business hours produced contact with a customer representative within one minute. The initial recording gave different contact hours than the FAQ, extending Monday through Thursday coverage to 8:00 a.m. Wealthsimple’s office addresses are listed on the “Who We Are” page without phone numbers.
Education & Security
Wealthsimple’s website features a comprehensive Investing 101 glossary, a broad-brush investment FAQ and an excellent 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 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).
Commissions & Fees
Wealthsimple’s fees vary by region as mentioned, but they are 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%. Apex charges for wire transfers and transferring the account to another broker.
Is Wealthsimple a Good Fit For You?
Wealthsimple offers a good fit for investors of all ages looking to save money and take the next step on the road to long-term financial security. The fees are average for the robo-advisory space and the account minimum of $0 removes a hurdle for investors who are just starting out. Conversely, lower management fees and more robust features on accounts at and above $100,000 could attract the interest of higher-net-worth individuals.
The appeal of Wealthsimple is broadened by the fact that it offers its services outside the U.S. to investors in Canada and the United Kingdom. The fact of operating in multiple jurisdictions may be behind the missing U.S. disclosures, but that is not a great excuse for an omission that will create unease with more seasoned investors who depend on those documents.
Overall, the approach Wealthsimple takes in constructing and managing your portfolio is not revolutionary. The portfolio is built with plain vanilla MPT with limited customization beyond the socially responsible and Halal options. This lack of customization is compounded by a small fund list compared to the larger selection available through competitors. Wealthsimple employs basic buy-and-hold diversified across assets with rebalancing and tax-loss harvesting as needed, and this approach does have a history of success in the market that most individual investors fail to match. That said, Wealthsimple may not be the best fit if you are looking for a portfolio that is customizable at the asset level. If you appreciate simplicity and want to have a hands-off portfolio, however, then Wealthsimple’s approach may be just right.
Wealthsimple is a good fit for investors of all ages looking to save money. See how they compare against other robo-advisors we reviewed.
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