Toronto-based Wealthsimple, launched in September 2014, provides algorithmic investment and savings programs for clients in Canada, the U.K., and the United States. 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 (for Canadians and U.S. citizens) or mutual funds (for U.K. citizens) is used to populate relatively generic portfolios that are further customized by the information you put into the platform. 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.

New and Notable Updates

  • In August 2020, Wealthsimple launched a cryptocurrency trading platform for its Canadian customers that is separate from the algorithmic trading platform. Canadian citizens can add themselves to the wait list. At launch, only Bitcoin and Ethereum are available, but the firm plans to expand the offerings.
  • Wealthsimple has committed to making its workforce more diverse, and to include more BIPOC voices in its marketing and development teams. The firm publishes an update on its progress quarterly.

Key Takeaways

  • Customers can set up socially responsible or Halal portfolios.
  • Accounts can be opened for $0.
  • High-net-worth clients with over $500,000 qualify for Wealthsimple Generations, which offers more personal attention from financial planners and lower fees.
Pros
  • Canadian, American, and U.K. accounts.

  • Excellent educational resources.

  • Savings account with competitive interest.

  • Tax loss harvesting.

  • $0 to open account.

Cons
  • Must disclose personal data very early in the account setup process.

  • Algorithms follow generic buy-and-hold strategy.

  • Limited choices in portfolio creation.

  • Management fee of 0.5% is higher than average.

Account Setup

4.7

Wealthsimple gets personal on the first screen of the account setup process. This means you can’t look at the questionnaire or review portfolio allocations before giving out your date of birth, address, and tax ID number. After that, 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 of ETFs 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. As an added incentive, Wealthsimple pays transfer costs on new accounts funded with at least $5,000.

U.S. citizens who make reading disclosure statements part of their decision to open an account will be disappointed. The Wealthsimple U.S. site provides no ADV-2A investment advisory brochure as mandated by the SEC, defying a rule that advisors are “required to deliver to clients and prospective clients a brochure disclosing information about your firm.” 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.

Goal Setting

4.3

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. 

Account Services

2.8

Funding your Wealthsimple account is simple—log into the account management interface and request a deposit, or set 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. If your account is clear of transactions to settle, it can take up to 3 business days.

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.

Cash Management

Wealthsimple Save, the savings account offered, invests your cash in low-cost conservative ETFs, which can generate a higher rate of return than a regular savings account. It may, however, lose value since it's not a cash account. You can quickly transfer money from the Save account into your Invest account. There is a 0.25% fee for a Save account, plus the management fees incurred for the underlying ETFs.

With the Save account, you can activate the Roundup feature after linking credit and debit accounts. This feature calculates and deposits “spare change” accumulated by rounding up charges to the next whole number. Roundup is a painless way to put more money away.

Portfolio Construction

1.8

There are five possible portfolios generated after you've gone through the Wealthsimple questionnaire: Conservative, balanced, growth, socially responsible or Halal.

  • Conservative, balanced and growth portfolios: ETFs (U.S.), ETFs and mutual funds (Canada), or mutual funds (U.K.)
  • Socially responsible portfolios: Select ETFs
  • Halal portfolios: Comply with Islamic law using pre-screened stocks; no ETFs or fixed income

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 that populate 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. 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 rivals of similar size have gone to greater lengths to build in checks against asset or geographical concentration and more robust target date functions.

Portfolio Management

4.1

Wealthsimple 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. Tax-loss harvesting is available for Wealthsimple Black and Wealthsimple Generations customers, and requires a minimum of $100,000 in the account.

User Experience

4.8

Mobile Experience

Wealthsimple offers an easy-to-read, mobile-ready website, and native 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 other secondary operating systems.

Desktop Experience

The website highlights major account features, explains the company’s philosophy, and provides a comprehensive FAQ covering most areas of interest.

Customer Service

3.5

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, 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 web pages 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

5

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.

Wealthsimple’s website uses 256-bit SSL encryption and features a clearly stated privacy policy that gives you a sense of security. Logging into account management requires two-factor authentication through a text message. For U.S. accounts, Apex Clearing Corporation holds all your funds in investment accounts, providing you access to SIPC insurance and excess insurance. Standard SPIC coverage insures against losses due to failed brokerages (not losses due to market movement) for up to $500,000.

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

4.6

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.

  • Monthly cost to manage a $5,000 portfolio: $2.10 (U.S. and Canada)
  • Monthly cost to manage a $25,000 portfolio: $10.42 (U.S. and Canada)
  • Monthly cost to manage a $100,000 portfolio: $33.33 (U.S. and Canada)

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 slightly higher than average for the robo-advisory space, though 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 the simplicity and want to have a hands-off portfolio, however, then Wealthsimple’s approach may be just right.

Compare Wealthsimple

Wealthsimple is a good fit for investors of all ages looking to save money. See how it compares against other robo-advisors we reviewed.

Investopedia Robo-Advisor Rating Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of robo-advisors. Our 2020 reviews are the result of in-depth evaluations of over 20 robo-advisor platforms, including the user experience, goal-setting capabilities, portfolio construction, costs and fees, security, mobile experience, and customer service. You can read our full robo-advisor rating methodology for a much more in-depth explanation than the summary below.

Overall Star Rating Explained

With the individual investor in mind, we took a critical look at the services and technology provided by robo-advisors. We organized our methodology into nine categories, scoring each advisor across multiple variables to rate performance in every applicable category. The score for the overall award is a weighted average of the categories.

EVALUATION CATEGORIES
Review Category Weighting Variables
Account Setup   5% 6
Goal Setting 15% 4
Account Services 10% 8
Portfolio Construction 15% 7
Portfolio Management 20% 4
User Experience 15% 6
Customer Service   5% 5
Education & Security   5% 6
Fees 10% 5

The Review Process

To evaluate these platforms, we sent questionnaires with over 100 queries to the participating robo-advisories. Most of the companies we reviewed gave us socially-distanced video demonstrations of their platforms and services during August 2020.

From the questionnaires, the hands-on testing of the platforms, and the platform demonstrations, we scored each category and then combined the category scores into an overall rating for each robo-advisor. Each category covers the critical elements users need to thoroughly evaluate a robo-advisor.

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