Updated July 8, 2018

Wealthsimple Review: Is It Legit?

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Wealthsimple is a robo advisor with features you should not ignore. But are the higher fees worth it? Read this review to find out what this automatic investing service can do and the pros and cons.

WealthSimple

Overall Score

4.2

Annual Fee

3.0

Minimum Deposit

5.0

Human Advisors

4.0

Customer Service

4.0

Social Responsibility

5.0
5-point scale (the higher, the better)

Pros and Cons

  • Human advisors
  • No minimum investment
  • Socially responsible and Halal investment options
  • Higher fees than competitors
  • No personal finance tools
  • Tax loss harvesting only to high balance accounts

Bottom Line

Good robo-advisor with socially responsible and Halal investment options, though fees are high

Wealthsimple started as Canada's largest robo-advisor, but broke into the U.S. market in 2017. What sets Wealthsimple apart from your standard robo-advisor?

It's their responsible investment options. Wealthsimple offers socially responsible and Halal portfolios in an effort to cater to a larger audience.

To start, check out Wealthsimple's latest promotions.

Wealthsimple seems to offer all in one pretty little package. Is it all it's cracked up to be? Keep reading to learn if Wealthsimple is worth your time and investment efforts.

Bottom Line: If you already know that you're interested in a socially-responsible investment portfolio, see Wealthsimple's current offers.

How Does It Work

Wealthsimple uses the Nobel Prize-winning Modern Portfolio Theory. The idea is to diversify your portfolio by investing in many different assets. This maximizes return and reduces risk.

Like many robo-advisors, Wealthsimple invests your money automatically in diversified ETFs (exchange-traded funds). Their focus is on the low-cost index funds to help keep your front-load expenses and total expense ratios down.

After completing a brief questionnaire, Wealthsimple will put together a recommended portfolio that they handle for you. They take into account your age, income, net worth, and risk tolerance. If you agree and fund your account, Wealthsimple then manages the funds, rebalancing as necessary to keep you on track.

Wealthsimple offers a range of account types, including individual and taxable accounts as well as a variety of retirement accounts that include:

  • Traditional IRA
  • Roth IRA
  • Rollover IRA
  • SEP IRA

Who Is Wealthsimple Best For?

  • Beginners who don't have a lot to invest and don't know where to start. There is no minimum deposit required. Wealthsimple will manage your funds no matter how little you have.

  • High balance investors. Wealthsimple gives a lot of extra perks to investors with over $100,000. These include a lower annual fee, tax benefits, and even airport lounge access. We'll go over it more later.

  • Socially conscious and Islamic investors. One thing that really sets Wealthsimple apart is that they offer Halal and socially responsible portfolios. You can stay in line with your values.

What Are the Fees?

WealthSimple keeps the pricing structure simple. There are 2 tiers:

  • Wealthsimple Basic: 0.5% annual fee for account balances $0 - $100,000
  • Wealthsimple Black: 0.4% annual fee for account balances over $100,000

Wealthsimple doesn't have any hidden fees.

The only other fees you would pay are any expense ratios pertaining to the purchased ETFs.

Take advantage of auto-deposits. If you are the type who spends before you have it, you might want to consider Wealthsimple's auto-deposit program. You set up the amount and the frequency, and Wealthsimple automatically withdraws the designated funds from your linked account and invests them for you. This is a good way to keep yourself on track to meet your financial goals.

Wealthsimple Black for Wealthy Investors

Robo-advisors are often for the beginning investor or the investor with little capital to invest. As you gain a higher net worth, you may want more options than strictly ETFs, which may prompt you to head to a discount broker.

Wealthsimple has a program for the wealthy investor you may want to consider. The Wealthsimple Black program is for investors with more than $100,000 to invest.

You get:

  • A lower fee. The annual fee is 0.4% of assets under management.

  • A detailed financial planning appointment with a financial advisor. During this appointment, you can set your financial goals and create a plan to reach them. You'll receive a detailed document showing your financial plans.

  • VIP airline lounge access. Great for travelers - you get a complimentary Priority Pass membership for you and a travel companion. This gives you access to 1,000+ airport lounges around the world.

  • Tax loss harvesting. This strategy helps you to save on taxes by using investment losses.

If you are more of a hands-off investor, you may want to consider this service as a way to manage assets totaling $100,000 or more.

Wealthsimple Smart Savings

Wealthsimple also offers a fixed-income portfolio, called Smart Savings. This is good for low risk investors because you know you will earn interest. It won't mimic the returns you could make with other investments, but the interest offered is higher than the average savings account.

Your interest rate goes up and down when the financial institutions change their rates. To see the current interest rate, visit Wealthsimple's website.

Why choose this savings option over a savings account at your own bank? For one, the rate is very competitive. And Wealthsimple doesn't have to follow the rules of standard banks. This means:

  • No limit on transfers (traditional banks limit you to 6 transfers per month)
  • No required minimum deposit
  • No required average daily balance

We like this savings option because it gets the money far enough away from you that you may not be tempted to spend it. You can use this account for your emergency fund or as a place to keep money you'll need soon but want to gain a little interest in the meantime. There are no transfer limits, so you can always get access to your money whenever you need it.

There is a fee of 0.25% of your account balance. The fee is only charged to the extent that you earn above 1% in returns. The fee is automatically deducted from your monthly interest deposit before it reaches your account. So you will see no additional fee deductions.

Platform and App

Wealthsimple's platform is barebones. Don't expect any fancy features. It's straightforward and good for the new investor. They also have an app, which is free and mimics what you see on their online platform.

Don't expect any fancy tools or chances to play "what if" with your finances. There are no personal finance or goal setting tools. This is one downside, as many other robo-advisors offer these tools so you can see if you're on track to your goals.

Is it safe? Wealthsimple takes your security seriously. Your investments are covered by CIPF (Canadian Investor Protection Fund) for up to $1,000,000. This only covers you should Wealthsimple go bankrupt. This is not insurance to help you recover from a bad investment decision. Wealthsimple also uses bank-level encryption and other high-powered security measures to keep your financial information safe.

Reasons We Like Wealthsimple

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  • You don't need a minimum investment to get started. Robo-advisors are great for the beginning investor. But new investors often have very little capital, which is why we like that Wealthsimple has no minimum. You can start investing even if you just have a few dollars.

  • Wealthsimple offers 3 portfolios that allow you to pick your desired risk level. You can choose from:

    • Conservative portfolio: 65% stocks and 35% bonds
    • Growth portfolio: 80% stocks and 20% bonds
    • Balanced portfolio: 50% stocks and 50% bonds

  • Wealthsimple offers a socially responsible portfolio. Some robo-advisors are slowly jumping on the socially responsible bandwagon, but Wealthsimple has more choices, including ETFs from companies that focus on low carbon emissions, local initiatives gender diversity, and affordable housing.

  • Wealthsimple offers a Halal portfolio. Muslim investors are often forced to handle their own portfolios in order to stick within the Islamic investment rules. Wealthsimple offers a portfolio with more than 50 stocks that are deemed okay by Islamic law. The companies the stocks represent follow Islamic law (no gambling, alcohol, firearms, or tobacco).

  • You can get a free portfolio review of your other investments. If you also have outside investments, Wealthsimple can help you perform a complete portfolio review. Just upload your most recent investment statement. An analyst will determine if you have proper allocations, are minimizing your tax burden, and are on track to meet your financial goals.

  • Wealthsimple will automatically reinvest your dividends. Any dividends you receive, Wealthsimple will invest, even if it means buying fractional shares.

  • You can buy fractional shares. You don't have to wait until you have enough money invested to buy a full share of an ETF. This means you won't have money just sitting in your account doing nothing. Wealthsimple will invest every penny.

  • Wealthsimple automatically rebalances your portfolio. This is a free service included in your annual fee. Your account is continuously monitored and if your allocation drifts, your portfolio is automatically rebalanced. Your portfolio is rebalanced the next business day if the weight drifts by more than 20%.

  • You can get reimbursed for transfer fees. If you transfer over from another investment firm and they charge you a fee, Wealthsimple will reimburse you as long as you transfer more than $5,000.

  • You can get live support. Even though a robo-advisor is mostly an automated investment service, Wealthsimple does have live advisors at your disposal. You can call customer service for general questions or schedule a 15-minute session with a financial advisor.

To start, check out Wealthsimple's latest promotions.

Reasons You May Want to Look Elsewhere

  • The fees are high compared to other robo-advisors. Wealthsimple charges a higher fee than the other standard robo-advisors. The average in the industry is 0.25%, putting Wealthsimple well over the limit.

  • Tax loss harvesting is only available to high balance investors. Only those in the Black program (balances of $100k+) can get tax loss harvesting. There are other robo-advisors who offer this service for all clients no matter their balance.

  • You can't set goals and go back and change them. Many robo-advisors have goal-setting programs that they use to determine your portfolio. When your goals change or your life circumstances change, you can go back and adjust the goals accordingly. Wealthsimple doesn't offer any type of goal setting, which can make it difficult to figure out the right allocation for your needs.

How It Compares

Wealthsimple vs Wealthfront:
Wealthfront charges much less than Wealthsimple with their 0.25% annual fee. In exchange, though, Wealthfront requires a $500 minimum deposit and they don't have the option for live customer service.

Wealthsimple vs Acorns:
Wealthsimple is a robo-advisor while Acorns is a micro-investor, investing your spare change for you. Both services invest your money in ETFs, but Acorns charges a much higher fee ($36 per year or $3 per month).

Wealthsimple vs Vanguard:
Wealthsimple and Vanguard Personal Services offer a human element to the robo-advisor industry with access to a financial advisor. Vanguard is for the wealthier investor, though, as they require a $50,000 minimum investment. Vanguard's fees are lower than Wealthsimple's as well, at just 0.3% of assets under management.

Bottom Line

The combination of no minimum balance required and access to a live financial advisor makes Wealthsimple a decent player in the robo-advisor industry. Their fees are steeper than others and their platform is rather barebones.

If you are a new investor with little desire to become a hands-on investor, this platform could be the answer you need, especially if you have an interest in socially responsible investments or Halal portfolios.

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