Wealthsimple is an online investing service founded by Michael Katchen in 2014 in Toronto. Today the company has over $8.4 billion in assets under management. Wealthsimple stood out from the start by offering smart and simple investing without the high fees and account minimums associated with traditional investment management.
The investment is made in a globally diversified portfolio of low-cost index funds. Their technology makes it possible to obtain the best possible return, while optimizing the tax bill.
In other words, the system takes care of automatic rebalancing, reinvesting dividends and harvesting tax losses. Previously, these services were only available to more affluent people.
Even though it’s an online investment system, rest assured that you’ll always get support from financial advisors. They help you plan your finances and answer any questions you might have about investing.
In addition to the robo-advisor, the company added other products to expand its mission, such as a high interest savings account, a commission-free online brokerage, and an account for investing in cryptocurrencies.
Almost everyone will enjoy Wealthsimple's services, but I believe millennials like me will be more attracted to this platform’s approach and style.
The corporate culture
Before talking about the different products that make Wealthsimple such a popular platform, let's talk about its exemplary corporate culture.
Wealthsimple's mission is to democratize wealth by democratizing access to financial tools. They believe that access to financial freedom is a fundamental right. They argue that everyone should be able to control their financial destiny, to have a job they love, to provide for themselves and their loved ones, and to invest in the community.
They want to achieve this goal by creating financial products that are simple, sophisticated, affordable and above all, accessible to everyone. By saying “accessible to everyone”, they mean that no matter what age, net worth, experience or education, everyone deserves the same royal treatment.
They accomplish this on several levels.
First, the platform is designed in such a way that it’s easy and even fun to use. They want people to be able to interact with their money. As mentioned on their website, they don't seek out the complex sophistication like this…
… but rather simplicity and clarity as below:
Secondly, they reduce costs to remove barriers to entry. Wealthsimple requires no minimum deposit to open an account. They avoid using complicated jargon that only financial pros understand. According to Wealthsimple, technical jargon only serves to intimidate and alienate people. They are also very transparent by clearly informing clients about the details of their fees and the ways they are investing their money. There’s no secrecy in the fine print with Wealthsimple!
Wealthsimple Investments is a robo-advisor you can use to invest in a portfolio of low-cost funds. The portfolios offered are diversified in order to minimize risk while maximizing profits. Your money is invested in Exchange-Traded Funds (ETFs) across the entire stock market. If you want to learn more about robot advisors, check out this article.
Your portfolio is reviewed free of charge and this includes your portfolios that are not with Wealthsimple. The fees, your account’s tax efficiency, and your portfolio’s allocation are all analyzed.
The free tax loss recovery feature is useful if you have taxable accounts or if you are investing money outside of your RRSP or TFSA. Harvesting tax losses reduces your taxes on investment gains by offsetting them with investment losses.
You also get access to financial advice, upon request. Like most robo-advis0rs, Wealthsimple Generation clients have access to in-depth financial planning. In addition, a team of experts prepares a personalized financial report adapted to your objectives.
Wealthsimple, like other robo-advisors, builds your portfolio by choosing an asset allocation based on your risk tolerance. Therefore, a portfolio of $100 can have the same diversification as a portfolio of $100,000.
The Socially Responsible Investment (SRI) option lets you to build portfolios using FBN SRI. These include low-carbon companies, cleantech innovators, companies with a positive human rights record, and Canadian federal AAA-rated bonds.
Transfers of your investments with a value greater than $5000 to Wealthsimple are eligible for a transfer fee reimbursement. All you have to do is complete an online application.
Unlike traditional robo-advisors, Wealthsimple also provides a host of other offers. For example, Wealthsimple offers Halal Investing, a new investment portfolio designed by experts in the field.
Lastly, you get access to a wide variety of technological tips and tools to help you maximize your savings and investments. For example, “Surplus” is a feature that can be set up to siphon excess money from your chequing account to your investment account(s). And there’s a feature called “Round Up”, another money siphoning tool that rounds up your debit and credit card purchases and uses that money to bolster your investments.
With Wealthsimple, you can invest in a TFSA, RRSP, RRIF, RESP, LIRA, joint account and even a business account. The types of portfolios you can invest in are Exchange-Traded Funds (ETFs) and stocks. No minimum deposit is required to open an account.
If you’re concerned about the environment and society, you can invest your money in socially responsible investing. There are various platforms available, either web-based or mobile on Android or iOS, which we will see below.
If you want to invest with Wealthsimple, there are 3 types of plans. The Basic plan is for balances between $0 and $100,000. For a 0.5% fee you get personalized portfolios, expert financial advice, automatic rebalancing, automated deposits, and dividend reinvestment. The Black plan is for balances between $100,000 and $500,000. You get all the advantages of the Basic plan, with fees reduced to 0.4%, a financial planning session, sales at a loss for tax purposes and tax-efficient funds. Ultimately the Generation plan is for balances over $500,000. It includes all the benefits of the Black plan, but you also get financial planning with an expert, asset tracking, a team of advisors, personalized financial reports, tailored portfolios, and 50% off Medcan health insurance.
If you want to know the benefits of other robo-advisors and help you choose one, use a comparison tool.
Wealthsimple Cash is a free savings account with an interest rate of 0.75%. This is rather high for a savings account, since they are often between 0.10% and 0.50%. Plus, you get free, unlimited Interac e-transfers. The Wealthsimple card will soon be launched, which is a prepaid card you can use to pay for purchases with money from the account, similar to a debit card. The card operates on the Visa payment system and can therefore be used anywhere Visa is accepted. This card has no monthly account fees, no minimum balance fees, and no fees on foreign currency transactions.
Finally, for the most skeptical, know that your money is protected just as much in this account as it would be in a savings account at a recognized bank. The balance in your Wealthsimple Cash account is held in an account with Wealthsimple's affiliate brokerage firm, Canadian ShareOwner Investments Inc. It is a member of the Investment Industry Regulatory
Organization of Canada. As a result, your money is protected by the Canadian Investor Protection Fund (CIPF).
In summary, in terms of this solution’s costs and benefits, there are no monthly fees and no minimum balance fees. Soon Wealthsimple will charge no fees on international transactions. You’ll be able to send money by electronic transfer and withdraw at ATMs.
Wealthsimple Trade stands out primarily for its almost no-cost platform. Compared to other online brokers who charge different fees depending on the type of trade you’re making, Wealthsimple only charges a fee on currency conversion.
The current conversion fee is 1.5% when you buy in US currency or sell your US stocks to have your money in Canadian dollars. This is very little compared to the average of other platforms, which charge around 2%. The rest of the operations are completely free. That is, the transaction fees, option commissions, annual fees, and account maintenance fees are all $0.
Wealthsimple Trade allows you to trade in TFSA and RRSP as well as non-registered accounts, and they are currently working to integrate other types of accounts into their platform. In terms of investment choices, you can trade in guaranteed investment certificates, mutual funds, exchange traded funds, stocks, fixed income securities, options and new issues.
Their platform has been designed primarily for mobile devices and the application is available for iOS and Android. You can also invest through their web platform, which is very easy to learn and use. However, since Wealthsimple is a relatively new online brokerage, it lacks a lot of important features. There isn't a lot of information about stocks, no analysis tools, and no way to automatically buy or sell stocks. You can only trade on the Canadian and US exchanges, but there will be more options in the future that will pay off. For example, they've already announced the arrival of these features: stock price change notifications, news and updates on stocks you're monitoring, and two-factor authentication.
In summary, in terms of the costs and benefits of the Wealthsimple brokerage, you never have to pay any commission on transactions, no minimum balance is required, you get access to TFSAs, RRSPs and taxable accounts, and you can monitor the price of your stocks in your favourites list.
If you want to know the benefits of other online brokers and help you choose one, use a comparison tool.
Wealthsimple Crypto is a commission-free cryptocurrency trading platform for buying and selling Bitcoin and Ethereum. You can trade on the Wealthsimple mobile trading app, in the section dedicated to Crypto. You can buy, sell and hold units on the app directly, however deposits and withdrawals can only be made in Canadian dollars.
You get several benefits including: no minimum investment amount required, $0 commission fee, no fee to deposit or withdraw your funds in Canadian dollars, a non-registered personal investment account, instant transactions and real-time quotes.
Wealthsimple for Business
You can help your employees save by letting them invest money directly from their payroll.
With Wealthsimple for Business, your employees will have access to digital tools and personalized financial advice to make investing more accessible. Your employees can set the amount of contributions taken directly from their payroll, and Wealthsimple will invest these amounts automatically. The great thing is that the money is invested before taxes. Your employees therefore keep more of their payroll throughout the year. Plus, it's free for employers. That means, no hidden fees, and you have the choice of whether to match contributions or not. If you want to use this product, getting started is easy – you just have to click on this link and make a telephone appointment.
Once again Wealthsimple stays true to its values; it offers low and straightforward fees, requires no minimum balance, and provides an easy-to-use platform.
Wealthsimple aims to make investing more accessible by providing access to three different educational resources.
The first educational initiative is the master class. This is a jargon-free, financial investing course for you to learn investing in 45 minutes. With this 10-video express course, Wealthsimple’s experts will teach you the basics of personal finance.
You will also get access to tools to help you build your financial future. The 10 videos cover the following topics:
- What’s the stock market – To teach you the basics.
- Introduction to investing – Explaining the two main approaches to investing and avoiding the most common mistakes.
- Save or invest – demonstrate how to get the best of both strategies.
- The five simple rules of investing – Proven tips explained to help you take it to the next level.
- The waterfall method – Whether it's getting rid of debt or getting rich, you'll get tips on where to invest your money to take control of your finances.
- Automate your finances – how to outsmart financial excesses by making technology work for you.
- Will I have to pay someone to help me? – An explanation of the pros and cons of doing business with a financial advisor.
- Socially Responsible Investments – A demonstration to show you how to make financial returns while respecting your values.
- Be careful when selecting stocks – An explanation of how to avoid the pitfalls of riskier investments such as the cannabis industry or cryptocurrencies.
- How much money do I need to retire? To get an idea of how much you will need to stop working.
If you want to benefit from this resource, click on this link.
Wealthsimple's second educational initiative is the magazine. It's a magazine about money for people who are only interested in money. Their articles fall into the following 4 categories:
- Finance for humans – Articles on various topics or important questions on how to manage money better. Examples of articles would be: “How to budget for your wedding”, “My girlfriend makes more money than me.” “How do you separate the rent?” Or even, “At what age should I stop asking my parents for money?”
- Money and the world – talks about how money shapes the world we live in. Examples of articles would be: “The helicopter parent, a response to income inequality”, “Most of our clients are men. We wanted to know why” or “Who is the new millionaire?”
- Financial slice of life – These are various articles from personalities who talk about their relationship with money. Examples of articles would be: “According to Mickael Katchen, everyone should have the same starting line”, “Why Anthony Bourdain owes nothing to anyone” or “Why should a woman not have ambition?”
- Wealthsimple news – Articles to keep you up to date with what's new at Wealthsimple. Examples of articles would be: “Wealthsimple Cash has arrived!”, “Welcome to SimpleTax, the newest member of the Wealthsimple family”, or “Your portfolios, smarter than ever”.
If you want to benefit from this resource, click on this link.
The third educational initiative is called Personal Finances 101. The goal of this educational resource is to teach you as much as possible about all topics in personal finance. These different subjects are:
- Investing, where they talk to you about, among other things, beginner investing, stock market “crashes” or how the stock market works.
- Savings, where they talk to you about emergency funds, how to save money or how to save for a home.
- Accounts, where you are told about RRSPs, TFSAs, RESPs, LIRAs and more.
- Finance, where they talk to you about unemployment insurance, how to prepare for a recession, or how to budget.
- Retirement, where they talk to you, among other things, about planning for retirement, knowing how long your savings for retirement will last, or even retirement strategies.
They gradually add resources about taxes and various currencies.
If you want to benefit from this resource, click on this link.
The English version of their site features a free retirement calculator that will help you figure out how much you need to save for your retirement. This calculator will ask you a few questions in order to get an overview of your finances. With the information received, you will be able to draw conclusions as to how much you need to save, how much you should save, how much you’ll have in retirement, if you are saving enough and how much you can spend in retirement.
Opening the account
We have opened an investment account (robo-advisor) in order to evaluate the process. As soon as you begin to open an account with Wealthsimple, you’re provided choices of accounts with phrasing that guides you in choosing the right account for you.
After clicking on the Wealthsimple Investments account, you are immediately given the steps you’ll need to take in order to open the account.
In the first step where you need to add your personal information, Wealthsimple will ask you for some details so that they can verify your identity and ensure that your account is secure. You will only have to enter this information once, as it will be used for all Wealthsimple products. You will also have to meet and agree to legal requirements.
Step two is to create your portfolio. Wealthsimple will ask you questions to find out how comfortable you are with risk and to determine your time horizon. The robo-advisor will use this information to present your personalized Wealthsimple Investment portfolio to you.
You’ll be able to play with the degrees of risk to see an estimate of the results that you can obtain over different investment horizons. The information you enter will also generate personalized advice
Finally, Wealthsimple will offer you an investment portfolio based on this information.
You always have the option of selecting a socially responsible portfolio.
Then, you’ll have access to a calculator that will estimate the return you’ll get, adjusted according to your initial deposit and your monthly savings.
The third step is opening the account(s). You can transfer an external account to Wealthsimple Investments or open a new account and make your first deposit. Once your account is opened, Wealthsimple will automatically invest your funds according to the portfolio they’ve built for you. The system will ask you if you want to open an RRSP, TFSA, personal, joint account, RESP, business account or other. Then you can enter new goals.
In the fourth and final step, you’ll need to link your bank account to transfer the funds. The robo-advisor will suggest that you schedule an automatic deposit, which will enable you to continually invest without even thinking about it. You can define the contribution period with which you are comfortable. You’ll have the choice between weekly, bi-weekly or monthly payments. You can turn off your automatic deposits with just a few clicks if your financial situation changes.
Wealthsimple will offer you various promotions as soon as your account is opened. If you invite a friend to join Wealthsimple, you’ll get no management fees on $10,000 of savings or investments for one year. This person will also get $10,000 managed for free for one year. If you want to have $10,000 managed for free right off the bat, enter our Wealthsimple referral code: TTZA7Q in the “Earn Rewards” tab.
Here are the other promotions:
- You can get an additional $100 managed for free for 12 months if you log into your account through the mobile app.
- If you transfer an account with at least $5000 in assets from another institution to Wealthsimple, you’ll also get $10,000 in free management for 12 months.
- When you activate an automatic deposit of $50 or more per month, you’ll receive additional free management for every $1000 invested.
- Enable two-factor authentication and you’ll receive additional free management of $100 for 12 months.
In all, promotions get you $21,200 in free management.
One of Wealthsimple’s strengths is their platforms’ ease of use. Upon opening, you are in the “Portfolio” tab where you can see your portfolio and fluctuations. You immediately see how much you have and whether you are “up” or “down”, and by how much. You can get your charts for 1 month, 3 months, 6 months, 1 year or since the opening of your account.
The “Move Funds” tab allows you to make all your transfers. All you have to do is choose your originating account, to the transfer account (TFSA, RRSP, etc.), choose the amount, frequency and start date, if it is a periodic deposit. You will automatically see the impact this new transfer will have on your investments. The graph is interactive so you can see the impact at specific times.
You can also request to withdraw funds or transfer an external account to Wealthsimple.
In summary, since Wealthsimple is exclusively online, they've gone all out on creating a user-friendly and engaging website. It's filled with colourful graphics that make it easy for you to understand where your money is being invested and how it's going. The dashboard provides a complete overview of your overall financial situation. The interface allows you to move through your accounts if you have several. Interactive charts enable you to see an estimate of your savings at any time in the future. Clearly Wealthsimple's platform is appreciated, as it won a Webby award in 2016 and 2017 as the best Financial Services and Banking website.
Wealthsimple has several apps: Wealthsimple Trade, Wealthsimple Invest and Wealthsimple Cash. The applications reflect the web version well. In the investment application (robo-advisor), you have the home tab which displays your portfolio with the same graph as on the web. You can also click on article suggestions directly from the app.
Wealthsimple stands out for its competitive prices and excellent services. It’s a very good choice of robo-advisor in Canada. The base portfolios are comprised of profitable ETF portfolios that minimize cost and volatility. In terms of usability, the platform is easy to use and accessible on mobile. I recommend Wealthsimple for any investor who doesn't want to worry.
If you want to know how to choose a robo-advisor, check out this article. If you’re unsure of which investment method is most suitable for you, take this short quiz.