Wealthsimple Review 2023: Still Canada’s Best Robo-Advisor?
Robo advisor platforms remove almost all of the work from investing, allowing you to follow a passive investing strategy. It’s no wonder they’ve become so popular; it’s expected that the robo-advisor segment will grow at an annual rate of 14% until at least 2027.
To date, Wealthsimple is the most successful Canadian robo-advisor platform, with over $15 billion in Assets Under Management at the end of 2021.
About Wealthsimple Invest
Wealthsimple has long been considered to be Canada’s best robo-advisor. Still, the company has expanded its services to include a commission-free mobile stock trading app, a crypto trading platform, free online tax return software, and more.
In this Wealthsimple Review, I’ll cover their robo-advisor service, Wealthsimple Invest, and let you know if they are still the top platform in Canada. I’ll also provide a brief overview of Wealthsimple’s other services.
Getting Started with Wealthsimple Invest
You can easily open a Wealthsimple Invest account online. Here’s what you need to do:
- Head to Wealthsimple and fill out an online application.
- Link your primary bank account using a secure connection to your online banking.
- Wait for Wealthsimple to confirm your account (within five business days.)
You will need to provide Wealthsimple with the following information at the time of account opening:
- Personal info (name, address, date of birth, SIN number)
- Email address
- Your phone number
If you open a Wealthsimple account using our exclusive link, you’ll receive a $25 bonus with an initial deposit of $500, and Wealthsimple will waive transfer fees up to $150 when you move money over from another brokerage or bank.
Get Started with Wealthsimple Today!
How Wealthsimple Invest Works
When you open a Managed Investing portfolio with Wealthsimple, their robo-advisor will ask you a series of questions to determine your investment objectives and risk tolerance. From there, Wealthsimple will assign you a diversified, low-cost exchange-traded fund ETF portfolio.
You can set up regular deposits, and Wealthsimple automatically rebalances your portfolio and reinvests any dividends. This level of automation takes all of the work out of investing.
But while the entire process can be fully automated, you can still get help from a human advisor. Wealthsimple invites any client to call a Wealthsimple Advisor, who can answer questions about investing strategy.
The following types of investments are available in a Wealthsimple Invest account:
- Registered Retirement Savings Plan (RRSP)
- Spousal RRSP
- Tax-Free Savings Account (TFSA)
- Registered Education Savings Plan (RESP)
- Locked-In Retirement Account (LIRA)
Wealthsimple Invest Tiers
Your Wealthsimple portfolio will fall into one of three tiers, depending on the dollar value: Basic, Black, or Generation. Let’s take a closer look at each one.
Wealthsimple Basic includes portfolios up to $99,999. The annual fee is 0.5%, over and above the MERs charged on the underlying ETFs.
Once your portfolio reaches $100,000, you’ll qualify for Wealthsimple Black, which features a lower fee of 0.4% and allows you to access health and estate planning benefits. Here is a list of Black features:
- Tax-loss harvesting
- Access to tax-efficient funds
- Estate Planning – 15% off your first will with Wilfull
- Six months of free medical services covered outside of OHIP (Ontario residents only)
- Set up a financial planning session with a Wealthsimple Advisor
If your portfolio is $500,000 or more, you’ll get all the features of Black plus the added benefits of Wealthsimple Generation, which include the following:
- Priority access to a special team of advisors
- Personalized financial reporting customized to your goals
- Customized portfolios, including optimized tax savings
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Wealthsimple ETF Portfolios
Wealthsimple’s Managed Investing portfolios fall into three asset categories: Conservative, Balanced, and Growth. Let’s take a closer look at the makeup of each type:
Wealthsimple’s Conservative portfolios are designed for conservative investors comfortable with short-term fluctuations. The bulk of the portfolios comprises government and corporate bonds, while the equity portion is around 35%. Equities are well-diversified with exposure to Canadian, US, and global markets, including emerging markets. Wealthsimple’s conservative portfolios (35% equity) have realized a 2.09% return since inception (August 2014).
Wealthsimple’s Balanced Portfolios have an equity allocation between 50%-65%. They are suitable for long-term investors with a low to medium risk tolerance. According to Wealthsimple, balanced portfolios with a 50% equity weighting have an annualized return of 3.11% since inception (August 2014).
Wealthsimple’s Growth portfolios have an equity allocation between 75%-90%. They are designed for investors with a long-time horizon and a willingness to accept medium to high levels of risk. Wealthsimple growth portfolios with an 80% equity allocation have returned 5.64% annually since inception (August 2014).
Socially Responsible Investing Portfolios
More than ever, investors want to ensure their money is invested in funds that align with their values. Wealthsimple can help you achieve this through their Socially Responsible Investing (SRI) portfolios. These are ETFs that invest in low-carbon and cleantech industries and companies, affordable housing bonds, etc.
Halal Investing Portfolios
Halal Investing incorporates Islamic principles of investing. With Wealthsimple Invest, you can choose a Halal investing portfolio that complies with Islamic Law. Wealthsimple optimizes its Halal portfolios in the following ways:
- Investments are screened by a third-party committee of Shariah scholars
- Halal portfolios don’t invest in companies that profit from gambling, firearms, tobacco, etc.
- No investment in businesses that derive a significant income from interest on loans.
What ETFs Does Wealthsimple Use?
Each Wealthsimple portfolio consists of 8-10 ETFs from various investment companies. Here is a list of a few ETFs that Wealthsimple uses in their portfolios. Each ETF contains many underlying investments (stocks and bonds), which vary depending on their investment objective.
- Horizons S&P/TSX 60 Index ETF Class A (HXT)
- Vanguard FTSE Canada All Cap Index ETF (VCN)
- iShares Core S&P/TSX Capped Composite Index ETF (XIC)
- iShares S&P/TSX 60 Index ETF (XIU)
- Vanguard S&P 500 index ETF (VFV)
- Schwab US Broad Market ETF (SCHB)
- iShares Russel 3000 ETF (IWV)
- Horizons S&P 500 Index ETF Units Class A (HXS)
Global & International Equities
- iShares MSCI Global Min Vol Factor ETF (ACWV)
- Goldman Sachs ActiveBeta World Low Vol Plus Equity (GLOV)
- Horizons Intl Developed Markets Equity Index ETF Class A (HXDM)
- iShares Core MSCI EAFE ETF (IEFA)
- iShares MSCI Emerging Markets Min Vol Factor ETF (EEMV)
- BMO Long Federal Bond Index ETF (ZFL)
- Vanguard Canadian Long-Term Bond Index ETF ( VLB)
Canadian Aggregate Bonds
- Horizons CDN Select Universe Bond ETF (HBB)
- BMO Aggregate Bond Index ETF (ZAG)
- iShares Gold Bullion ETF (CGL.C)
- SPDR Gold Trust (GLD)
- Purpose Gold Bullion
Wealthsimple Customer Service
You can connect with Wealthsimple for support in three ways: Live Chat, telephone, and email. Here are the specifics:
Wealthsimple Business Hours: Mon to Fri 8 AM-8 PM EST or Sat-Sun 9 AM to 5 PM EST.
Chat: You can reach a team member via live chat during business hours or interact with Wealthsimple’s virtual assistant after hours.
Email: Send an email anytime via this link.
Telephone: 1-855-255-9038 – 7 days/week during business hours.
How Are My Wealthsimple Investments Protected?
It’s important to note that your Wealthsimple Invest holdings are market investments, and Wealthsimple does not guarantee your principal, nor are they insured by Canada Deposit Insurance Corporation (CDIC). Your portfolio value will fluctuate up and down.
That said, Wealthsimple is fully regulated. They are a member of the Investment Industry Regulatory Organization of Canada (IIROC) through their custodial broker, Wealthsimple Investments Inc., and customer accounts are protected by the Canadian Investor Protection Fund (CIPF) up to certain limits.
This coverage protects you in the unlikely event that Wealthsimple were to become insolvent and go out of business.
Get Started with Wealthsimple Today!
Wealthsimple Invest Pros and Cons
While Wealthsimple continues to expand its product offering, robo-investing remains at the core of its business, and for a good reason. They make it easy to get started, and the fees are among the lowest you’ll find among managed ETF portfolios. Here’s my list of pros and cons:
- Near seamless account opening and onboarding
- Low MERs on exchange-traded funds
- Hands-off investing with access to human advisors when needed.
- SRI and Halal portfolios are available
- Ability to keep managed investments and self-directed investments under one roof
- Limited portfolio options
- Most ETF portfolios have delivered mediocre returns
Other Wealthsimple Products
Wealthsimple Trade App
Wealthsimple Trade is Wealthsimple’s mobile stock trading app. With Trade, you can buy and sell Canadian stocks and ETFs commission-free from your mobile device. There are no account minimums, so you can start trading with as little as $1. Wealthsimple Trade supports fractional investing, so you can purchase fractional shares in a stock when you set up a recurring investment plan.
The Basic plan is free, or for $10/month, you can upgrade to Plus and unlock additional features, including Instant Trades up to $5000, unlimited US Stocks, and no FX fees on US trades.
Crypto is Wealthsimple’s cryptocurrency exchange. It lets you trade over 50 coins and earn up to 4.5% per year by staking Ethereum or Solana. You can set limit buy orders to schedule trades at a specific price and move your crypto to and from Wealthsimple with a few clicks.
The majority of Wealthsimple Crypto’s coins are held in offline storage with Wealthsimple’s custodial partners, who also have insurance coverage in place for an extra layer of protection. Transaction fees are quite high, between 1.5%-2%.
Wealthsimple Spend & Save
You’ll get 1% cash, stock, or crypto rewards when you make purchases with your Wealthsimple Spend account. You can also earn 1.5% interest on your savings by opening a Wealthsimple Save account. There are no fees for either account, and Wealthsimple’s Mastercard Debit means you can spend anywhere that Mastercard is accepted.
Wealthsimple Tax is Wealthsimple’s free online tax return software. Like TurboTax, it’s designed to handle most tax situations, including if you are new to Canada, self-employed, have investment income, work from home, or changed jobs. To speed up your tax return, you can import your tax slips from the CRA, and Wealthsimple’s team of experts is available whenever you have questions.
Get Started with Wealthsimple Today!
Wealthsimple Invest is just one of several Canadian robo-advisor platforms. Here’s a brief overview of some of its biggest competitors.
If you’re looking for a robo-advisor option for your RESP accounts, JustWealth is the place to invest. They specialize in target-date portfolios for RESPs, and there are no account minimums. Unfortunately, non-RESP portfolios are subject to a $5000 account minimum. JustWealth’s account management fees are slightly higher than Wealthsimple’s because they don’t drop below 0.50% until your portfolio exceeds $500,000.
Unlike Wealthsimple, which charges fees as a percentage of portfolio assets, NestWealth uses a flat fee model, making it a lower-cost option, especially for larger portfolios. For example, the yearly management fee on a $75,000 portfolio with NestWelth would be $300. The same portfolio would cost $375 with Wealthsimple. A $750,000 portfolio would be $1800 yearly with NestWealth because they cap their fees at $150 per month. With Wealthsimple, you would pay $3000 for a $750,000 portfolio. That’s a significant difference, especially over several years.
ModernAdvisor is ideal for smaller accounts, as they don’t charge fees on the first $10,000 in your portfolio. They have a fee analyzer tool that lets you compare mutual funds and ETFs, and like Wealthsimple, they offer SRI portfolios.
BMOSmartFolio was the first robo-advisor platform from a Canadian bank. They offer a low minimum account threshold of $1000 (still higher than Wealthsimple’s $1 minimum). Unfortunately, their fees are higher than Wealthsimple’s. You’ll pay 0.70% on your first $100,000 and 0.60% on the next $150,000. You have to invest $250,000 before the fee drops to 0.50%. Regarding your investments, BMO keeps things simple with five model portfolios: Capital Preservation, Income, Balanced, Long Term Growth, and Equity Growth.
How does Wealthsimple make money without fees?
While it’s true that Wealthsimple doesn’t charge fees on their Spend and Save accounts, but they make money in other ways, including the annual fees on their Managed Investing portfolios and payment processing fees when Wealthsimple Spend customers use their Mastercard.
Is it hard to withdraw money from Wealthsimple?
You can transfer the funds from a Wealthsimple account to your linked Canadian bank account. However, the funds must be in your Wealthsimple account for five business days before you can withdraw them, and transfer processing can take up to seven days.
Will Wealthsimple reimburse my transfer out fees?
When you transfer investments from another financial institution to Wealthsimple, they will usually charge you between $50 and $150 per account. Wealthsimple will reimburse this fee if the transfer amount exceeds $5000.
Get Started with Wealthsimple Today!
Wealthsimple Review: Final Thoughts
Is Wealthsimple still the top robo advisor in Canada? The answer is yes. JustWealth is better for RESPs, and NestWealth’s low fees make it a solid alternative for large portfolios; however, Wealthsimple still has the best overall package when you consider their pricing, onboarding, and ease of use, the added features you get at the Black and Generational levels, and their many complementary products, like Wealthsimple Trade, Crypto, and Tax.
How come you don’t refer to their success or lack of success in terms of returns on investments. How does it compare to the others you were comparing them with.
When will Wealthsimple open Riff’s and Liff’s? We have significant assets we’d love to transfer. They don’t seem to be concerned about all the baby boomers who are converting and are missing out on tons of potential revenue.
Really disappointed when WS Black discontinued their Priority Pass program.
Colin, I think the biggest con is the inaccessible nature of the robo’s (and the discount platforms too). When you really need to speak with someone…you get voicemail. And it can take days to get a call back. I have found this to be a real challenge in dealing with Wealthsimple for the past 8+ years. Plus, they don’t provide me with 5 year CAGR performance reporting so I have no way to comparing my returns, as @joe mentions in his comment.