Wealthsimple Review: Should You Invest With This Robo-Advisor?

If you want streamlined way to invest, Wealthsimple can help you put your investing plans on autopilot. Similar to other robo-advisors, it uses smart technology to help you build and grow your investment portfolio.

Wealthsimple's major attraction is low-cost, diversified investing, which it claims to be backed by Nobel Prize-winning research.

The platform uses simple, honest pricing to help you invest at a fraction of what you might pay a traditional financial advisor.

If you're ready to invest for the first time, or if you'd like to make a switch to online investing, Wealthsimple can help. But, it may be better suited for some investors than others.

We've got all the details on how Wealthsimple works to help you decide if it's the right choice for your investment dollars.

Wealthsimple is Great For…

  • Investors who have a 401(k) or IRA they want to transfer
  • People who value simplicity
  • Socially responsible investors
  • People who want to get a solid rate on cash savings

Wealthsimple Pros & Cons

Pros Cons
  • Taxable and retirement accounts are available
  • First $5,000 in managed assets is free for the first year
  • Automatic rebalancing & dividend reinvestment
  • Tax loss harvesting is included
  • No 401(k) management
  • Financial tools are scarce
  • Socially-responsible investments may be more expensive
  • Management fees may be higher overall

Types of Accounts Offered

Wealthsimple offers two broad categories of account types: taxable and tax-advantaged.

Investors can open a personal taxable account for themselves, or a joint account with someone else. That could be a spouse if you're married or a business partner. You can also set up a trust account to hold assets on behalf of a beneficiary.

Your tax-advantaged options include:

  • Traditional IRAs
  • Roth IRAs
  • SEP IRAs

You can roll a 401(k) or another retirement account over to a Wealthsimple IRA, but the platform doesn't offer 401(k) management.

And if you run a business, you can't set up a solo 401(k) or a SIMPLE IRA. You'll have to check with a brokerage for those kinds of accounts.

Smart Savings Accounts

Wealthsimple is primarily for investing in the market, but you can also use it to save for other goals.

The Smart Savings Account is a high-yield savings account with no minimum account balance requirement.

Rates are competitive with what you'll find at online banks that offer high-yield savings. There are no fees to make deposits or withdrawals from Smart Savings.

Different Wealthsimple Plans

Wealthsimple Basic is a plan designed for investors who have a balance of $0 to $100,000. As a Wealthsimple Basic investor, you enjoy features like:

  • No management fee on the first $5,000 in assets for the first year
  • Expert advice by phone, text or email
  • Automatic rebalancing
  • Auto deposit so you can grow your account automatically
  • Tax loss harvesting
  • Automatic dividend reinvestment

If you have a combined balance of $100,000 or more across your Wealthsimple accounts, including Smart Savings, you get bumped up to Wealthsimple Black. You get all the same benefits as the Basic plan, along with:

  • VIP airline lounge access at more than 1,000 lounges worldwide through Priority Pass
  • Lower investing fees
  • A dedicated money coach to help you plan your financial goals

The money you save and invest with Wealthsimple is insured for up to $500,000 through SIPC coverage. That amount covers both your principal and returns.

Who Is Wealthsimple Black right for?

Wealthsimple Black may be worth a look if you're rolling over investments from a previous employer's plan or another investment platform.

It's also worth considering if you're a frequent traveler and you want to save money on lounge access when you fly.

As far as the fee discount goes, you'll pay slightly less with the Black plan than you would Basic. We'll dig into how the fees compare a little later.

Having access to a dedicated financial planner is also a nice perk. You can schedule an appointment to discuss your goals without having to pay an additional fee.

Investment Options

Wealthsimple portfolios are build using exchange-traded funds or ETFs.

ETFs hold a collection of both stocks and bonds, from different asset classes and sectors. Wealthsimple uses ETFs that include:

  • U.S. stocks
  • U.S. Mid-Cap stocks
  • U.S. Small-Cap stocks
  • Foreign stocks
  • Emerging markets
  • Municipal bonds
  • Inflation-protected bonds
  • Government bonds
  • High-yield bonds

Stocks are generally riskier but offer the potential for higher returns.

Bonds tend to be more conservative but yield less than stocks. Including both stocks and bonds in your portfolio helps with diversification.

If one investment goes down, for example, you have others to balance things out.

There are three portfolios to choose from:

  • Conservative
  • Balanced
  • Growth

Wealthsimple asks you questions about your risk tolerance, goals and time horizon for investing to recommend the portfolio that's best for your situation.

Each portfolio contains the same mix of investments mentioned earlier but in different combinations.

The Growth portfolio, for instance, is heavier on U.S. stocks while the Conservative portfolio includes a higher proportion of municipal bonds.

The Balanced portfolio has roughly the same percentage of bonds and U.S. stocks.

Socially-responsible investing

If you want to invest and do good at the same time, socially responsible investing (SRI) might appeal to you.

This investing philosophy is focused on investing in companies that make a positive social, environmental or economic impact.

Wealthsimple allows you to build a customized SRI portfolio, based on what you value most. Portfolios can be conservative, balanced or growth-oriented. Individual investment options include:

  • Global stocks with a lower carbon exposure than the broader market
  • Companies that support gender diversity in their leadership
  • Cleantech innovators
  • Municipal bonds that support local initiatives
  • Government-issued securities that promote affordable housing
  • U.S. companies that adopt socially responsible practices

You can invest in SRI portfolios through a Wealthsimple Basic or Black plan. The same SIPC insurance coverage applies to these investments.

Fees: How Much Does It Cost to Invest With Wealthsimple?

Robo-advisors tend to have a reputation for being low-cost. That's attractive for newer investors who may not have as much money to invest.

  • $0 - $100,000: 0.50%
  • $100,000+: 0.40%

At Wealthsimple, you pay no management fees on the first $5,000 in assets for the first year. That gives you a chance to get your portfolio off the ground and gauge whether Wealthsimple is where you should be investing.

After that, you'll pay an annual fee of 0.50% on balances up to $100,000. The fee drops slightly to 0.40% for balances of $100,000 or more.

The fee structure is simple but compared to other robo-advisors, Wealthsimple is a little more expensive.

It's possible to find other online investing platforms with fees that around half of what Wealthsimple charges. Higher fees mean fewer returns you get to keep.

It's also worth noting that this fee doesn't include any management fees charged by the ETFs you invest in themselves. Those fees can range from 0.10% to 0.28%, depending on the investment.

Tax Loss Harvesting

Wealthsimple comes with a few features that can make your investing life easier. One of the most important is tax loss harvesting.

Tax loss harvesting means offsetting gains in your portfolio with losses. The reason you do that is to cut down on the amount of taxes you pay on gains in your taxable account when you sell an investment.

That can be tricky to do for a novice investor, but Wealthsimple does it for you.

The platform also rebalances your account periodically to make sure you've got the right mix of investments, based on your goals and risk tolerance.

Other automated features include automatic deposits from your bank account and automatic dividend reinvestment.

If one of your ETFs pays a dividend, that amount gets reinvested back into your portfolio to buy more shares. Both of those features can help you speed up how quickly your balance grows.

Online & Mobile Investing Experience

With Wealthsimple, you can track your portfolio online or from your mobile device. The website is easy to navigate and the details of investing with Wealthsimple are transparent.

The Wealthsimple app is also highly functional, with a clean interface.

When you log in you'll see an account overview page. This page tells you the most important things you need to know about your investments. That means you don't have to waste time looking for it.

You can also find Wealthsimple Magazine articles, investing news and account alerts at your fingertips.

Research Tools & Resources

Some robo-advisors load you up with calculators, interactive reports and other tools. Wealthsimple doesn't come with those kinds of bells and whistles.

Simplicity really is the order of the day.

If you're looking for extras, you may have to try another online investing platform.

Should You Invest With Wealthsimple?

Wealthsimple could be a good investment choice if you want the process to be as streamlined as possible.

But, be aware of the fees.

If keeping costs down is a priority, we'd suggest comparing some of Wealthsimple's competitors. You may find a less expensive option.

Related Articles

The Investor's Guide to Opening a Roth IRA
Contributing to Roth IRA for Children: The Benefits of Starting Early
How to Invest in U.S. Series I Savings Bonds
Understanding Buy and Hold Investment Strategy
How & Where to Buy Your First Investment Stock
Can Kids Invest and Start Saving for Retirement?

Ask a Question