“We’re on a mission to bring smarter financial services to everybody, regardless of age or net worth.”

– Michael Katchen, CEO

Let no one say that Wealthsimple’s goals were small ones!

Canada’s financial industry has been doing things a certain way for decades.  To sum up that gold tarnished brass standard:

  1. Convince Canadians that their money is only safe with you – not risky new guys.
  2. Tell Canadians that they need to save 10-20% for retirement – show them “The Graph” that illustrates how compound investment returns will make everyone a millionaire.
  3. Sound super confident while repeating a whole bunch of financial acronyms and worlds like “asset allocation”, “diversification”, and “5-star fund manager”.
  4. Never ever bother people with small details such as the price they are paying for your services, or even how that price is arrived at. Instead, continuously state that your services are “free”.
  5. Rinse and repeat as each you promise to fix all clients’ problems by “putting them into this new, better fund,” – which of course has a bonus commission attached to it at that time.

To recap, when Wealthsimple says that their mission is to bring smarter financial services to Canadians – and to do it for a price tag that is upfront and far below the traditional model – that’s no small feat.  Essentially, what Wealthsimple (and other companies like them) are doing is upending an entire industry business model that has working fabulously for many decades (just take a look at the dividend history of Canada’s major banks for proof).  These new “Fintech” companies that offer an exciting new middle ground between the old Canadian way to manage money and the DIY methods that personal finance geeks have been touting for a long time, are collectively known as robo advisors.

Wealthsimple definitely isn’t the only dog in the Canadian robo advisor yard – but they are the biggest by a significant margin.  (It’s worth noting that even Wealthsimple is a relatively small entity when compared to American robo advisors such as Betterment   Check out our Complete Guide to Canada’s robo advisors  if you want to read a bit more about why these new guys on the block are making such a big splash.  We cover:

  • Why they are super safe.
  • Why they don’t have anything to do with robots.
  • What they cost.
  • Why we think they’re awesome.

Limited Time Offer to Try Wealthsimple

If you’d like to try Wealthsimple for free after reading this review, Canada’s largest robo advisor has extended an exclusive offer to Young and Thrifty readers:

Wealthsimple will let you manage $20,000 for free if decide to open an account with them by clicking here.

A Little About Canada’s Market Leader

The good folks behind the curtain at Wealthsimple describe what they do as:

We provide world-class, long-term investment management without the high fees and account minimums associated with traditional investment managers. We invest your money in a globally diversified portfolio of low-cost index funds modeled after the same Nobel Prize-winning research used by the world’s savviest investors.

 

Our cutting-edge technology helps you earn the best possible return on your money, while also lowering your tax bill. This means we do things like automatic rebalancing, dividend reinvesting, and tax loss harvesting—services that most people couldn’t afford until now or found too time-consuming and tedious to do on their own.

Our financial advisers are always available when you need them. They can help plan your financial milestones and answer questions you might have about potential risks or what sort of investment accounts you should have.

Like their competitors, Wealthsimple wants to help you invest your money using the principles of index investment and asset allocation that have long been labelled as “couch potato” strategies.  In a nut-shell, what they’re going to do is “sit down” with you (through an email, online conversation, or on the phone) and discuss what route they think is best for you considering your savings goals and investment risk tolerance.  Then they’re going to explain how after you put your money into your RRSP, TFSA, or other account, it will automatically get split up in the buckets that you agreed upon in your initial conversation.

Wealthsimple’s advisors can answer almost any question that you might have (they might not be able to answer super complex corporate tax shelter stuff off the top of their head) and their customer service in regards to opening and using their platform has been widely reported as excellent.

They’re going to do all that for you – for as cheap as possible!  They are able to cut significant costs by relying on email, Facetime/Skype, and phone calls, as opposed to having an expensive brick and mortar location to maintain.  More on costs later in the show…

The People Behind the Website

If you’re like most Canadians and terrified of putting your savings and investments in any sentence that also has “new” in it, then you should be reassured that the folks behind the computers at Wealthsimple are long-time professionals in the wealth management industry.

First and foremost, you should know that Power Financial Corp. (one of Canada’s oldest and largest financial institutions with $780 billion+ in assets around the world) believes strongly enough in this type of wealth management to buy into the company for $50 million!

Their impressive Board of Directors reads as follows:

Paul Desmarais

Paul Desmarais

Chairman of Wealthsimple, VP of Power Financial

Som Seif

Som Seif

Founder and CEO of Purpose Investments

Bertrand Badre

Bertrand Badre

Former CFO of the World Bank

Jeff Carney

Jeff Carney

CEO of IGM Financial

Michael Katchen

Michael Katchen

CEO of Wealthsimple

Needless to say, there are brains behind the aesthetic beauty that strikes you when you open their website!

How Wealthsimple Works

You can read in more detail exactly what robo advisors do by checking out our all-encompassing article on them.  They are more similar than not in how they approach taking a piece of your paycheque and investing it in a wide variety of diverse assets.

Wealthsimple likes to highlight fact that they didn’t create this approach, but instead based it on the Nobel Prize-winning work in Modern Portfolio Theory done by Harry Markowitz.  If you’ve read any of our articles on index investing with ETFs or any of Dan Bortolotti’s musings on the Couch Potato Portfolio, then you’re familiar with the basic ideas behind the way Wealthsimple will manage your money.

As a 100% devotee of index investing, a warm glow settled over me when I read the following on Wealthsimple’s webage: Expected returns are impossible to predict and out of your (and our) control. We prefer to focus on things we can control: fees, diversification and emotions. The stock market will take care of returns over the long term. The key is to stay disciplined and stick to your strategy in order to build wealth. You can read more about our investment strategy here.

There is absolutely full transparency at all time when it comes to your investments.  Wealthsimple will show you your returns in a variety of formats.

Finally, like most of the their robo brethren, Wealthsimple is CIPF-insured up to $1 million.

What Makes This One Different?

Many of Canada’s robo advisors share broad features, but Wealthsimple is unique in that they:

  • Are the largest robo advisor in Canada.
  • Have a $0 Account Minimum.
  • Have the only mobile app in Canada that allows you to sign up for an investment account.
  • Own their own broker (they purchased ShareOwner last year).
  • Can invest in fractional shares (smaller account balances).
  • Automatically reinvest dividend income from your investments back into the ETFs that have fallen below the portfolio target that you initially set.
  • Are incredibly easy to use.
  • Have design aesthetics that are off the charts.
  • Are partnered with the Mint App.
  • Pay the transfer fees that your bank will charge to switch over.
  • Statements that offer a fully-interactive breakdown of your deposits, buys/sells, capital gains, and dividends, as well as your current balances.

Finally, Wealthsimple is one of only a few robo advisors that have embraced Socially Responsible Investing (SRI).  I have to admit that this is not a major concern for me, but I understand that for a lot of folks my age this is a primary consideration.  Your Friendly Fintech Front-runner describes SRI as:

“Investing in companies that meet a certain threshold of social responsibility. SRI takes into consideration environmental impact as well as social and governance concerns. SRI has become an incredibly popular way to invest, growing tenfold over the past 20 years—there are now $22 trillion in assets worldwide in SRI funds. In Canada alone, SRI accounts for 30% of all financial assets.”

Wealthsimple SRI portfolio includes the following ETFs:

ETFSymbolDescription
iShares MSCI ACWI Low Carbon Target ETFCRBNGlobal stocks with a lower carbon exposure than the broader market
iShares Jantzi Social Index ETF XENCanadian stocks, excluding companies with a poor social responsibility record based on broad ESG criteria
Vident International Equity Fund VIDIDeveloped and emerging economies with sustainable growth, based on criteria such as human rights and low corruption
PowerShares Cleantech Portfolio PZDCleantech innovators in the developed world
BMO Mid Federal Bond Index ETF ZFMFixed-income exposure via Canadian government bonds, in order to optimize for risk

It’s worth noting that people that are much more involved with SRI than I am have stated there are many different standards of “socially responsible”, and that these ETFs do include some companies that individuals might object to.  You may want to do a bit more research if this is important to you.

You should also realize there is a relatively small price premium (.2% MER or so) to investing this way since the ETFs that are being used are a little more niche-oriented than your basic bread-and-butter index ETFs.

How Much Does It Cost?

Wealthsimple has recently re-structured their fees and now have two basic levels in terms of costs and features.

1) For Wealthsimple Basic accounts of up to $100,000, there is a .5% fee that includes any trading, account fees, rebalancing costs, or transfer fees.  Everything already mentioned in this article is included at that price point.

2)  An account reaches newly-launched Wealthsimple Black status when it hits the $100,000 mark.  Once you hit $100K, in addition to the Wealthsimple Basic benefits you get:

  • .4% MER fees
  • Automatic Tax-loss Harvesting
  • Full-service Financial Planning
  • VIP airline lounge access – Enjoy Global access to more than $1,000 airline lounges in over 400 cities.

Have to say, some pretty cool new perks with this latest update!

Types of Accounts Available

As a leader in the robo advisor space, Wealthsimple offers the full monty of accounts including:

  • RRSP
  • TFSA
  • Personal
  • RRIF
  • Joint
  • LIRA
  • Corporate

Once you choose your account and have taken your risk tolerance quiz, your investment funds will be split between many asset classes including Canadian equities, international equities, real estate, and various types of bonds.

How Does Wealthsimple look?

WealthSimple Review

wealthsimple dashboard

Wealthsimple Dashboard

The Wealthsimple dashboard is obvisouly easy on the eyes and lets you know at a glance:

 

  • What your expected returns are at various ages.
  • Your savings on fees versus traditional Canadian options
  • How many free trades you’ve saved on
  • Total portfolio performance
Wealthsimple Activity Report

Activity Report

The activity report gives you a more in-depth look at your deposits, investments, dividends, fees, and withdrawals. Each item can be toggled on or off to show you exactly what has went on in your account since you last checked.  Some people may choose to never look at this screen, but it’s comforting to know that it’s there for transparency purposes.

Wealthsimple funding page

Wealthsimple Funding Page

You can see from this screenshot how easy it is to keep track of your automated investing (your best option for building wealth according to most studies) and/or do a one-off shot of cash.

Open Your TFSA or RRSP Today and Get $20,000 Managed for Free

Because our readers are right in the sweet spot of potential Wealthsimple customers they have decided to extend a special offer to our readers.  If you click here and open an account, Wealthsimple will pay any fees associated with moving your investment accounts over to them, and manage up to $20,000 for free for two full years.  It will literally cost you nothing to try this fresh new approach to investing in Canada.

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