Wealthsimple Review – A Closer Look at a Leading Robo-Advisor

Wealthsimple Review
  • Fees
  • User Friendliness
  • Portfolio Diversity
  • Performance
3.9

Summary

A robo-advisor platform, Weathsimple, has made itself a name in the game. Wealthsimple aims to have all the functionality of a traditional brokerage, with a few key features to help cut costs. Our thorough review will tell you everything you need to know about Wealthsimple and if they are the robo-advisor platform that is right for you.

About Wealthsimple

Wealthsimple is a robo-advisor platform designed in the same vein as Wealthfront and Betterment. The platform aims to mimic the functionality of a traditional brokerage, but cut costs by automating most of its investing advice and directing customers assets towards low-cost ETFs. Wealthsimple was founded in 2014 by CEO Michael Katchen and has since grown to managing over $3.2 billion.

How Wealthsimple Works

Wealthsimple makes investing as streamlined and painless as possible by guiding users into a diversified portfolio. When you sign up for an account, Wealthsimple asks you about your investing goals and risk tolerance to determine the right balance of asset classes – risky growth stocks or conservative bonds, for example – for your portfolio. Wealthsimple offers ETFs covering nine different asset classes, including US stocks, emerging market stocks, and bonds.

Once your investment account is established, Wealthsimple makes it easy to add money with one-time or recurring deposits. At the same time, you can view a quick estimate of how your deposit will help grow your nest egg over time – helping you gauge how much to invest. Wealthsimple integrates easily with most banks to make transferring money for investment simple.

Wealthsimple Deposits

In addition to investment accounts, Wealthsimple also offers a high-yield saving account similar to that available through competitor Wealthfront. Wealthsimple Save accounts offer 2% annual returns with no management fees and integrate seamlessly with investment accounts on the platform so you can easily manage your money in one place.

Wealthsimple also mimics some of the functionality of Acorns, another robo-investing app, by allowing you to round up purchases made on a connected debit or credit card for deposit. With roundups turned on, every time you make a purchase, the remaining change to the nearest dollar is automatically transferred into the Wealthsimple account of your choice.

Wealthsimple Roundup

Account Requirements

Wealthsimple does not have any account minimums for either investment or savings accounts. Currently, Wealthsimple is available in the US, Canada, and the UK.

Pricing and Fees

Wealthsimple charges a 0.50% per year management fee for investment accounts up to $500,000. This is significantly higher than the 0.25% yearly fee charged by both Betterment and Wealthfront, although users do get access to speak with financial advisors over the phone with Wealthsimple. Accounts with a balance greater than $100,000 get a slight discount to a 0.4% annual fee.

Wealthsimple Pricing

Like its competitors, Wealthsimple does not charge for trades, transfers, or portfolio rebalancing. However, users are subject to exchange fees on the ETFs that Wealthsimple purchases, and the platform is not transparent about what these fees are – the company states that they are around 0.2%, which is somewhat high.

Wealthsimple Save accounts are free to open and are not subject to management fees.

Wealthsimple Platform and Tools

Wealthsimple offers incredibly stripped-down browser and mobile apps. These interfaces offer just the barest insights into what your money is going towards, with almost no detailed information about how individual asset classes within your portfolio are performing. Furthermore, unlike Wealthfront and Betterment, there are no tools for goal planning to determine how much you will need to invest for retirement if you plan to take out a significant sum for a house or college tuition in the future.

Instead, most of what you get is an overview of how much money you have in your portfolio and an interactive chart showing how your money will grow over time based on your portfolio returns and current deposit rate. This simple view is ideal for users who want to invest for retirement and not think about it, but anyone who likes to take a hands-on approach to saving may be frustrated by the lack of information. 

Wealthsimple Portfolio Overview

That said, Wealthsimple does have some unique investing tools for conscientious investors. For example, Wealthsimple’s socially responsible investing tools let you choose a portfolio built on stocks and bonds related to clean energy, affordable housing, and diversity. Keep in mind, though, that socially responsible portfolios in Wealthsimple are kept separate from standard investing portfolios.

Wealthsimple Socially Responsible Investing

Wealthsimple Performance

Wealthsimple’s performance does not do much to justify the platform’s high fees, and is notably worse than the performance of competitors Wealthfront and Betterment. The high-growth portfolio has an annualized return of just 5.4% since the platform’s inception in 2014, and numerous years have seen negative annual returns. Especially given that the S&P 500 has averaged 8.1% annual returns over the same period, it would be advantageous for any investor who has the knowledge and patience to invest in index ETFs through a traditional brokerage to do so. 

Wealthsimple Performance

Comparison to Alternative Investments

On the whole, it’s hard to justify Wealthsimple compared to its direct competitors Wealthfront and Betterment. Both Wealthfront and Betterment offer significantly lower management fees, and most users won’t take advantage of the availability of human investment advisors with Wealthsimple that come with the added cost. Furthermore, Wealthfront and Betterment have both performed better over the past five years and Wealthfront offers ETFs with lower exchange fees than Wealthsimple. Even Wealthsimple’s savings accounts are eclipsed by the savings accounts at Wealthfront, which offer a higher interest rate and up to $1 million in FDIC insurance.

There is also relatively little that Wealthsimple does that cannot be accomplished more cheaply through a traditional low-cost brokerage. All of the ETFs available through Wealthfront can be purchased elsewhere, and the need for portfolio rebalancing is relatively minimal. Plus, most investors would see better returns by investing in index funds or ETFs rather than by using Wealthsimple’s asset allocation options.

Key Differentiators

The main reason for investors to use Wealthsimple is that it makes investing incredibly simple. Beyond a few questions when setting up an investment account and deposits, there is almost nothing to be done to manage your investment. The web and mobile apps are inviting, with relatively few graphs and surprisingly few performance metrics, making Wealthsimple a safe place for investors who are easily scared by the prospect of investing. Plus, the ability to link a debit or credit card to an investment account for roundups can appeal to investors who need some encouragement to save for retirement.

Trustworthiness

Wealthsimple takes security seriously, encrypting all user data and securing your account with two-factor authentication. In addition, all Wealthsimple investment accounts are backed by up to $500,000 in investment insurance in case the company ever runs into financial trouble. On top of that, all transfers into and out of Wealthsimple are free.

Who is Wealthsimple Best For?

Wealthsimple is best for investors who are willing to pay more for low-stress investing. While it’s hard for Wealthsimple to compete with lower-priced Wealthfront and Betterment, the company’s focus on streamlining its website and mobile app and eliminating anxiety-inducing tools like goal planning and performance tracking can set it apart for some investors. In addition, Wealthsimple is unique among these robo-advisors in offering socially responsible investing portfolios, which can appeal to socially conscious investors.

Conclusion

Wealthsimple is a solid robo-advisor platform with a wealth of features, but its high management fees and low returns compared to its competitors make it a hard sell for the majority of investors. Overall, Wealthsimple is best for socially conscious investors and those who feel stressed out by most other investing apps.

Pros

  • All Wealthsimple users get access to human advisors
  • Highly streamlined web and mobile apps reduce investing anxiety
  • Ability to link debit or credit cards for rounding up purchases for investment
  • Offers socially responsible investing portfolios
  • Simple recurring deposits
  • High-yield savings accounts with no management fees or account minimums

Cons

  • Poor returns compared to other robo-advisors and S&P 500
  • High management fees and ETF expense ratios compared to competitors
  • Very few tools for goal planning or performance tracking

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