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Wealthsimple Review 2019

Jan. 2, 2019
Brokers, Investing
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There’s a lot to like about Wealthsimple’s offerings, such as its diverse lineup of portfolio choices (including socially responsible and halal-compliant options), clear pricing ($0 minimum and $0 fees) and unfettered access to certified financial planners for all clients, regardless of account balance.

All those goodies come at a price, though, and the 0.4% to 0.5% advisory fee — which puts it on the pricier side of the competition — is one of the few categories where we had to dock Wealthsimple’s score. (You can see how it stacks up against its peers in other categories in our roundup of best robo-advisors.) However, for values-based investors in particular, the extra money may be well worth spending.


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Quick Facts

  • Management fee: 0.4% - 0.5%.
  • Account minimum: $0.
  • First $10,000 managed free for one year for NerdWallet readers.
Get started on Wealthsimple's secure site

Wealthsimple is best for:

  • Socially responsible investors.
  • Those seeking halal choices to fit Islamic law.
  • Beginning investors.
  • Automatic rebalancing.
  • Tax-loss harvesting.
  • Access to financial planners.
Overall

4.5 NerdWallet rating
Account minimum
$0
Account management fee
0.5% for balances $99,999 and less.
0.4% on balances above $100,000.
Investment expense ratios
0.09% - 0.12% on standard portfolios.
0.25% on SRI portfolios.
Account fees
$0 annual, transfer, closing fee.
Portfolio mix
Between 6-10 ETFs covering up to 10 asset classes; around 50 individual stocks for halal portfolios.
Accounts supported

Taxable personal/joint accounts, IRAs (traditional, Roth, SEP), trust and custodial (UTMA and UGMA).
Tax strategy
Free tax-loss harvesting for Wealthsimple Black customers; free for Wealthsimple Basic customers by request.
Automatic rebalancing
Free on an as-needed basis.
Human advisor option
All customers can schedule a financial planning session with a certified financial planner.
Tools
Free Portfolio Review.
Customer support options (includes website transparency)
Phone or email Monday-Thursday 9 a.m.-8 p.m., Friday 9 a.m. - 5:30 p.m. Eastern time.
Promotion

First $10,000 managed free for one year for NerdWallet readers (new clients only).

Where Wealthsimple shines

Socially responsible investment options: One of Wealthsimple’s marquee offerings is socially responsible investments. Investors can choose from three risk-weighted SRI portfolios.

The portfolios draw from six exchange-traded funds that focus on companies involved in enterprises such as clean technology innovation in the developing world, efforts to lower carbon exposure and supporting gender diversity in senior leadership roles. The portfolio may also contain municipal bonds that support local investment and government-issued, mortgage-backed securities that promote affordable housing.

Shariah-compliant portfolio: A halal investing portfolio — one that complies with Islamic law — is another standout offering. It contains roughly 50 individual stocks (not ETFs) screened by a third-party committee of Shariah scholars. No companies that profit from gambling, alcohol, firearms, tobacco or other restricted industries or derive significant income from interest on loans are permitted.

The halal investing portfolio risk profile is in line with Wealthsimple’s growth portfolio offerings, because it is invested 100% in equities and designed to track the broad market’s performance. Customers with a lower risk tolerance are advised to hold a certain percentage of their portfolio in cash since investment in interest-bearing assets (such as bonds) is not allowed under Islamic law.

Low account minimum and no extra fees: The $0 account minimum for the Wealthsimple Basic offering is a low hurdle to get started. That service includes free automated deposits, automatic rebalancing and dividend reinvestment. Wealthsimple charges no fees on transfers (in or out), trading and tax-loss harvesting. Maintaining a $100,000 minimum balance qualifies customers for the Wealthsimple Black service, which offers the same features as the Basic account at a lower management fee (0.4% versus 0.5%), plus a few extras, discussed below.

Service extras: Since Wealthsimple opened its doors for business in the U.S. in 2017 — it was already the largest robo-advisor in Canada — it has been steadily adding services, which now include:

  • VIP Priority Pass membership. This complimentary perk for Wealthsimple Black clients gives a customer plus a travel companion unlimited access to more than 1,000 airline lounges in 400 cities around the world.
  • Smart Savings account. For the money you’re not investing for the long term, the 1.75% interest rate (subject to change) is more than most traditional banks offer. And the unlimited free transfers and no minimum make it a convenient place to stash money you need in the near-ish term or as a parking spot for an emergency fund — just far enough away from everyday spending cash so you’re not tempted to spend it. However: Note that the company charges a 0.25% management fee on this cash, deducted from your balance at the end of each month.
  • Roundup feature. This new tool puts your spare change to work by rounding up purchases paid for with a linked credit or debit card and automatically depositing the money in your Wealthsimple account. (Logistically, the money is actually added up each week and then debited from your bank account.) It’s a great way to keep the investment momentum going and a reminder that even small contributions over time can add up to big bucks.
  • Free portfolio review. You don’t even have to be a Wealthsimple customer to cash in on this perk. The company offers a free portfolio review, which you can get by uploading the latest statement from any of your current investment accounts. A Wealthsimple analyst will check your investment allocation, account fees and tax efficiency based on your goals and time horizon and call to discuss the findings (and whether the company can improve on what you already have), with no account sign-up required.

Investment in fractional shares: Like other robo-advisors, at Wealthsimple each customer’s portfolio of ETFs — the exact mix of growth, international, fixed income, cash and other asset classes — is based on answers to questions about financial goals, investing experience, financial situation and risk tolerance. But the company has a bonus feature for customers who may be adding small amounts to their account over time: Wealthsimple buys fractional shares of ETFs, which means your entire deposit can be invested in full instead of hanging out in low-interest-bearing cash until there’s enough to purchase a full share.

Access to financial planners: Most robo-advisor services limit the amount and kind of hands-on help they offer customers (e.g., email only or one meeting per year) or offer access to one-on-one advice only to premium account holders who maintain high account balances. Wealthsimple allows all customers, regardless of account balance, the chance to set up a phone call with one of the company’s certified financial planners. This kind of access may be another reason why Wealthsimple’s management fee runs higher than some of the competition.

Free tax-loss harvesting: Tax-loss harvesting is a strategy used to lower an investor’s taxes on investment gains or other income by offsetting it with any investment losses. Often it is either a paid add-on service or only available to high-net-worth clients. Any Wealthsimple customer with a taxable account can have a portfolio analyst review their accounts (including those outside of Wealthsimple) for tax-loss opportunities, though the strategy typically is most valuable to those with larger investment balances and high salaries.

Simplicity: Practically everything about Wealthsimple’s service — clear, straightforward pricing; beginner-friendly customer experience; a slick, no-nonsense website — is stripped down to provide just what the customer needs (hence the “simple” in Wealthsimple’s name). We’re particularly impressed with the company’s “Help Center,” where everything you need to know about fees, portfolio holdings, performance and account management is laid out clearly and transparently.

Where Wealthsimple falls short

Account management fees: Account fees are where both customer and provider fortunes are made and broken. Wealthsimple’s 0.5% management fee on account balances of less than $100,000 and 0.4% on accounts over $100,000 is higher than that charged by the other companies on NerdWallet’s best robo-advisors list.

In comparison, Wealthfront and Betterment charge a 0.25% management fee. Even big-name brokers such as Charles Schwab Intelligent Advisory (0.28% management fee), TD Ameritrade Essential Portfolios (0.3%) and Fidelity Go (0.35%) undercut Wealthsimple by a large margin, although many of those providers have an account minimum ranging from $500 to $25,000.

SRI fund management fees: Management fees (aka expense ratios) on socially responsible investments (funds and ETFs) are notorious for being higher than average ETF fees. This isn’t a Wealthsimple-specific issue — you’ll pay these fees anywhere. But do keep in mind that these expense ratios are taken directly out of an investor’s returns. Even though Wealthsimple shops around for the lowest-cost SRI options, it’s good to know that the weighted average on SRI portfolios will cost you around 0.25% versus the average weighted expense ratio of 0.09% to 0.12% for Wealthsimple’s non-SRI portfolios.

Lack of personal finance tools: Those seeking a more fleshed-out financial advisory experience — calculators, planning tools, educational material and a money command central — may find Wealthsimple’s purposely streamlined website and app sparse compared with other providers. There can be beauty in simplicity: The entire approach is designed to merely cover the important concepts of saving and investing and keep customers apprised of what’s happening in their accounts. It’s ideal for savers who want to set it up and forget about it … but maybe less so if you like to play with what-if retirement planning scenarios.

Compare Wealthsimple with other robo-advisors

Management Fee

0.40%-0.50%

0.40%-0.50%

Account Minimum

$0

$0

Promotion

$10,000

$10,000

amount of assets managed for free for one year

Management Fee

0.25%

0.25%

Account Minimum

$500

$500

Promotion

$5,000

$5,000

amount of assets managed for free

Management Fee

0.25%

0.25%

Account Minimum

$0

$0

Promotion

Up to 1 year

Up to 1 year

of free management with a qualifying deposit

Is Wealthsimple right for you?

With its multiple SRI and halal portfolio offerings, Wealthsimple is a clear winner in the values-based investing category. Other pluses — tax-loss harvesting, access to certified financial planners and a $0 minimum balance requirement — put it in the same class as other robo-advisors that have higher brand-name recognition.

The biggest check mark in the “cons” column is Wealthsimple’s account management fees of 0.4% to 0.5%. Given the effect management fees can have on long-term investment returns, this is an important consideration, especially for investors with account balances that don’t qualify for Wealthsimple’s lower advisory fee rate.

 

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