Wealthsimple is an automated investing platform. After launching in 2014, Wealthsimple quickly became Canada’s largest robo-advisor and made it’s to the US in 2016.
Wealthsimple has made a name for itself by providing world-class investment management and offering its services at a fraction of what traditional financial advisors charge. By setting the account minimum to $0, Wealthsimple has done away with one of the greatest deterrents to getting started with investing – a minimum initial deposit. Wealthsimple also provides additional perks such as automatic rebalancing, free tax-loss harvesting, dividend reinvesting, access to financial planners and socially responsible investment offerings.
Right now, Dollar Build readers can take advantage of the Wealthsimple $50 sign-up bonus (or $100 if you deposit enough to qualify for their Wealthsimple Black program).
But before you jump on that limited time offer, let’s check out what else Wealthsimple has to offer and see if it’s right for you!
Who is Wealthsimple for?
Wealthsimple can be especially attractive to millennials and new investors seeking a beginner-friendly investment platform with a clear and simple price plan. In general, Wealthsimple is a good fit for anyone who:
- Is new to investing
- Wants to get started even if they don’t have a ton of extra cash to invest
- Enjoys investing in companies and causes that reflect their personal beliefs and passions
- Wants access to financial planners and expert financial advice
- Likes free money just for opening an account
How Much Does Wealthsimple Cost?
Currently, Wealthsimple’s account minimum is $0 and they promise that you’ll never pay any trading, transfer, or rebalancing fees. Wealthsimple does, however, charge annual account management fees.
Here’s how those fees breakdown:
- Under $5k: Free for one year
- $5k – $100k: 0.50%
- Over $100k: 0.40%
For new customers, Wealthsimple will manage your first $5,000 for free for one year. After one year – or after your balance exceeds $5,000 – you’ll pay an account management fee of 0.50%. When your account surpasses $100k, you’ll qualify for Wealthsimple Black and pay a lower management fee of 0.40%.
Although Wealthsimple’s fee plan is straightforward and transparent, it still leaves something to be desired. While Wealthsimple’s annual fee of 0.50% for its basic service is less what most big-name traditional brokers charge, it’s twice as high as the 0.25% account management fee that Wealthfront and Betterment charge. And it’s not even in the same league as M1 Finance’s entirely free investing platform!
What is Wealthsimple Black?
Wealthsimple Black is a program for investors with account balances of $100,000 or more. Those investors will enjoy all of the basic Wealthsimple features plus a few extra perks:
- A reduced management fee of 0.40%
- A financial planning session with one of Wealthsimple’s expert advisors to help you meet your financial goals
- VIP access to over 1,000 airport lounges in more than 400 cities
How Does Wealthsimple Work?
Wealthsimple’s investing strategy is based on Modern Portfolio Theory, an investing theory developed by the Nobel Prize-winning economist Harry Markowitz. In a nutshell, Markowitz’s research showed that diversifying your investments is an effective way to minimize risk while maximizing return.
Wealthsimple puts Modern Portfolio Theory into practice by investing your money across the entire market using Exchange Traded Funds (ETFs) that track the global economy. Wealthsimple asks investors to complete a brief introductory questionnaire during the sign-up process so they can help you select the right mix of funds for your portfolio. Their portfolio recommendation is based on your unique financial goals, risk tolerance, previous investment experiences, and investing knowledge.
In addition to helping you set up a well-diversified portfolio that aligns with your personal goals, Wealthsimple throws in a number of other premium features for free!
Access to Financial Advisors
One aspect where Wealthsimple really shines is by offering the human touch as a standard feature. Most robo-advisors only offer one-on-one guidance to account holders who have high account balances. Wealthsimple, on the other hand, gives all its customers an opportunity to schedule a one-on-one session with a financial advisor. Basic clients get a 15-minute phone call to discuss the basics of financial planning and to set up their investment portfolio. Wealthsimple Black customers receive additional access and a more formalized financial plan.
Free Portfolio Review
Wealthsimple offers a free portfolio review service to anyone whether you are a Wealthsimple client or not. The review consists of expert analysis of all of your financial accounts to help you evaluate the fees you are paying, tax efficiency, and asset allocation.
Wealthsimple makes sure that your asset allocations remain in line with your chosen strategy, by automatically rebalancing your portfolio.
Tax-loss harvesting is a strategy used to improve the after-tax return on taxable investments. By realizing a loss, investors are able to offset taxes on investment gains or other income. This type of investment service is usually only available to investors who are willing to pay higher annual fees or carry larger investment portfolios. Wealthsimple offers tax-loss harvesting as part of its basic service at no additional cost!
Wealthsimple’s Portfolio Options
Wealthsimple’s portfolios are comprised of varying positions in low-cost index-based ETFs. They offer three portfolio types: conservative, balanced, and growth. The conservative portfolio is a 65/35 stock/bond split. The balanced portfolio is an even 50/50 split. And the growth portfolio favors stocks with an 80/20 split.
There are a couple unique investment options that make Wealthsimple stand out from their robo-advisor peers. First, there’s Wealthsimple’s offering of socially responsible investments. These SRI portfolios appear to be rather popular. According to Wealthsimple, roughly 35% of their clients hold least one such investment.
Another unique offering is the Halal portfolio which adheres to Islamic Halal rules. According to Islamic investing principles, a halal investing portfolio must not include companies that profit from gambling, alcohol, tobacco, pork, firearms, or other debt-based investments (e.g., bonds).
How to Open an Account with Wealthsimple
Signing up for an account with Wealthsimple account is easy. Here’s how to do it:
By using our link, you’ll be eligible for the Wealthsimple sign-up bonus of $50 when you fund your portfolio with at least $1,000. You’ll get an additional $50 if you deposit over $100,000 and open a Wealthsimple Black account.
2. Complete the Online Application.
Click the “Claim your bonus” button to get started. After that, all you need to do is provide some basic personal information and answer a few questions about your investment experience.
3. Bank Verification
Wealthsimple offers several methods to verify your banking information.
Which Types of Accounts does Wealthsimple Offer?
Wealthsimple offers several types of accounts to choose from, including:
- Taxable Investment Accounts
- Roth IRA
- Traditional IRA
- SEP IRA
- Join Accounts
- Trust Accounts
If you already have an account at another financial institution or with another robo-advisor, that’s okay. Wealthsimple doesn’t want transfer fees to keep you from investing with them. If your account has more than $5,000 in assets, Wealthsimple will facilitate the transfer by covering any transfer fees.
You can access Wealthsimple on your desktop or via mobile app available for both iOS and Android. The website and app are beautifully designed with a deliberately clean and simple appearance.
No Minimum Initial Deposit. With no minimum account balance, you can open your account and start investing immediately.
- Socially Responsible Investing Options. You can design a socially-responsible portfolio so you can invest in companies that are making a positive environmental and social impact.
- Portfolio Review. Wealthsimple’s offer to review third-party financial accounts can help investors determine whether they are investing wisely and efficiently. This is certainly a unique feature in the robo-advisor space.
- No Fees for Trading. There aren’t any fees for buying and selling securities, which means you can change your pie allocation whenever you want at no cost.
- Tax-Loss Harvesting. Tax-loss harvesting is available on all taxable account at no additional cost.
- Referral Bonus! Use our link to take advantage of Wealthsimple’s sign-up bonus!
High Account Management Fees. Given the detrimental impact management fees can have on long-terms investment returns, Wealthsimple’s fee plans are a major drawback.
- SRI Fund Management Fees. Expense ratios for socially responsible funds and ETFs are notorious for being higher than more traditional investment options. This dilemma isn’t unique to Wealthsimple, but it’s something to keep in mind.
Is Wealthsimple Right for You?
Wealthsimple shines in several areas. It offers investors a robust mix of socially responsible investment options that can be appealing to value-based investors who want their investments to match their beliefs. Wealthsimple also excels by offering premium features such as tax-loss harvesting, dividend reinvestment, automatic rebalancing, and access to financial planners at no additional charge. On top of that, Wealthsimple’s financial advisors are available to you whenever you need them. Oh, and there’s no minimum initial account balance. For those reasons, Wealthsimple can be an attractive investing option for newbie investors who historically haven’t been able to afford access to these services.
Those features come at a price that shouldn’t be ignored, however. The average investor will maintain an account balance that is subject to a 0.50% account management fee. Despite those attractive features we just discussed, we don’t think Wealthsimple’s platform is strong enough to justify charging more than twice the fees charged by robo-advisor competitors like Wealthfront, Betterment and M1 Finance.
On the bright side, you can try out Wealthsimple for free for one year if your account balance is $5,000 or less. And you only need to fund your account with $1,000 to get the $50 sign-up bonus. One year should be plenty of time to figure out if Wealthsimple is right for you. And even if you decide it isn’t, you’ll still walk away with a free $50!