Account Minimum: $0 – Fees: 0.40% – 0.50% – Best for: Investing, Saving
For most of us, wealth management is a non-issue because… We’re not wealthy. If you are, congrats. You’re likely here to research whether or not Wealthsimple is the right platform for your needs.
TL;DR – Wealthsimple is a great robo-advisor that still gives you access to a human. Fees are a bit higher, but it comes with some peace of mind talking to a person.
What is Wealthsimple?
Wealthsimple is a Canadian online investing service that targets millennials. They offer two separate services: a high yield savings account and an investment platform.
According to the founder Wealthsimple is, “building the world’s most human financial company.” They want to make the traditional investment process less scary for those who are just looking to start saving.
A lot of financial tech companies are embracing as much automation as possible. Wealthsimple balances the efficiency of a robo-advisor with the human touch of the traditional financial advisor. Is this good for customers? Lets’ see.
Who created Wealthsimple?
Michael Katchen is the CEO of Wealthsimple. The company began in 2014. Previously he held jobs at McKinsey & Company and Ancestry.com. Wealthsimple acquired a robo-advisor in Canada and they rolled out most of their current product offerings in 2016.
Save money with Wealthsimple.
This is not Wealthsimple’s primary feature but it is still important to highlight. They have a savings account that has an annual APY of 2.0%. This is far better than most banks. Rest easy knowing that your savings are insured up to $500k in the case of insolvency.
They also boast no transaction fees, account minimum balances or low balance fees. Another service they offer is rounding up, where they invest spare change when you make purchases. With Wealthsimple it is easy to track your savings, and make adjustments as needed.
Invest money with Wealthsimple.
Wealthsimple’s primary feature is their investment product. As a customer you can put your investing on autopilot with auto-deposits.
When you sign up, they tailor-make a portfolio after discovering what your risk tolerance is. They use the Modern Portfolio Theory to manage your funds. Basically this means they diversify rather than picking individual stocks. This isn’t a new concept, they are just repackaging an old idea to sound new. To learn more about MPT, read here.
Wealthsimple for financial advisors.
One of the biggest features Wealthsimple has is their platform for advisors. If you are a financial advisor you can manage your clients money through Wealthsimple.
The way this arrangement works is easy. Wealthsimple takes 0.35% of the funds you manage. The advisor can then choose their fee. Anywhere from 0% – 1.15% of assets managed.
What this means for you.
As a consumer, this means you could be paying triple the cost of Wealthsimple is you are using a financial advisor.
What Wealthsimple does differently.
There are dozens of robo-advisors on the market today. It can be hard to tell them apart. Here are the features that make Wealthsimple different from others:
- Robo-Advisors and Humans Unite – Wealthsimple embraces modern tech, but adds a human touch. A product like Wealthfront (the names are so similar) steers away from human interaction. There are pros and cons to both methods, but Wealthsimple is firmly in the camp oof human financial advisment.
- Financial Advisor Platform – Most robo-advisors cater to the needs of the consumer looking too save. Wealthsimple meets this need but also provides the infrastructure for financial advisors to manage and grow their clients wealth all while making a decent profit themselves.
- Halal Investing – Certain religions have requirements around money. Tithing is the idea oof giving 10% of what you make back to the church. Halal investing requires investment decisions to align with Islamic principles. This a complex set of rules and processes. Learn more about it here. Wealthsimple has a third-party committee of Shariah scholars the use to screen investments for their Halal Investing portfolio.
5 reasons we love Wealthsimple.
- Socially Responsible Investing – Socially responsible investing is a growing trend. Global Socially Responsible Investing funds now total at over $22 trillion dollars. Wealthsimple has a way for their clients to invest in an SRI portfolio.
- Humans are There – From personal experience at a large startup, there is a huge focus on letting customers solve their own problems without talking to a human. While this is a novel idea, the process can be frustrating if the app or product does not help a user solve their problems. This gets worse when the app has anything to do with money. Wealthsimple offers live support and good customer service.
- Easy to Use – Some people just like to use a financial tool that has a great design. Wealthsimple definitely meets this criteria. They have beautiful, elegant interfaces that are easy to understand and interact with. That being said, they do lack some of the features other robo-advisors have.
- High Yield Savings – Wealthsimple provides a 2.00% APY on their savings accounts. While this is cool, other companies like Citizens Access or CIT Bank have rates of 2.35% APY and 2.4% APY.
- VIP Airline Lounge Access – Very random, but with a Wealthsimple Black ($100k+ balance) you have access to more than 1,000 airline lounges in over 400 cities with a complimentary Priority Pass membership.
Less than $100k = .50% Annual Fee
Over $100k = .40% Annual Fee
Over $500k = .40% Annual Fee
Keep in mind that if you are working with a financial advisor who uses Wealthsimple, your fees could be much higher. They are allowed to charge up to 1.15% on top of the .35% fee from Wealthsimple. You could pay up to 1.5% annually in fees!
Where Wealthsimple could improve.
- High Managment Fees – This alone could (and should) steer many away from Wealthsimple. 0.50% is a hefty management fee, especially when there are other robo-advisors on the market that are much cheaper. If you really value having access to people you could rationalize, but it is quite expensive.
- No Goal Setting – Wealthfront and Betterment both offer great financial planning features. It is surprising they do not provide these services, and they should.
Wealthsimple Review: The Bottom Line
Wealthsimple is good for those of us who still want to speak to a human being. However, if you want too save money on robo-advisor fees this is definitely not the platform for you.