Roboadvisor apps became very popular over the past decade, especially among younger investors. In this Wealthsimple review, we’ll put this roboadvisor service under the microscope and tell you whether it’s worth your hard-earned money.
These services autonomously manage user portfolios using AI algorithms. The roboadvising space has become competitive over the past few years, but Wealthsimple is distinguishing itself from the crowd.
Intro to Roboadvisor Services
Roboadvising services usually have significant cost advantages because they don’t use personal portfolio managers. But some people still want the human touch.
That is why many roboadvisor services offer complimentary support from human advisors.
These so-called hybrid advisors come in various flavors, and some platforms offer more human-based services than others. H
owever, most roboadvising platforms lean towards automated investing strategies.
Wealthsimple Reviews: Street Cred
Wealthsimple is a popular roboadvising platform headquartered in Canada. Since it was founded in September 2014, the firm has built up a reputation for quality and value.
Currently, Wealthsimple has nearly $5 billion in client assets under management and thousands of users.
When it was first founded, Wealthsimple focused solely on traditional investing. However, the firm branched out in recent years and began offering a variety of financial products.
In 2018, the firm introduced high-yield savings accounts and other services. In 2019, Wealthsimple started to offer tax prep services after it acquired SimpleTax, a Canadian tax firm.
Wealthsimple’s main draw is its roboadvising features. The platform automatically allocates your portfolio based on your preferences. It continually monitors your investments and adjusts positions to maintain your preferred presets.
All of this happens automatically, so investors don’t have to do anything put add funds. The AI takes care of everything. You don’t have to adjust your funds or rebalance your portfolio because the roboadvisor function does it for you.
Wealthsimple Review: The Basics
Wealthsimple is all about intelligent automatic investing. Users can open a variety of accounts, including standard brokerage accounts and tax-advantaged IRAs.
Once you create an account, you fill out a brief risk-assessment questionnaire. Wealthsimple uses your answers to determine your portfolio allocation.
You can also adjust your allocations if you don’t think the survey scored you accurately. Welathsimple offers several portfolio settings based on time horizon, risk tolerance, investment experience, and more.
Wealthsimple has three primary portfolio structures: conservative, balanced, and growth.
Each allocation holds various concentrations of investments, primarily ETFs. ETFs are a favorite option for roboadvisor firms because they are easy to diversify and generally have low expense ratios.
Wealthsimple Review: Portfolio Options Explained
For example, the Conservative options tend to concentrate more investments in municipal and government bonds, while the Growth option puts more money into US and foreign stocks.
Once you pick a portfolio that fits your investment style, you deposit your money and the algorithm takes care of the rest.
Wealthsimple’s algorithms are based on Nobel-laureate Harry Markowitz’s Modern Portfolio Theory (MPT).
MPT is the pre-eminent investment methodology and involves finding the right kind of diversified portfolio that minimizes risk while maximizing growth.
The Wealthsimple algorithm uses MPT formulas to ensure your accounts are diversified adequately to protect against the risk of overconcentration.
Wealthsimple also offers socially-responsible portfolio options. This portfolio invests companies that emphasize environmental, social, and governance factors.
The environmental branch favors companies with lower carbon footprints and an emphasis on green technology. It also invests in companies with high rates of gender and racial diversity.
Wealthsimple was one of the first roboadvisor platforms to offer ESG investing back in 2016, and these options are in high demand amongst Wealthsimple’s younger demographic.
Wealthsimple Review: Features
Here are some examples of the features included with Wealthsimple:
- Dividend reinvesting
- Tax-loss harvesting
- Roundup investing
- Portfolio reviews
- Savings accounts
Auto-rebalancing is the core function of most roboadvisors. Basically, the platform automatically buys and sells your investments to maintain portfolio allocations within preset ratios.
The entire process is autonomous, so you don’t have to do anything to manage your portfolio.
Some funds pay dividends to shareholders, and many investors prefer to reinvest these cash payments into their portfolios.
Wealthsimple users have the option to automatically reinvest dividends at no extra charge. Many platforms charge for this feature, but Wealthsimple provides this feature at no additional cost.
Wealthsimple will automatically sell poorly performing assets to minimize your tax liability. The platform automates the entire process, so you don’t need a tax pro to do it.
Roundup allows you to automatically reinvest your spare change from debit card purchases.
Once you link a debit or credit card to your account, Wealthsimple automatically rounds purchases up to the nearest dollar and invests the difference. This is a great way to build your investments without manually depositing funds.
For example, if you buy a coffee that costs $2.50, Wealthsimple charges you $3 total and deposits the extra $0.50 into your account.
It’s not a lot, but those purchases can quickly add up. You can also invest lump-sums to build up your savings even quicker.
Wealthsimple is a roboadvisor firm, but they also offer access to human advisors.
In fact, Wealthsimple users can even access free consultations with finance pros.
An expert is available to analyze your accounts, allocations, and time horizons to ensure you’re on the right track. Free portfolio reviews are a big plus for inexperienced investors on a budget.
Wealthsimple’s Smart Savings account is its high-yield savings option.
Smart Savings pays a 1.66% interest rate on account balances, which is much higher than traditional savings accounts.
However, the company charges a small management fee for account holders. It’s an excellent option for investing cash that you can’t afford to lose.
Wealthsimple Review: Costs
Wealthsimple charges account management fees in exchange for its services. The payment structure is relatively straightforward.
There is a 0.50% AUM fee on investment accounts under $100K and a 0.25% fee for Smart Savings accounts. These fees also include regular portfolio reviews and advising services.
One you invest more than $100k with Wealthsimple, you qualify for a Black account. Black members pay reduced management fees of 0.4%.
If your investments total more than $500k, the deal gets even sweeter with the Generation plan. Generation plans include all the basic and Black-level perks, plus:
- Individualized portfolios
- Asset location
- In-depth planning
- Access to a dedicated team of financial advisors
Outside of management fees, Wealthsimple doesn’t charge hidden fees.
There are no charges for withdrawals, rebalancing, or low balances. In fact, you can open an account with no money at all.
Is Wealthsimple a Scam?
Absolutely not. Wealthsimple is a very legitimate and respected service.
When you invest with Wealthsimple, you can rest easy knowing your money is safe. Wealthsimple doesn’t even hold your money so you won’t lose your funds even if they go bankrupt.
All Wealthsimple accounts are covered by SIPC-insured for up to $500,000 in securities and $250,000 in cash.
The platform also includes a supplemental insurance plan that covers balances that surpass these limits.
Wealthsimple Reviewed: Data Protection and Privacy
As far as your personal data, Wealthsimple uses state-of-the-art bank-level security encryptions and 2-factor authentication (2FA) to protect your investments.
Overall, the platform has lots of useful features to protect your funds and account info from hackers.
Wealthsimple Reviews: Word on the Street
Wealthsimple has an excellent reputation and receives high marks from consumers. We checked out Wealthsimple’s Trustpilot page, and they have an excellent rating with more than 100 reviews.
The vast majority of testimonials say they’ve had a very positive experience with the platform and offer notable praise for its simplicity and customer support.
Even if you just search for reviews online, you find lots of positive reviews for the platform. Most reports indicate that Wealthsimple is a very trustworthy platform with a track record for customer satisfaction.
- Excellent features like auto-rebalancing and tax-loss harvesting
- No account minimums
- Simple and easy-to-use interface.
- Decent portfolios selections/allocations
- Fractional share investing
- Access to human advisors
- VIP services for high-balance clients
- High-interest savings accounts
Is Wealthsimple Right for Me?
Welathsimple is an excellent choice if you meet any of the following criteria:
- Simplified, hands-off investing is most appealing to you.
- You’re interested in ESG investing.
- You’re a beginning investor looking to build your savings.
- You want a non-traditional cash management account with investing options.
Wealthsimple is one of the best roboadvisor platforms available. The fees are somewhat high, but you get a lot of value for your dollar.
Wealthsimple offers a robust selection of features with plenty of beginner-friendly investing options. If you’re interested in investing with a roboadvisor, you can’t go wrong with Wealthsimple.