Nest Wealth vs. Wealthsimple: A Tale of Two Robo-Advisors
This post provides a detailed review of Nest Wealth and Wealthsimple, comparing two of Canada’s leading robo-advisors for your online investing needs.
If we’ve learned anything over the past 10 years, thanks to the likes of Uber and Netflix, it’s that no industry is immune to the impact of disruptive technology. Now Canada’s big banks and wealth management firms have been put on notice: The robo-advisor revolution has arrived.
Robo-advisors – or online portfolio managers – offer a number of advantages over traditional banks and investment firms; namely low costs, ease of use, unbiased advice, and the use of technology to limit or even eliminate behaviour that often leads to poor returns.
Related: Why pairing a robo-advisor with a fee-only planner can save you money
Furthermore, research from business consultancy firm EY suggests that the adoption of financial technology services among Canadians will triple over the next 12 months.
Nest Wealth vs. Wealthsimple
Two of Canada’s leading robo-advisors are Wealthsimple and Nest Wealth. Here’s how these two platforms stack up:
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| Getting started | One of the only institutions in Canada that allows for same-day funding. Their fastest mobile signup was eight minutes.
Clients fill out a risk questionnaire that asks about financial goals, time horizon, risk tolerance, past investment experience and level of investment knowledge. From this, you will be assigned a risk score and portfolio. |
Opening an account is completely online, secure, and encrypted – taking no more than 5 to 10 minutes.
There’s no need to print anything out or leave your house. Each client gets a customized portfolio based on his or her risk profile, goals, and financial situation. |
| Minimum deposit | No account minimum. | No account minimum. |
| Fee for service | 0.50% – 0.40% management fee based on account size. | A monthly subscription plan starting at $20 per month and capped at $80 per month. |
| Annual fee at $25,000 invested: | $125 (0.50%) | $240 (0.96%) |
| Annual fee at $100,000+ invested: | $500 (0.40%) | $480 (0.48%) |
| Annual fee at $250,000 invested: | $1,000 (0.40%) | $960 (0.38%) |
| Annual fee at $500,000 invested: | $2,000 (0.40%) | $960 (0.19%) |
| Types of ETFs used | Purpose, iShares, Vanguard and BMO. | iShares, Vanguard. |
| Average management expense ratio of ETFs | Average MER is 0.18% | Average MER is 0.13% |
| Charge per transaction | No charge per transaction. | $9.99 per trade for re-balancing capped at a maximum of $100 per year. |
| Rebalancing | Portfolio is monitored daily and automatically rebalanced if it drifts beyond certain thresholds. | Portfolio is monitored daily and automatically rebalanced if it drifts beyond certain thresholds. |
| Availability | Available across Canada in all provinces and territories. | Available to investors across all Canadian provinces. |
| Investor protection | CIPF protected up to $1M per account. | CIPF protected up to $1M per account. |
| Automation + human advice | Everything is automated, from rebalancing to dividend reinvestment, even tax efficiency.
Wealthsimple does offer advice – clients can reach out to a Wealth Concierge team to discuss financial goals and objectives over the phone, text, email or Skype. |
The onboarding and forms process is all automated but a Nest Wealth representative speaks with every client to discuss portfolio options.
In addition, Nest Wealth offers advice on which accounts to open, investing time horizons, goals and risk tolerance by phone, email, or in person visit. |
The verdict:
Wealthsimple’s platform is geared toward Millennials and indeed may be the best fit for the 20-and-30-something investor who is just starting to save. The company has embraced Gen Y, with a slick website and mobile app, and its cost structure is better suited for investors making regular contributions to portfolios under $250,000.
Boomer & Echo readers get a $50 cash bonus when they open and fund an account with $500 within 45 days. Sign-up today to add this offer to your account.
Investors with more sizeable portfolios might find Nest Wealth and its monthly subscription plan more appealing. That’s because instead of taking a percentage of assets – a fee that increases as your portfolio grows – Nest Wealth’s fee is capped at $80 per month, meaning the fees in relation to your account size actually decrease over time.
Boomer & Echo readers can try Nest Wealth free for 3 months.
That’s a good reminder that robo-advisors are not just built for Millennials, but investors at any age and stage can benefit from a low-cost and hands-off approach to investing.
More resources: Learn more about what all of Canada’s online investment providers have to offer with this handy comparison fee calculator.
Robb,
Appreciate the time you took to put this article together. It’s because of bloggers like you that more Canadians are starting to learn about all the options they now have as investors. Well done!
Am looking for the best online platform for investing. Would like to have some of my investments taken care through robo advising but would also like to do some of my own trades and possibly get some guidance from the platform. New to this type of investment style, not a new investor. Any advice would be great. Looking for the best online investment site with the best customer service and great fee structure.
Thank you to anyone who can advise.
Hi Katie,
We here at Nest Wealth would be happy to have a conversation with you to discuss your questions. Our flat fees and responsive customer service team are very popular with our clients.
Please feel free to book a call at this page; https://www.nestwealth.com/scheduling
You can also email me directly at ctringham @nestwealth.com
All the best,
Chris
Thank you so much Chris, Will call you tomorrow or Monday. Would like to set something up as soon as possible. Thank you so much for your reply.
Katie
I second Randy’s comment – great job getting the word out about newer options now available to Canadian investors.
Thanks for the article – this really does place the 2 leading robo advisers versus each other and their fit overall for portfolios of various sizes.
Is the annual fee tax deductible?
I think it is deductible against any capital gains as an adjustment to your ACB.
I’m an early customer of Wealth Simple, and while I am in my mid 30’s I think I faced the same doubts/concerns about investing my hard-earned cash with a startup tech firm. There is nothing “robo” at all about having yearly phone/skype follow ups with my “wealth concierge,” and they were very hands on with my early investing questions and transferring our accounts over. I even met our Wealth Simple advisor for coffee when he was visiting Vancouver for business.
Based on my prior big bank experience, Wealth Simple was an upgrade in professionalism and investment advice, all for a lower fee.
I tried to sign up for a Wealthsimple joint investment account. The signup process was straight forward and even though they offer a joint investment account they could not get their act together and get the paperwork right after a month of trying. Very frustrating and on top of that they failed to respond to my numerous emails requesting action on this. Disappointed completely by Wealthsimple’s lack of customer service and the month of time I wasted trying to get this going. I gave up and am now looking at alternatives.
Jay,
Reach out to me tomorrow at randy@nestwealth.com and we will see what we can do to help you out.
I’m surprised. I usually get very quick answer to my questions
I am also surprised. I have had a very good experience with Wealthsimple. They have always been very quick to respond to questions (and I am one that generally has a lot).
Although robo-advisors have lower fees than mutual funds, does that imply an investor will always underperform the index given the costs? If a manager can add alpha there is potential to offset the MER, in particular for low MER funds such as Mawer.
I can’t even imagine how these two firms could possibly succeed long term. Margins are way too thin in the retail wealth management business to begin with. I just took a look at the Wealthsimple website. I don’t see a “Wealth” of experience in the business – it won’t be long before these yougin’s realize that bottom fishing low net worth clients and charging a minimal fee is not a formula for success. Unless you’re a manufacturer of products with a distribution channel the business sucks and margins will only continue to shrink as the regulatory, technological side of the business swells.
Why do you care? You’re not buying their business. You’re investing your money for a low cost.
actually, even at .35% for their services, they are actually better funded than many other investment dealers in Canada that already have scale. I think the average fee for an advisor is around 1% of which most companies typically get 1/3 of this meaning in a race down the toilet on fees, traditional investment dealers will have less money and be worse funded where these guys will just get more scale
This comment didn’t age well, Wealthsimple has now over 1 billion dollars under asset management and has been named a top 50 Interbrand breakthrough brands 2017.
Robb, great article.
Can you provide more information about the difference in investment strategies?
I notice Wealthsimple has less of a Canadian bias in its portfolios as opposed to Nest Wealth but it’s hard to figure out based on the public information on their websites.
Thanks!
One update to the above article is that the “Annual fee at $100,000 invested” section for Wealthsimple is now down to 0.4% (from 0.5%). [Note: I am not as familiar with Nest Wealth, so there could be changes to their platform fees since this post as well.]
As a male who has entered his 60’s, I am a little scepticle about a new investment tool, but at the same time, I hear a lot of positives about ETF’s. I guess my question would be, is there an opportunity to change my current investments, that are primarily in bank mutual funds, into these type of funds, without loosing everything? I’m not looking for a home run, but a little more than the current 4- 5% im getting in mutual funds.
Hi Tom,
I’m a Wealth Associate here at Nest Wealth and we’d be happy to schedule time for a call to review your current portfolio. I’m sure that we could address your needs using an ETF portfolio and transferring from bank mutual funds is typically a very straight forward process.
Feel free to email me at ctringham@nestwealth.com or you can schedule a call here; https://www.nestwealth.com/scheduling
Take care,
Chris