This article is a review of the Wealthsimple robo-advisor platform and includes positive testimony from a real-life Wealthsimple investor.
I started investing at 19 without really understanding what I was doing. A bank advisor set me up with a portfolio of mutual funds, and for several years I paid a handsome fee for what amounted to underperforming investments and little-to-no advice.
If only I had found a smart, low-cost, rules-based approach to help guide my investing strategy, I might have been further ahead today.
Millennials, thankfully there’s a better way for you to get started. Online investment managers – often called robo-advisors – are changing the investing landscape and turning a tired, old industry on its head. Here’s my Wealthsimple review:
Wealthsimple is Canada’s fastest growing robo-advisor, and is now registered as a portfolio manager in every Canadian province and territory. Unlike the big banks, Wealthsimple offers a lightning fast onboarding process that allows you to set up an account in about 10 minutes from your computer or smart phone. There’s no sales pitch to tiptoe around, or endless paperwork to sign. You can do it all online.
It’s that kind of simplicity and accessibility that led 28-year-old Joshua Colp to move the bulk of his investments to Wealthsimple two months ago.
Joshua, a telecommunications consultant from Moncton, N.B., didn’t know that robo-advisors existed in Canada until he stumbled on a blog post written by Canadian Couch Potato Dan Bortolotti. From there he found the Canadian online investment options fee calculator, created by Sandi Martin and John Robertson.
“This made me aware of other options and provided better insight into just how much I was paying before moving (to Wealthsimple),” said Mr. Colp.
After spending a long time investing in bank mutual funds, Colp made a conscious effort to reduce his investment costs and automate his finances. He tried investing on his own using a discount brokerage, but said he did not enjoy the amount of time and effort required to manage his own portfolio. Two months ago, Colp opened up RRSP and TFSA accounts at Wealthsimple and hasn’t looked back.
“It was the perfect solution for me,” he said.
There’s a lot to like about the Wealthsimple platform, and it starts with the initial account set-up. After creating an account, you’re given a six-question risk assessment designed to help choose the portfolio that best suits you.
Using an e-signature to sign documents electronically online eliminates the need to visit a physical location to fill out paperwork. In just a few minutes, you’re ready to start investing. Send funds from your bank account, transfer over an existing investment account, or set up automatic deposits.
“I literally have an automated bill payment set up to contribute to my TFSA and RRSP, that’s it. Set it, and forget it.”
Wealthsimple uses low cost ETFs to build your portfolio, at an average cost of 0.17 percent. You’ll see carefully chosen investment products from the likes of iShares, Vanguard, BMO, and Purpose.
The management fee, which is in addition to the charges for your investments, ranges from 0.40 to 0.50 percent a year. A $10,000 investment would cost you just $25 a year, plus about $17 in investment fees for the ETFs. Compare that to the industry average of $240 per year.
Related: Nest Wealth Review
We’re entering an age where Millennials are shunning models of old. Today, thanks to the Internet, and the FinTech revolution, a client can research and access information that was once only available to investment firms and advisors.
“We all have access to the same information and can understand it at a basic level, if we want. This is what the younger generation does and it plays out in other areas, such as shopping,” said Colp.
Wealthsimple is not a true “robo-advisor” in the sense that its clients can get financial planning and investment advice from an actual human being. Dubbed a Wealth Concierge Service, clients can get help and advice from a team of wealth professionals to discuss their portfolio, including risk tolerance and asset allocation, and answer any questions related to their investments, finances, or financial goals.
The team isn’t paid on commission and doesn’t charge any hidden fees.
The human element was put to the test when stock markets tumbled over a few days this August. While many investors panicked on the doomsday scenarios reported in the financial media, clients of firms like Wealthsimple received calm, reassuring messages via email, text, and instant message explaining what was happening in simple terms while reminding clients to stay the course.
Mr. Colp did log-on during the market turmoil to check on his investments and watch the robo-advisor at work. He received an email about what was happening in the markets.
“It was the first real unsolicited contact I had received (from Wealthsimple), which gave it even more weight to read, and it was reassuring.”
When I asked Joshua if he would recommend Wealthsimple to his friends he said he will, and in fact, already has. He said the online investment manager is a great alternative to do-it-yourself investing and using a traditional bank or investment firm.
“They may not be for everyone, but they are a great solution for many.”
Final thoughts on Wealthsimple
Wealthsimple offers the full array of accounts, from RRSPs, TFSAs, RESPs, non-registered accounts, spousal plans, LIRAs, and RRIFs.
If you’re interested in becoming a client of Wealthsimple, we have a special offer for you:
Boomer & Echo readers get a $50 cash bonus when they open up a new account with Wealthsimple and fund it with $500 within 45 days. Sign-up now to add this offer to your account.