Wealthsimple review: A human-backed robo-advisor

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Wealthsimple review: A human-backed robo-advisor

A few years ago, no one knew what a "robo-advisor" was. But today, it seems like everybody and their uncle is launching an automated investing service, a.k.a. robo-advisor. Incumbents in the investing space like Charles Schwab, E-Trade, Fidelity, and TD Ameritrade all offer an automated service now, joining startups like Betterment and Wealthfront.

In the middle of this waltzes Wealthsimple. Wealthsimple started in Canada in 2014, quickly becoming one of the country’s leading investment services with over $1 billion under management. (Justin Trudeau loves them, in case that particular brand of neoliberalism gets your heart racing.) Wealthsimple just launched in the U.S. this past January, bringing their mission of making investing as simple as possible with them.

But do we really need another automated investing service down here? Is Wealthsimple, like E-Trade or Fidelity, just a less innovative and more expensive version of Betterment? Or does this Canadian company’s human touch actually have Betterment shaking in their boots?


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Wealthsimple: The basics

Wealthsimple is an automated investing service, which means that it uses artificial intelligence to automatically invest your money in stocks and bonds. More specifically, Wealthsimple puts your money into a portfolio of ETFs – exchange traded funds – that let you buy a cross-section of the market without buying a stake in every security individually. That means it’s much easier to create a diversified portfolio, keeping you (relatively) protected in case one particular stock starts to tank.

For those of you who want to dig into the weeds a little more, Wealthsimple has a great look at their U.S. portfolio in its magazine. For the rest of you – be assured that a lot of smart people spent a long time thinking about the best way to diversify your assets.

Wealthsimple offers a wide variety of account types: both personal and joint taxable accounts are supported, as well as tax-advantaged accounts like IRAs, Roth IRAs, and SEP IRAs. Additionally, Wealthsimple supports rollovers from 401(k), 403(b), and 457 retirement accounts. Unlike Wealthfront, Wealthsimple does not currently support 529 college savings plans (our favorite way to save for college), but a representative did tell me they hope to offer them at some point in the future.

What are Wealthsimple’s special features?

Human expertise

Wealthsimple is primarily a robo-advisor, but unlike competitors, they offer unlimited calls with licensed financial experts as a part of its Basic tier. That means all of their customers have access to a financial advisor, no matter how much money they have in their accounts. This is seriously invaluable to new investors and more experienced investors alike, but especially to young millennials who are just starting to plan out the rest of their financial lives.

Wealthsimple’s financial experts can help you out with everything from your investment portfolio to your overall financial plan. Whether you don’t trust the "robo" part of robo-advisor or you just want a human being to walk you through your retirement plan, you can talk to a financial advisor at Wealthsimple for no extra cost.

Free portfolio review

Anyone, whether they’re a Wealthsimple customer or not, can get a free portfolio review from one of their experts. All you have to do is upload your most recent account statement from your brokerage and Wealthsimple’s financial experts will analyze it. Are your fees too high? Is your current brokerage doing everything they can to minimize your taxes? Is your portfolio diversified? Wealthsimple’s experts will answer these questions and more, and walk you through their analysis over the phone. After receiving your free review, there’s no obligation to sign up for Wealthsimple.

Socially Responsible Investing

Wealthsimple is one of the first robo-advisors to offer a Socially Responsible Investing (SRI) portfolio option. SRI portfolios typically stress environmental impact, diversity, consumer protections, and human rights, along with high financial returns. Wealthsimple’s SRI portfolio is no exception.

Wealthsimple’s SRI portfolio is built around six ETFs that tackle different social responsibilities. Like their standard portfolio, Wealthsimple’s SRI portfolio is designed to be diversified, low fee, and viable as someone’s entire portfolio. Wealthsimple estimates that about 35% of their customers have at least one SRI portfolio in their account.

SRI portfolios are available to all of Wealthsimple’s customers for the same management fee as the standard portfolio. However, the ETFs in the SRI portfolio tend to have higher fees associated with them – as much as .2% higher, depending on your specific allocation – so you’ll end up paying a little more in fees.

Wealthsimple’s fees

Wealthsimple has two tiers: Wealthsimple Basic and Wealthsimple Black.

Wealthsimple Basic is available for anyone investing between $0 and $100,000. With Wealthsimple Basic, investors receive personalized portfolios, automatic rebalancing of their portfolios, auto-depositing, on-demand investment advice, and dividend reinvesting. Wealthsimple charges a fee of 0.5% of your portfolio for the Basic tier.

Wealthsimple Black is available for anyone investing over $100,000. In addition to the Basic tier features, Wealthsimple Black investors receive tax efficiency features like tax-loss harvesting and tax-efficient funds, a goal-based planning session, and access to over 1,000 VIP airport lounges, because why not? Wealthsimple charges a fee of 0.4% of your portfolio for the Black tier. Your first $5,000 are managed for free for the first year.

In addition to Wealthsimple’s management fees, the ETFs in your portfolio will have fees associated with them. The weighted average fee of the ETFs in a standard portfolio is 0.2%, and the weighted average fee of the ETFs in a socially responsible investing (SRI) portfolio is 0.25% to 0.4%, depending on your asset allocation.

How do Wealthsimple’s fees stack up against competitors?

On the surface, Wealthsimple is more expensive than both Betterment and Wealthfront, which both start at a 0.25% fee. However, it’s not necessarily an apples to apples comparison.

On one hand, you have to take into account that Wealthsimple offers unlimited calls with licensed financial advisors as part of their Basic tier. You can get a similar service at Betterment, but it matches Wealthsimple’s 0.5% fee and you need a minimum of $100,000 in your account to qualify for the service. (Weirdly enough, Betterment announced this service on the same day Wealthsimple launched in the U.S.)

On the other hand, Wealthsimple’s advanced tax efficiency features, like tax-loss harvesting, don’t kick in until you have $100,000 in your account. Betterment and Wealthfront offer these same features for all of their customers.

While Wealthsimple isn’t the cheapest way to invest, it’s not the most expensive, either – a traditional financial advisor can cost you upwards of 1% of your portfolio on average. Wealthsimple is making a bet that many people don’t want a pure robo-advisor, and are willing to pay a little more out of the gate in order to get real human advice at any stage of their financial plan.

Is Wealthsimple right for you?

Wealthsimple is a good fit for anyone looking for an automated investing service who also wants the option of talking to a real human being. For individuals new to investing and new to long-term financial planning in general, having human advisors available at such a low monthly fee is invaluable. While Betterment offers a similar service, you can only sign up for it if you have over $100,000 in your account, putting it out of reach for many new investors.

For investors looking for an easy way to build a diversified portfolio that follows the principles of socially responsible investing, Wealthsimple has a unique offering among top-tier automated investing services. Plus, Wealthsimple’s SRI portfolio can live side-by-side with traditional portfolios, which only increases the options available for your long-term financial plan.

If you’re just looking for the cheapest way to invest your money, however, look elsewhere. Wealthsimple’s management fee is twice as expensive as Betterment Digital (their cheapest tier) and Wealthfront, and if you don’t care about SRI or talking to a human being, it’s probably not worth it.

Disclosure:We may use affiliate codes when linking to third parties. These codes earn us a small commission, but their presence does not influence which services or apps we choose to recommend, or our reviews of them.