Editor's note: Wealthsimple's U.S. book of business was acquired by Betterment in early 2021. The company is no longer accepting new clients in the U.S. Existing clients will have the option to move their accounts to Betterment.
There’s a lot to like about Wealthsimple’s offerings, such as its diverse lineup of portfolio choices (including socially responsible and halal-compliant options) and unfettered access to a team of financial advisors (including some certified financial planners) for all clients, regardless of account balance.
All those goodies come at a price, though, and the 0.40% to 0.50% advisory fee puts it on the pricier side of the competition. However, for values-based investors in particular, the extra money may be well worth spending.
Wealthsimple is best for:
Socially responsible investors.
Those seeking halal choices to fit Islamic law.
Beginning investors.
Access to financial planners.
Individualized portfolio for large accounts.
Wealthsimple at a glance
Reviewed: Jan. 2021
Period considered: Aug. - Oct. 2020
Account minimum | $0. |
Account management fee | 0.5% for balances $99,999 and less.0.4% on balances above $100,000. |
Investment expense ratios | 0.09% - 0.11% on standard portfolios.0.13 - 0.14% on SRI portfolios. |
Account fees | None. |
Portfolio mix |
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Socially responsible portfolio options | Clients can choose to invest in SRI portfolio options for no additional fee. |
Accounts supported |
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Tax strategy | Tax-loss harvesting only available for Wealthsimple Black clients (those with deposits greater than $100,000). |
Automatic rebalancing | Yes, free rebalancing on as-needed basis using its proprietary threshold-based rebalancing methodology to detect if portfolio drifts out of range of the target allocation. |
Human advisor option | Human advisors available to all clients regardless of assets under management and with no additional fees required. Advisors are CFP, CIM, or CFA certified. Wealthsimple Generation clients receive two dedicated advisors. |
Savings account/cash management account option | Wealthsimple Save, a lower-risk investment portfolio that is not FDIC-insured. Wealthsimple charges a 0.25% management fee. |
Customer support options (includes website transparency) | Phone and email support Monday-Thursday a.m. - 6 p.m. Eastern time, Friday 9 a.m. - 5:30 p.m. Eastern. |
Where Wealthsimple shines
Socially responsible investment options: One of Wealthsimple’s marquee offerings is socially responsible investments. Investors can choose from three risk-weighted SRI portfolios.
The portfolios draw from six exchange-traded funds (ETFs) that screen and weight companies for adherence to certain environmental, social and corporate governance (ESG) criteria, along with performance. The screening process removes investments in controversial companies and those involved in fossil fuels, tobacco and weaponry.
Wealthsimple's SRI portfolios seek companies with a track record for socially responsible values. For example, it eliminates the top 25% of carbon-emitters in each industry and every company in the fund has 25%, or at least three, women on the board of directors.
Shariah-compliant portfolio: A halal investing portfolio — one that complies with Islamic law — is another standout offering. It contains 50 individual stocks (not ETFs) screened by a third-party committee of Shariah scholars. No companies that profit from gambling, alcohol, firearms, tobacco or other restricted industries or derive significant income from interest on loans are permitted.
The halal investing portfolio risk profile is in line with Wealthsimple's growth portfolio offerings because it is invested 100% in equities and designed to track the broad market's performance. Customers with a lower risk tolerance are advised to hold a certain percentage of their portfolio in cash since investment in interest-bearing assets (such as bonds) isn't allowed under Islamic law.
Low account minimum and no extra fees: The $0 account minimum for the Wealthsimple Basic offering is a low hurdle to get started. That service includes free automated deposits, automatic rebalancing and dividend reinvestment. Wealthsimple charges no fees on transfers (in or out) or trading and all accounts receive a few extras, discussed below.
Maintaining a $100,000 minimum balance qualifies customers for the Wealthsimple Black service, which offers the same features as the Basic account at a lower management fee (0.4% versus 0.5%), along with tax-loss harvesting. Tax-loss harvesting is a strategy used to lower an investor’s taxes on investment gains or other income by offsetting it with any investment losses. Often it is a paid add-on service but Wealthsimple provides it complimentary for clients qualifying for its Black tier.
Service extras: Since Wealthsimple opened its doors for business in the U.S. in 2017 — it was already the largest robo-advisor in Canada — it has been steadily adding services, which now include:
Roundup feature This tool puts your spare change to work by rounding up purchases paid for with a linked credit or debit card and automatically depositing the money in your Wealthsimple account. (Logistically, the money is actually added up each week, then debited from your bank account.) It's a great way to keep the investment momentum going, and a reminder that even small contributions over time can add up. The feature is integrated into the firm's website and mobile app.
Free portfolio review You don't even have to be a Wealthsimple customer to cash in on this perk. The company offers a free portfolio review, which you can get by uploading the latest statement from any of your current investment accounts. A Wealthsimple analyst will check your investment allocation, account fees and tax efficiency based on your goals and time horizon and call to discuss the findings (and whether the company can improve on what you already have) with no account sign-up required.
Smart Savings account For the money you're not investing for the long term, the 1.83% interest rate (trailing 12-month dividend yield, subject to change) is more than most traditional banks offer. Note that the account is a brokerage account — covered by the Securities Investor Protection Corp., not the Federal Deposit Insurance Corp. — invested in investment-grade municipal bonds and short-term Treasury bonds. The company charges a 0.25% management fee on this cash, deducted from your balance at the end of each month. The advertised 1.83% rate is net of that management fee. (See more on the pros and cons of cash management accounts at investment firms.)
Investment in fractional shares: Like other robo-advisors, at Wealthsimple, each customer's portfolio of ETFs — the exact mix of growth, international, fixed income, cash and other asset classes — is based on answers to questions about financial goals, investing experience, financial situation and risk tolerance. But the company has a bonus feature for customers who may be adding small amounts to their account over time: Wealthsimple buys fractional shares of ETFs, which means your entire deposit can be invested in full instead of hanging out in low-interest-bearing cash until there’s enough to purchase a full share.
Access to a team of financial planners: Wealthsimple allows all customers, regardless of account balance, email and phone access to its financial advisors, including some certified financial planners. The advisors can discuss portfolio allocation, retirement planning, estate and tax planning and do cash-flow analyses.
Customized service for high-balance account holders: Wealthsimple Generation, a premium-tier service, serves clients who maintain a $500,000 balance (individually or per household). Generation customers are assigned two dedicated advisors who will create a holistic financial plan that includes cash-flow analysis, projections and actions to take to achieve your goals. This level of service is ideal if you have more complex planning issues, such as establishing a retirement income strategy, legacy planning and are seeking maximum tax efficiency. Generation portfolios are tailor-made for each client's needs. Advisors take into account all assets (including investments outside of Wealthsimple, homes and owned businesses). Wealthsimple charges a 0.40% management fee only on assets the firm manages.
Simplicity: Practically everything about Wealthsimple's service — clear, straightforward pricing; beginner-friendly customer experience; a slick, no-nonsense website — is stripped down to provide just what the customer needs (hence the "simple" in Wealthsimple's name). We're particularly impressed with the company's "Help Center," where details you need to know about fees, portfolio holdings, performance and account management are laid out clearly and transparently.
Where Wealthsimple falls short
Account management fees: Account fees are where both customer and provider fortunes are made and broken. Wealthsimple’s 0.50% management fee on account balances of less than $100,000 and 0.40% on accounts over $100,000 is higher than that charged by the other companies on NerdWallet’s best robo-advisors list.
In comparison, Wealthfront and Betterment charge a 0.25% management fee. Even big-name brokers such as TD Ameritrade Essential Portfolios (0.3%) and Fidelity Go (0.35%) undercut Wealthsimple by a large margin, although many of those providers have account minimums ranging from $500 to $5,000.
Lack of personal finance tools: Those seeking a fuller financial advisory experience — calculators, planning tools, educational material and a money command central — may find Wealthsimple’s streamlined website and app sparse compared with other providers. There can be beauty in simplicity: The approach is designed to merely cover the important concepts of saving and investing and keep customers apprised of what’s happening in their accounts. It’s ideal for savers who want to set it up and forget it, but maybe less so if you like to play with what-if retirement planning scenarios.
Is Wealthsimple right for you?
With its multiple SRI and halal portfolio offerings, Wealthsimple is a clear winner in the values-based investing category. Other pluses — email and phone access to financial advisors and a $0 minimum balance requirement — put it in the same class as other robo-advisors that have higher brand-name recognition in the U.S.
The biggest check in the “cons” column is Wealthsimple’s account management fees of 0.40% to 0.50%. Given the effect management fees can have on long-term investment returns, this is an important consideration, especially for investors with account balances that don't qualify for Wealthsimple's lower advisory fee rate.
Tiffany Lam-Balfour contributed to this review.
