Wealthsimple: A Comprehensive Review After Years of Use

After using Wealthsimple for over four years, I've had a lot of time to form an opinion on whether it lives up to its hype as a leading Canadian investment platform. From its fee structure to its range of products, here's a detailed breakdown of my experience to help you decide if it's the right choice for your financial journey.

Fees: A Transparent and Low-Cost Approach

One of the most compelling reasons to choose Wealthsimple is its clear and competitive fee structure.

• Management Fees: For those who opt for a managed portfolio, where Wealthsimple handles the investments for you, the management fee is 0.5% (or 0.4% if your total funds exceed $100,000). This is significantly lower than the industry average, which can often be as high as 2%.

• Trading Fees: The platform offers commission-free trading for Canadian and U.S. stocks and ETFs. This is a major advantage over traditional brokerages that charge a fee for every trade, which can quickly erode your returns, especially for frequent traders or those with smaller portfolios.

• Account Fees: There are no monthly or annual account fees, and a minimum of just $1 is required to get started. This makes Wealthsimple highly accessible for new investors who may not have a large sum of money to begin with.

• Foreign Exchange (FX) Fees: This is an important detail to note. Wealthsimple charges a 1.5% FX fee when trading U.S. or foreign-listed stocks and ETFs. While this is a fee, it's worth considering the trade-off of zero commission fees. For those with larger U.S. holdings, a USD cash account is available, which can help mitigate these costs.

Investment Products and Features: Catering to a Wide Range of Investors

Wealthsimple has evolved beyond just a robo-advisor, offering a robust suite of products and features.

• Stocks and ETFs: You can buy stocks and ETFs on both Canadian and U.S. markets. While it doesn't provide access to other international markets directly, you can still gain exposure through Canadian or U.S. ETFs that track global indexes.

• Fractional Investing: A standout feature for beginners is fractional investing. This allows you to buy a portion of a high-priced stock, like Tesla, with as little as a few dollars, making it possible to build a diversified portfolio even with a limited budget.

• Crypto Trading: Wealthsimple is unique in that it integrates crypto trading alongside traditional investments. While the fees for crypto trading (2% for core customers) are on the higher side, it's a convenient way for beginners to get started with a small amount on a single, easy-to-use platform.

• Registered Accounts: A major draw for Canadians is the availability of all the key registered accounts, including TFSAs, RRSPs, and FHSAs. This allows you to consolidate all your tax-advantaged and non-registered accounts in one place, making tax optimization and wealth building much simpler.

Beyond Investing: Banking and Automation

Wealthsimple has also expanded its offerings to include day-to-day banking functions, positioning itself as a comprehensive financial hub.

• Cash Account: The platform offers a cash account that functions like a hybrid checking and high-interest savings account. It provides a competitive interest rate and includes a virtual or physical card, direct deposit capabilities, bill payment, and Interac e-Transfer.

• Automation: One of my favorite features is the automation. You can set up recurring deposits into your investment accounts and even automatically reinvest dividends. This "set-it-and-forget-it" approach ensures your money is always working for you without manual intervention.

Safety and Security

When it comes to the safety of your money, Wealthsimple is as secure as traditional financial institutions. It's a member of the Canadian Investor Protection Fund (CIPF), which protects client accounts up to $1 million against the company's insolvency. Your cash holdings are also protected by the Canada Deposit Insurance Corporation (CDIC) through their partner banks.

Potential Downsides

No platform is perfect. For more advanced traders, Wealthsimple may lack some of the sophisticated portfolio analysis tools and charting features found on other platforms. Additionally, while the customer service has been sufficient for my needs, some online reviews mention that it can be difficult to get in touch with a representative, especially if you're not a Premium or Generation client.

Conclusion

Overall, Wealthsimple is an excellent choice for a wide range of investors, particularly beginners and those who value simplicity and low fees. It provides a comprehensive suite of features—from commission-free trading to registered accounts and banking—all within an intuitive and user-friendly app. While it might not be the best fit for advanced day traders, its focus on making investing accessible and automated makes it a truly valuable tool for anyone looking to build long-term wealth.