WealthSimple takes the guesswork out of investing with a robo-advisory service that does the work for you
A friend asked me last week how his daughter could start investing. She’s in her early 20s and responsible with her finances but still ‘afraid’ of investing and unsure how to start.
After a few questions, I had three words that were perfect for this type of investor, “Robo-investing with WealthSimple.”
I’ve been covering robo-investing options on the blog for a while and recently met the people behind WealthSimple at a conference for financial experts. After looking into the robo-advisor platform, I think it could be the perfect solution for investors that want a hands-off investing approach and a stress-free way to their financial goals.
I’ve talked about robo-investing tools in the past as a way to take all the stress out of investing. For those of you that don’t want to worry about keeping up with your investments or picking stocks, a robo-advisor is the way to go.
For this post, I thought I would go a little deeper into how WealthSimple works and how it can be a great choice for a certain type of investor. In this review, you’ll find the basics of the site as well as WealthSimple fees and what I think could be improved on the platform.
What is WealthSimple?
WealthSimple is an online investing platform that does all the work for you. Like other robo-advisors, you start by answering a few questions about your investing goals and needs. The platform then suggests a portfolio of funds in which you can invest designed to meet your goals.
Your portfolio is spread across different types of stocks as well as in bonds for instant diversification. Anytime you deposit money into your account, it is automatically invested in the funds.
That’s one of the biggest advantages to robo-investing. You pay no trading fees to invest. Instead of paying $10 every time you want to buy a stock, you pay just 0.5% each year for the website to automatically invest your money.
WealthSimple charges 0.5% on accounts under $100,000 and 0.4% for larger accounts. That means your total investing expense is going to be $50 for an account with $10,000 invested. By comparison, my trading fees in my E*Trade account were $295…and I still get the $5 per trade price that’s no longer available.
As with all robo-investing services, WealthSimple rebalances your account automatically so your investments are never far from the plan that’s going to best fit your goals. All of this is completely hands-off for the investor and automated by the website. You have nothing to do but continue saving to grow your nest egg faster.
WealthSimple is trying to set itself apart from other robo-advisors though. It has a team of investment advisors to answer your questions through call, text or email. It’s a free service and really a way to bridge that gap between traditional advisors and robo-advisors. You still get that personal, customized feel with the ability to talk to an expert.
How Does WealthSimple Work?
I’ve recorded below the process I used to start an account with WealthSimple. How the website works is actually very simple.
After answering questions about your goals and your investor personality-type, the platform suggests one of three portfolios. The portfolios range from conservative which holds more bonds and will be less volatile to a growth portfolio that includes more stocks and would be better suited for very long-term investors.
The portfolios invest mostly in Vanguard funds to keep fees low. Each of these funds holds hundreds and even thousands of individual stocks or bonds so you get instant diversification in each sector. Each portfolio holds between eight to 10 funds.
Your money is invested automatically across funds in the portfolio and any deposits are invested as well. Dividends are automatically reinvested at no charge. The platform even manages your investments each year to minimize your taxes.
This all means that, after setting up your account, it’s about the most stress-free way of investing possible.
I’ll still maintain an investing account on a few other platforms but robo-investing is a great choice for many investors. I like the research and tools provided on E*Trade and Ally Invest. I also invest regularly in my Lending Club account for peer loans.
In summary, WealthSimple is best for investors that:
- Know they need to invest but don’t have the time to follow the stock market or pick stocks.
- Want a stress-free solution to reaching their financial goals, something in which they can deposit savings and not have to worry about it after that.
- Investors that want professional help with their money but want to save money compared to the traditional advisor or brokerage.
- Investors that can’t keep themselves from over-trading and making the bad investing decisions that lose money…you know who you are. Let a robo-advisor take over and take human error out of investing.
What Set WealthSimple Apart for Me
Even though I like managing my own investments, WealthSimple really stuck out for me and the decision to open an account was an easy one.
It’s a good mix of that do-it-for-me idea in robo-investing but still the personalized feel of a traditional advisor. Financial advisors are available by phone, email or text and are ready at any time to answer questions about your portfolio or just investing in general.
The platform even goes the extra mile with a free portfolio review, even for people that are not signed up to the service. You can upload your current portfolio for a free review by a portfolio manager with feedback on how to improve your investment strategy. There’s no obligation to become a WealthSimple client and no hard sales pitch.
How to Get Started on WealthSimple
It took me less than five minutes to get started on WealthSimple though it takes a little longer to transfer funds from another account.
The new account process works like it does on most other investing sites, with a series of questions that help to define your goals and investing needs.
- What’s your primary reason for investing? This helps match your goals, whether long-term or short-term, with the best investments.
- What is your annual income?
- What is the value of your savings and investments? This all helps to see how close you are to your goals which is critical in understanding how much risk you need to take to reach your goals.
- What is the value of your debts?
- How long have you been an investor? This helps establish how well you know the ups-and-downs of the market and your risk tolerance.
- How long do you plan to hold your investments? If you can only invest in something for a year or two, you don’t want your money in an asset that could drop quickly.
After you answer the questions, WealthSimple matches you with a portfolio that best meets your needs. Rightfully for my investor-type, the platform suggested the Growth Portfolio for my account.
The Growth Portfolio holds 80% in U.S. and international stocks with a strong mix of company sizes and emerging markets to diversify and create a higher return. The portfolio doesn’t neglect bonds though with two bond funds for safety and income.
If you were an older investor or one with a lower tolerance for risk, the platform might have selected the Conservative Portfolio below. It still provides for growth and inflation-protection through a 35% exposure to stocks and through TIPS but the four bond funds dominate the portfolio for maximum safety.
You’re always able to customize your portfolio even beyond the ready-made choices by talking with a WealthSimple advisor.
After you select your portfolio, you create an account with your email and password. WealthSimple offers regular personal accounts as well as IRAs, Roth, SEP and Trust accounts. There is no account minimum but if you start your account with more than $5,000 they’ll waive the first year’s management fee.
What I Like about WealthSimple
There were a few other features that stuck out to me with WealthSimple. The offer to manage $5,000 in assets for free for the first year can be increased to $10,000 if you transfer your account from another brokerage or refer a friend.
WealthSimple also has an innovative gift card program. Instead of giving your kids toys that are only going to get destroyed or forgotten in a week, you can fund their WealthSimple account and put them on their way to financial freedom.
Another feature that impressed me was the library of advice and articles. You wouldn’t expect this with a robo-advisor because they are taking care of everything for you but WealthSimple gives you the information to better understand your money.
The site is pushing its Money Diaries, a collection of first-hand stories from celebrities and other people about money. I loved reading Paul Reiser’s story. I’m a big fan all the way back to watching him on Mad About You in the 90s and it was interesting reading his financial narrative.
My Biggest WealthSimple Complaints
There were a few things I thought could be improved about the website. I would like to see more than just the three portfolios suggested, something that customizes just a little more for investors. The three do a good job of catching most investors’ needs, I’d just like to see a little more offered.
I’d also like to see REITs and MLPs offered in the portfolios. I know that MLPs aren’t for everyone because of the need for a special tax form but everyone should have real estate investment trusts in their portfolio.
Overall, WealthSimple is an excellent choice for investors that want a hands-off approach to their goals. It goes beyond the traditional robo-investing platform with on-call financial advisors and a library of information you can use to better understand your money. The account is easy to set up and WealthSimple fees are some of the lowest in the industry. Give it a try with their special offer, get your first $5,000 invested free for a year.