Have you ever wished that you had a robot to do things like clean your house or walk your dog?
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After all, it is 2018 and life could be so much easier if we had more robots.
If you agree…
…you will likely see the benefit of a robo-advisor, which is basically a robot that invests money for you.
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Robo-advisors provide automated, algorithm-driven financial planning software to build and manage your investment portfolio.
The technology collects information like your financial situation and future goals, through an online survey, and offers advice and makes investment decisions based on that information.
Robo-advisors can save you time by automating complex, time-consuming activities like rebalancing and tax optimization.
This type of investing can also save you money because you money because robots are cheaper than humans!
Robo-advisors weigh your personal preferences against unpredictable events to tailor a portfolio to your specific needs. Personal preferences and unpredictable events include the following:
- Time Horizon
- Financial Goals
- Risk Tolerance
- Asset class performance
- Market Volatility
- Market Conditions
Robo-advisors are great because they require minimal human interaction and can do the same thing that humans do.
And, since there are low costs and low (or no minimum investment), robo-advisors can get you started quickly.
But sometimes investors need a human’s touch to guide them through such a complicated topic.
You have many robo-advisor options at your disposal – so which one should you choose?
Preferably one that is cheap, helpful, and easy to use.
This article aims to look at Wealthsimple, one of our top picks for best robo-advisors in 2018.
Wealthsimple Review Overview
Wealthsimple offers the benefit of investing with robo-advisors and humans.
Founded in 2014, Wealthsimple is Canada’s largest robo-advisor with over 100,000 clients. And, Wealthsimple has been newly introduced to the United States.
Wealthsimple has world-class financial experts and top-talent from Silicon Valley working for you.
Additionally, the company’s team of software engineers, designers, and data scientists are from companies like Amazon, Google, and Apple.
Wealthsimple provides you with world-class, long-term investment management…
…without the high fees and account minimums!
Even better, the company helps you earn the best possible return and can lower your tax bill.
But you may be wondering…
What is the goal of Wealthsimple?
The primary goal of Wealthsimple is to make “investing easier for millennials.”
Because, as we know, most millennials are clueless about money.
So, how does Wealthsimple give you a hassle-free investment experience?
The company puts your investments on autopilot by creating a diversified portfolio made up of ETF indexes.
To put it simply, Wealthsimple’s low-cost, automated investment portfolios can help you reach your long-term investment goals.
So, apart from millennials, who is Wealthsimple best for?
There is no minimum deposit required, and you can have your funds managed regardless of the amount.
Investors with over $100,000 to invest also receive numerous extra benefits. These benefits include lower fees and tax benefits.
Socially responsible and Islamic investors
This robo-advisor gives you the ability to make money while staying in line with your values.
That’s right – Wealthsimple is great for just about everybody – although that largely depends on your individual goals. Learn more about Socially Responsible Investing.
How Wealthsimple works
Wealthsimple is surprisingly easy to use. The company uses the Nobel Prize-winning Modern Portfolio Theory. The company aims to diversify your portfolio by investing in a broad range of assets.
Here is how a robo-advisor works in FIVE steps…
- Complete a brief questionnaire to assess your investment needs.
- The robo-advisor creates a portfolio of Exchange-Traded Funds (ETFs).
- Experts’ monitor market activity and underlying investments to rebalance your portfolio.
- Speak with Certified Financial Planning professionals to update and improve your plan.
- Log in to your accounts to track progress, make adjustments, and move closer to your goals.
Wealthsimple works just as any other robo-advisor. You can begin your online application by selecting the “Start Investing” button on the website.
Signing up for the service is a breeze, to complete your sign-up, you must…
- Get started Here
- Answer a few questions.
- E-sign the investment management agreement.
- Upload a bank statement, a screenshot of a bank account, or a void check.
If you experience any trouble signing up, you can contact Wealthsimple at +1 (855) 782-3559 or email firstname.lastname@example.org
Wealthsimple offers several account types, including individual and taxable accounts…
- Personal: Build long-term wealth alongside your 401(k) and IRA.
- Traditional IRA: Save for retirement and lower your taxes.
- Roth IRA: Save for retirement and withdraw money tax-free.
- SEP IRA: Save for retirement if you are self-employed.
- Joint: For accounts with multiple owners.
- Trust: Hold assets for a beneficiary.
- Smart Savings: Stash your cash for the short-term.
They also provide four types of investment accounts:
- Wealthsimple Basic
- Wealthsimple Black
- Wealthsimple Socially Responsible Investing
- Wealthsimple Halal Investing
We have the details on each of these accounts below.
The Wealthsimple Basic portfolio is the most common option.
This account is for account balances between $0 – $100,000. The management fee is 0.50% annually and manages your first $5,000 invested for free.
This portfolio offers the following services…
- Automatic deposits and account rebalancing
- Tax-loss harvesting
- Dividend reinvesting
- Personalized portfolios
- Expert financial advice
From there, you have three choices for your portfolio:
- Conservative: 65% bonds and 35% stocks
- Balanced: 50% bonds and 50% stocks
- Growth: 80% stocks and 20% bonds
Your ‘risk setting’ determines whether you should go with a conservative, balanced, or growth portfolio. The answers that you provide in your questionnaire will determine your risk setting (but you can override this).
Each portfolio is made up of ten different ETFs (six stock funds and four bond funds).
This account is for account balances over $100,000+ and offers every feature included in the Basic account, plus:
- Lower fees: Management fee of 0.4%
- Goal-based planning: Get a financial planning session with an expert financial adviser.
- VIP airline lounge access: Global access to 1,000+ airline loungers in over 400 cities with a complimentary Priority Pass membership for you plus one travel companion.
Otherwise, the portfolio options are similar to that of the Basic account.
Wealthsimple Socially Responsible Investing (SRI)
Wealthsimple also gives you the opportunity to invest in good causes.
The SRI accounts focus on companies that support:
- Low carbon emissions
- Gender diversity
- Affordable housing
You can see for yourself which ETFs you are investing in and what causes they support.
Here are the six funds offered with the SRI portfolio:
- iShares MSCI ACWI Low Carbon Target (CRBN)
- PowerShares Cleantech Portfolio (PZD)
- iShares MSCI KLD 400 Social Index Fund (DSI)
- SPDR Gender Diversity (SHE)
- PowerShares Build America Bond Portfolio (BAB)
- iShares GNMA BD ETF (GNMA)
SRI portfolios do carry slightly higher costs associated with keeping your investments “socially responsible.” Otherwise, the SRI portfolio offers the same fee structure and asset allocation as the Basic and Black accounts. The primary difference involves the ETFs that you will be invested in.
P.s. If you are really interested in Socially responsible investing, you should also take a look at Swell Investing.
Wealthsimple U.S. Halal Investing
Wealthsimple has also created a portfolio option that makes investing easy for Islamic people. The Halal portfolio does not include bonds, which goes against Islamic law that prevents profiting from debt.
These portfolios are not tailored to individual investors since the shares in this portfolio must comply with Sharia law.
Complying with Islamic law means no investment in companies that profit from tobacco, gambling, or other restricted industries.
The top ten holdings in the Halal portfolio include:
- Johnson & Johnson (JNJ)
- Novartis AG-Sponsored ADR (NVS)
- Exxon Mobil Corp (XOM)
- SAP SE-Sponsored ADR (SAP)
- Procter & Gamble (PG)
- Canon Inc.-Sponsored ADR (CAJ)
- Total SA-Sponsored ADR (TOT)
- Pfizer Inc. (PZE)
- Alibaba Group Holding-Sponsored ADR (BABA)
- Unilever N V-NY Shares (UN)
Wealthsimple offers a simple, easy-to-use website without many extras.
You can also download Wealthsimple’s app (available on Android and iOS), which is very similar to the functionality on the site.
You can use the app for:
- Viewing your portfolio
- Tracking account activity
- Making deposits
- Updating your profile
This makes accessing your investments very easy, which was an important feature for us.
Wealthsimple also offers educational materials and tools to give you a better understanding of how your investments are doing.
Our favorite tool that you can use it called Wealthsimple Roundup. This feature rounds up the “change” on your purchases.
For example, if you purchase a $3.75 coffee that purchase will be rounded up to $4.00. Once per week your money will be combined and invested. Talk about a fully-automated way to invest.
And, believe us – that money can really add up!
Another tool we like is the compound interest calculator that you shows you your investments potential over time.
Seeing your investment potential can motivate you to get started – today!
You can also learn more about your investments in general in with company’s educational materials.
Here is an example of that with the company’s explanation of an ETF:
This information is simple and straight to the point.
If you need additional information, there is a wealth of it that can be found anywhere on the internet.
Wealthsimple Customer Service
This service allows robots to do your investing, but…
…Wealthsimple offers customer service that can assist you in opening your portfolio, specific investments, creating a financial plan, and more.
You can reach customer support…
- Over the phone, Monday through Friday, 8 to 8 EST.
- By e-mail, 24/7, at email@example.com
You can also access certified financial planners and chartered investment managers. This access is an impressive opportunity that MOST robo-advisors do not offer.
Despite its low-cost offerings, Wealthsimple does not skimp on customer service and professional investment advice.
This benefit ensures that your investments will get, and stay, on the right track.
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I know what you are thinking…
…this is great, but how much is it going to cost me?
There are no maintenance, trading, rebalancing or transfer fees.
The fee structure of this company is straightforward. Wealthsimple charges a flat percentage for all account balances. There are two annual fee tiers…
- Wealthsimple Basic: 0.5% annual fee on account balances $0 – $100,000.
- Wealthsimple Black: 0.4% annual fee on accounts balances over $100,000.
In addition to these fees, you will need to pay the expense ratios related to the ETFs in your portfolio.
These fees are slightly higher compared to other robo-advisors, but represent a fraction of what you would pay a human financial advisor or large institution!
These fees are standard within the industry, and there are no hidden fees.
What we love from this Wealthsimple Review
Your options include: individual and joint taxable accounts; trusts; traditional, Roth, and SEP IRA accounts.
Access to financial planners
Automation is the main benefit of robo-advisors, but sometimes you need human interaction.
Wealthsimple gives all customers the ability to get personalized help from one of the company’s certified financial planners or chartered investment managers.
Wealthsimple Basic clients receive a 15-minute phone call to ask questions to a financial planner. These questions could include…
- How should I be saving?
- Which account is best for me?
- How will my investments be taxed?
Wealthsimple Black clients get more features with their plan. These features cover concerns like…
- Will I have enough money to retire?
- Which accounts should I withdraw money from?
- How can I improve my plan?
Having access to investment professionals is extremely important and this is where Wealthsimple stands out compared to other robo-advisors.
Free tax-loss harvesting
Tax-loss harvesting lowers an investor’s taxes by offsetting income with any investment losses. This service is usually a paid add-on service or only available for very wealthy investment clients.
However, any Wealthsimple customer can have a portfolio analyst review their accounts for tax-loss opportunities.
This free benefit can be significant and will pay-off the first time you file your taxes.
Minimum initial investment
There is a $0 account minimum for the Wealthsimple Basic portfolio. This service includes free automated deposits, automatic rebalancing, and dividend reinvestment.
This makes investing with a robo-advisor easier than ever!
Wealthsimple charges no fees for transfers, trading, or tax-loss harvesting. You just pay an annual fee on your account balance.
Socially responsible investment options
You don’t need to fund large corporations to invest.
You can invest in companies that specialize in things like clean technology innovation, efforts to lower carbon exposure, and supporting diversity in leadership roles.
You can put your money to work and do some good!
Shariah-compliant portfolio options
You can invest in a halal portfolio, which is a portfolio that complies with Islamic law.
Wealthsimple offers a portfolio containing around 50 individual stocks that are reviewed by a third-party committee of Shariah scholars.
What we don’t love about Wealthsimple
Account management fees
Wealthsimple charges a 0.5% management fee on account balances less than $100,000. And 0.4% on balances over $100,000.
In contrast, numerous other robo-advisors charge between 0.25 – 0.35% management fees.
SRI fund management fees
It is not always cheap to invest responsibly.
Socially responsible investments typically come at a higher cost compared to other investment options. SRI portfolios can charge around 0.25% management fees whereas non-SRI portfolios are approximately 0.1%.
Is Wealthsimple for you?
Most robo-advisors are relatively similar in investment format and fee structure.
So, how do you know which robo-advisor is right for you? Let’s look at the final details…
You can open an account with just $1, so these portfolios are available to any investor. Also, you will not pay a dime on your first $5,000 invested.
Wealthsimple does charge higher fees than most robo-advisors – and you could end up paying 0.10 – 0.25% more, per year. But again, these fees are meager compared to paying a human investment professional.
Also, one key benefit that can be difficult to measure is the access to investment professionals.
Depending on your familiarity with investments, this benefit could prove to be invaluable and well worth the higher fee.
Also, Wealthsimple offers ways for you to invest that are consistent with your values. Robo-advisors are typically limited in specialty portfolios, but Wealthsimple is not.
If you are looking to try a robo-advisor, Wealthsimple is a logical place to start because trying their product is essentially risk-free.
Overall, we highly recommend Wealthsimple and recommend that you give them a shot.
Have you ever used a robo-advisor to invest? What was your experience?
Let us know your thoughts with a comment below!
P.s. If you sign up today, you will get the first $5,000 invested for FREE. Sign up here
Ease of Use10.0/10
- No management fee for first $5,000
- Tax-loss harvesting
- No minimum balance requirements
- Option for larger investors
- User-friendly website
- Higher fees compared competition
- Limited accounts types