WealthSimple Reviews 2017

Introduction

A Canadian robo-advisor founded in 2014, WealthSimple introduced its digital investment service to the U.S. market in January 2017. The Toronto-based company has offices in New York and London. It oversees over $750 million in assets and has 20,000 clients.  WealthSimple reviews show that it’s a promising new firm, ranking it higher than SigFig, but with fewer stars than Betterment or WealthFront.

WealthSimple provides automated investment services at slightly higher fees than most other automated advisors with some access to personal advisors over the phone. It offers exclusive perks for high-balance account holders and a Socially Responsible Investment Portfolio dedicated to environmentally and socially conscious products and services.

Types of Accounts Supported/Facts

WealthSimple has no minimum deposit. Accounts under $5,000 don’t require a fee. You’ll pay a fee of 0.50% if you have between $5,000 and $100,000. Deposit over $100,000, and you’ll pay a fee of 0.40%.

Supported Account Types

  • IRA
  • Roth IRA
  • Individual and Joint Taxable Accounts

You can transfer any existing accounts to WealthSimple, and they’ll cover any bank transfer fees.

The SIPC insures WealthSimple accounts up to $500,000. Apex Clearing Corporation acts as its broker and dealer. Power Financial Corporation, one of the world’s largest financial institutions, provides financing and other services for WealthSimple.

How WealthSimple Works

Sign up for WealthSimple by completing an online application and answering questions about your investment history. Choose a growth, conservative or balanced portfolio. You’ll E-sign an Investment Management Agreement and verify your bank account information. WealthSimple approves and activates most accounts within five days.

After assessing your personal financial goals, the company’s advisors will determine the right investments for your needs. WealthSimple invests your money in Exchange-Traded Funds (ETFs) from different sectors of the worldwide economy. This market diversification gives you the right blend of securities and reduces the chance of losses due to holding too many similar investments.

WealthSimple’s robo-advisor platform saves you a significant amount of money over using a traditional stockbroker or financial advisor.  Digital investment platforms also save you time by enabling you to deposit and withdraw money and check your balances from your phone or computer. Automated advisors use specialized software, algorithms and historical data to choose the best investments for you.

Your ETFs will be selected based on Modern Portfolio Theory, which advocates minimizing risk and maximizing reward by using a mixture of stocks that will provide decent returns without extremes in value.

Some of the ETFs WealthSimples uses include the following stocks:  

  • Vanguard US Total Stock Market
  • WisdomTree Japan Hedged Equity Fund
  • Vanguard FTSE Europe
  • Vanguard US Mid-Cap Value
  • Vanguard US Small-Cap Value
  • Vanguard FTSE Emerging Markets

Bonds include:

  • Vanguard US Total Bond Market
  • iShares TIPS Bond
  • VanEck Vectors Fallen Angel High Yield Bond
  • iShares National AMT-Free Muni Bond

Features

Asset Allocation

WealthSimple helps you make the most of your account by choosing ETFs that best serve your goals. Young people may benefit from having high-risk stocks in their portfolio. Investors near retirement age may prefer lower-risk bonds to protect their investment.

Regardless of your age or financial goals, allocating assets from different sectors will help you avoid losing money if one type of ETF underperforms.

Tax-Loss Harvesting

Available for accounts over $100,000, tax-loss harvesting helps you save money. WealthSimple will sell investments when they lose money and replace them with similar securities. You’ll regain lost money when the market for the investment type rises again.

Tax-loss harvesting increases your gains by compounding interest since the process enables you to wait a year or more before paying taxes on money from the sale. Taking advantage of tax-loss harvesting during a bad market can give you a future tax credit.

Dividend Reinvestment

A dividend reinvestment program (DRIP) automatically reinvests dividends instead of cashing them. Dividend reinvesting reduces the cost of a share of stock, and it helps investors avoid brokerage sales fees. WealthSimple reinvests in dividends with varying prices, which lessens the chance of buying all stocks at a higher price point.

Portfolio Rebalancing

By balancing your investments to account for fluctuations in the value of particular securities, portfolio rebalancing helps you reach your financial goals. It maintains your ideal asset allocation, which may need to be adjusted as your circumstances change.

WealthSimple rebalances your portfolio by trading at a preset time. Its algorithm automatically does the math and figures when- and what – to sell or buy. This automated process prevents emotional responses to a weak or robust market get in the way of sound investment decisions.

Compound Interest

Compound interest is the process by which the interest on your investments earns interest. You’ll make a lot more from your portfolio with compound interest than simple interest. The earlier you open a compound interest account – and the more money you have in that account – the more money you’ll make. The bonds and stocks offered by WealthSimple can give you compound interest.

Black Program for Clients with High Balances

WealthSimple’s Black Program offers you better tax efficacy, including tax-loss harvesting, to lower the amount you pay to the government each year.You’ll be eligible for perks if you have a balance of $100,000 or more.

A financial advisor will assist you to clarify your financial goals if you qualify for the program. As a member of this exclusive club, you’ll receive a Priority Pass for free entry to over 1,000 luxury airport lounges worldwide. Perks at these lounges include champagne, appetizers, and free Wi-Fi.

Socially Responsible Investing Portfolio

An SRI portfolio consists of ETFs dedicated to a better environment. WealthSimple’s socially responsible investments include:

  • PowerShares Cleantech Portfolio
  • iShares MSCI ACWI Low Carbon Target ETF
  • BMO Mid Federal Bond Index ETF*
  • Vident International Equity Fund
  • iShares Jantzi Social Index ETF*

* Canadian securities

Socially responsible ETFs have slightly higher fees than regular ETFs, (0.25% to 0.40% to 0.2% to 0.3% for other WealthSimple investments.

Security

Bank-level security with 128-bit SSL encryption and a firewall protects information sent between your computer and the WealthSimple servers. The company backs up client information daily.

Apps

Log in to WealthSimple on your computer, or download the free app for iPhone or Android.

Blog/Online Magazine

The WealthSimple magazine/blog has a contemporary feel. The online magazine is regularly updated with news, how-tos, “Money Diaries” featuring interviews with celebrities, and an “Ask WealthSimple” section.

Support Center

You can call or email WealthSimple for assistance with your account. (No official hours for these services are listed on their website.)

Potential Drawbacks

WealthSimple has fees higher than industry leaders Wealthfront and Betterment. You can get Betterment’s services for a fee of as little as 0.25%.

This robo-advisor concentrates on passive investing to provide you with long-term financial security. It uses ETFs only and avoids buying individual stocks. You’ll need to choose another firm if you want single stocks to be part of your portfolio.

Who Will Benefit from Using WealthSimple?

The Socially Responsible Investing Portfolio will allow you to actively improve society while contributing to your net worth if you care about the environment and social issues.

The higher fees may not be a problem if you have $100, 000 or more to invest since you’ll be eligible for tax-loss harvesting and the premium Black Program.

Summary

WealthSimple offers the same financial basics as other robo-advisors, but with a social conscience and easygoing flair. Even though the company doesn’t brand itself as such, it seems to be Millennial-friendly. WealthSimple’s services, however, will work for investors of any age.

WealthSimple reviews show this automated investment firm provides many of the services people need from a robo-advisor, with its higher fees being the only major complaint.

About the Author HarryC

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