Wealthsimple Trade Review
Our Take Wealthsimple, a Canadian online broker, has been in business for fewer than ten years, but it has quickly risen to become one of the most popular online investing platforms for investors not just in Canada but also in other nations such as the United Kingdom.
Wealthsimple is best suited for novice to intermediate-level investors who have a preference for automated or self-directed investing through the use of sophisticated technological platforms. The customers of Wealthsimple benefit from the company’s ability to simplify and clarify complicated investment processes and the company’s provision of cost-effective financial solutions. Wealthsimple was the first online broker in Canada to provide clients with commission-free trading of stocks and exchange-traded funds (ETFs). The primary objective of Wealthsimple is to give investors access to trading opportunities online, freeing them from the necessity of physically visiting a branch. Wealthsimple might not be the greatest choice for aggressive traders because it only offers a limited selection of financial tools and platforms. In a similar vein, experienced and active traders who desire access to a powerful mobile app that offers a full variety of comprehensive capabilities might not find the ideal fit with Wealthsimple. This is because Wealthsimple does not currently provide such an app. Wealthsimple is not your typical brokerage firm; rather, they are more of a financial technology company.
Introduction
Michael Katchen established Wealthsimple in September 2014 in the city of Toronto, in the country of Canada. The Power Corporation of Canada owns this business and operates it as a subsidiary. No matter who a person is or how much money they have, it is Wealthsimple’s goal to assist them in reaching a point where they are financially independent. Their competitive advantage is the provision of straightforward, digital financial resources and tools that simplify the management of customers’ financial affairs.
On March 4, 2021, Wealthsimple announced that they had sold their American accounts to Betterment. The deal was finalized in the second quarter of 2021, and the American accounts were moved at that time. Wealthsimple completed the sale and transfer of its customer accounts in the United Kingdom during the first quarter of 2022. The corporation is shifting more of its attention toward the market in Canada.
Wealthsimple has emerged as one of the most popular online brokers in Canada, particularly among novice investors and those who prefer a passive investment strategy. Wealthsimple had 1.7 million clients in Canada and $14.9 billion in assets under administration as of the end of the second quarter of 2022. The corporation claimed a growth rate of 14% as compared to the previous year. They are also the first regulated cryptocurrency broker in Canada, and they are constantly adding new features and improving existing ones to their platform.
Pros & Cons
Pros
• Commission-free stock and exchange-traded fund trades
• Option that is competitive for potential new investors
• An automated platform for financial investments
• Trading in fractional shares of stocks and exchange-traded funds
Cons
• A lack of available platforms and tools
• There is no security for cryptographic assets.
• Neither Wealthsimple Trade nor Wealthsimple Invest is synchronized with one another.
An Analysis of the Pros and Cons
The Positives Exposed
• Investing in stocks and ETFs through Wealthsimple is completely free of charge. On the other hand, there are additional fees, such as a 1.5% fee for currency translation when using Wealthsimple Trade. Customers can pay an additional $10 per month to have their Wealthsimple Trade accounts upgraded to the Plus version. The commission for deals that are supported by a broker is $45.5
• Because of the user-friendliness of the platforms and tools on the website, the digital investment advisor, and the educational resources such as Investing Master Class, Personal Finance 101, and an online retirement calculator, Wealthsimple is regarded as a viable alternative for first-time investors who are looking for a platform that offers competitive advantages. The Investing Master Class consists of ten shorter films that cover a variety of topics, such as the stock market, the fundamentals of investing, and calculating how much money you will need to retire.
• Wealthsimple Invest is an automated investing platform that uses a robo-advisor. This platform is offered by Wealthsimple and goes by the name Wealthsimple Invest. Customers can create a portfolio based on their unique objectives, requirements, risk tolerance, and other factors, and the robo-advisor will manage the portfolio on their behalf, including performing rebalancing as necessary.
• Wealthsimple enables customers to trade fractional shares of stock and ETFs. However, clients are not permitted to make fractional reinvestments of dividends.
Defining the Drawbacks
• Wealthsimple offers a restricted number of platforms and features. There are no other trading platforms available besides Wealthsimple Trade, Wealthsimple Invest, and Wealthsimple Crypto; these are the only ones provided by Wealthsimple. Despite this, Wealthsimple Crypto may be accessed exclusively through the Wealthsimple Trade mobile app. There is not much in the way of market news, advanced features, customised screening, research choices, and more that can be found on the platforms.
• Cryptographic assets bought through Wealthsimple are not covered by any kind of insurance policy. Wealthsimple educates its customers about the potential downsides of investing in cryptocurrency assets. Wealthsimple, on the other hand, claims that their custodian, Gemini, Inc., has a commercial criminal insurance coverage with a limit of up to $200 million, which protects them against the loss of cryptocurrency assets that have been stolen as a consequence of a breach, a hack, fraud, or theft.
• There is a disconnect between Wealthsimple Trade and Wealthsimple Invest. Customers are required to open an account on both platforms, but they are unable to transfer funds between their accounts on the two platforms.
Usability
In the eight years that it has been in business, Wealthsimple has grown to become one of the most successful online brokerages and the largest robo-advisor in the Canadian market. The mission of the organisation is to simplify and reduce the cost of gaining access to a variety of financial tools and information so that it may be utilised by as many people as possible. The Wealthsimple website is designed to be intuitive and straightforward to use. You will need to first generate a profile on the website’s sign-up page before you will be able to set up an account there. Tools and information provided by Wealthsimple can be accessed via their website as well as their mobile apps.
The following are examples of Wealthsimple’s platforms:
• The website provided by Wealthsimple
• The smartphone application developed by Wealthsimple (available for iOS and Android)
• Wealthsimple Trade, an online trading platform that allows for self-directed trade (available on the web and app)
• Wealthsimple Invest, an online trading platform that employs the use of robo-advisors and is fully automated (available on the web and app)
• WealthSimple Crypto, a marketplace for purchasing and selling various cryptocurrencies (only accessible in Wealthsimple Trade app)
Trade Experience
The app and internet platforms offered by Wealthsimple are not as feature-packed as those offered by some of their primary rivals. They offer straightforward financial platforms and tools that are easy for investors of any experience level to understand. If you are a trader who engages in active activity and is interested in more sophisticated features and tools, you should probably look into alternative possibilities. Wealthsimple makes use of cutting-edge technologies, such as automated investing with the help of robo-advisors, which may pique the interest of first-time investors and those who prefer a more hands-off approach.
Within the Wealthsimple Trade platform, Wealthsimple customers can choose between two different plan options. The two plans available are the Basic plan, which is offered at no cost, and the Plus plan, which represents an upgrade and costs $10 per month. Customers who subscribe to the Plus plan gain access to a variety of additional benefits, including limitless real-time quotations and price alerts. Wealthsimple does not provide a tool to generate ideas, and there are just a few different analysis tools available. Customers can use a graphing feature on both the mobile app and the website platforms to view their data. Because of its restricted feature set, the charting tool may be ideal for novice investors as well as experienced investors who do not require a significant amount of analytical data in order to monitor their investments. The charting tool just has a line chart as an option, and there is no sketching tool available to use with it. Customers, on the other hand, have the ability to alter the timeframes that are available to them in order to obtain an indication of how investments have performed at a variety of time intervals.
Mobile Trade Experience
Both Wealthsimple Trade and Wealthsimple Invest are distinct mobile trading applications that are both included in the Wealthsimple app. Wealthsimple Trade is a platform that facilitates self-directed trading, while Wealthsimple Invest is a platform that facilitates automated trading through the use of a robo-advisor. The app does not have as many features as some of Wealthsimple’s rivals’ mobile applications have, thus it is not as user-friendly as those alternatives. When using the Wealthsimple app, clients are required to use biometric logins in order to access their respective accounts.
The mobile app provides investors with real-time stock quotes, and the app platform supports the same kinds of orders as the internet platform does. Market orders, stop-limit orders, limit orders, and other fractional orders are the various sorts of orders that can be placed. The mobile app includes a tool for creating charts, but it does not have a tool for drawing. The only customization element available is a selection of different timeframes for the customer to choose from. The only type of chart that may be created is a line chart.
The screeners have a restricted number of capabilities and do not have any features that allow for customisation or technical indicators. You can keep tabs on each of your investments by compiling a watchlist, which you may use for tracking stocks, ETFs, or cryptocurrencies. You are only allowed to create a single watchlist at a time; you cannot do it for multiple items at once. In the watchlist, you will be able to view the performance of an investment across a range of time intervals, as well as statistics and news pertaining to the investment, and you will also be able to view the categories into which the investment fits.
Variety of Services and Products
Wealthsimple is an online discount broker, so it does not provide a vast variety of investment options. Wealthsimple does not provide its users with access to fixed income, options, futures, or mutual funds. The following are examples of Wealthsimple’s offerings:
• Stocks (Canada and U.S-based stocks)
• Exchange traded funds (ETFs)
• Penny stocks
• Cryptocurrencies (56 various cryptocurrencies available)
• Shares denominated in fractions (stocks and ETFs)
• Investments made automatically through the use of Wealthsimple Invest (uses robo-advisor)
• Halal Investments (ETFs that comply with Islamic law)
Order Types
There are just four different order types available through Wealthsimple. These orders can be categorised as either market orders, stop-limit orders, limit orders, or other fractional orders. Both the website and mobile app of Wealthsimple provide access to various order kinds. They do not provide the ability to stage orders for later entry, nor do they support orders with complex conditions. When it comes to orders, Wealthsimple keeps things simple and it is abundantly evident that the platform is geared more toward a buy-and-hold investor than an aggressive trader.
Technology Used in Trading
The Investment Industry Regulatory Organization of Canada (IIROC) has established guidelines that Wealthsimple must follow, and it does so. A necessary component of compliance is the establishment of high-quality order execution policies and procedures, as well as the communication of such details to consumers. This include order management and routing, order types, technological challenges, conflicts of interest that relate to execution, and regulated markets in other countries across the world. This also covers a number of other criteria, such as the pricing of investments, the speed of execution, the guarantee of execution, the expenses of transactions, and the conditions of the market.
Costs
In the legal section of their website, Wealthsimple lays out all of the fees and prices associated with the purchase of their various goods and services. The investment management fees charged by Wealthsimple are not the lowest when compared to those charged by online brokers in the United States; however, the company’s no-commission stock and ETF trading makes it competitive in Canada, a country in which trading commissions are still quite prevalent.
• Wealthsimple Trade Plus plan: In addition to the free Basic plan, Wealthsimple provides Wealthsimple Trade account holders with the option of upgrading to the paid Plus plan. A monthly fee of $10 is added for access to the Plus plan, which is an upgrade. In addition to that, it consists of extra services such as limitless price alerts, unlimited real-time quotations, $5,000 quick deposits, and USD trade accounts.
• Customers who use the Basic plan will be subject to a currency conversion fee of 1.5% when trading American equities and changing between Canadian dollars (CAD) and United States dollars. This price is included in the cost of the plan (USD). Customers who have upgraded to the Plus plan are exempt from having to pay the currency conversion fee while trading equities and ETFs in US dollars. Customers on the Plus plan, on the other hand, will be subject to a currency conversion fee of 1.5% whenever they fund their accounts or convert between CAD and USD.
• There are no minimum balances or service charges required to start or terminate an account.
• There are no costs associated with inactive accounts or transfers made from active accounts.
• There is a charge of $20 for paper statements.
• There is a cost of $75 for any special investigations or requests.
• There is a cost of fifty dollars for any voluntary corporate action or election.
• There is a cost of $30 for all wire transactions, including incoming and outgoing.
• There is a cost of $250 for the withdrawal of a certificate.
• $45 fee for broker-assisted trades.
• Wealthsimple imposes investment management fees on assets that are currently handled by the company, including digitally managed portfolios that are held under Wealthsimple Invest. The cost is 0.50% of the value of the portfolio if it is less than $99,999. The cost is 0.40 percent for portfolios with a value of more than 100 thousand dollars.
How this Broker Will Make Money for You While Also Making Money Off of You
Wealthsimple is an online discount broker with the goal of providing everyone with access to financial solutions that are within their price range. Even if many of the company’s goods and services have no required minimums, no service fees, and no commission fees, the business must nevertheless find a way to turn a profit in some way.
• Wealthsimple Invest customers whose portfolios are managed by Wealthsimple are charged a management fee for the service. Wealthsimple also receives a management fee for those portfolios. They earn a charge of 0.40% for portfolios with a value of over $100,000, while the price is 0.50% for portfolios with a balance of less than $99,999. These charges are also applied to the Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), Registered Education Savings Plan (RESP), and Locked-In Retirement Account (LIRA).
When Canadian investors trade American investments through Wealthsimple, they are subject to a fee that covers the cost of currency conversion. Each type of account has its own unique pricing structure. When customers trade American equities and convert between Canadian dollars (CAD) and United States dollars (USD), they will be subject to a currency conversion fee of 1.5% under the terms of the basic plan (USD). Customers who have upgraded to the Plus plan are exempt from having to pay the currency conversion fee while trading equities and ETFs in US dollars. Customers on the Plus plan, on the other hand, will be subject to a currency conversion fee of 1.5% whenever they fund their accounts or convert between CAD and USD.
• The fee for the Wealthsimple Trade Plus plan Wealthsimple’s customers are charged a fee of $10 per month for the Plus plan, which is an upgrade from the free basic plan and comes with more features.
• In Canada, accepting payment in exchange for a higher volume of business is against the law. This is a fact that is frequently brought up as an argument regarding the continued existence of trading commissions, and it is an important one.
• Interest on cash balances: Wealthsimple does not pay interest on cash that is sitting in your account doing nothing. All of a client’s money is invested immediately when using Wealthsimple Invest. Cash balances held within Wealthsimple Trade do not qualify for interest, despite the fact that the broker most likely has the ability to earn some.
Facilities for Account Management and Research
Wealthsimple is centred on making things as easy as possible. Although they do provide a variety of services and assistance for their customers, the amount of options provided by them is not as extensive as those provided by some of their rivals who have been in business for a longer period of time. The field of research is one in which Wealthsimple falls short, unfortunately. Customers will not get either proprietary or third-party research from this company, nor will they receive regular reporting on the results of market research conducted by this company. In addition, they do not provide users with trading idea generator tools to use.
Screener for Stocks
Customers of Wealthsimple have access to screeners for socially responsible investments (SRIs), also known as environmental, social, and governance investments (ESG investments). Customers are unable to build or customise their own screens, which also means they are unable to store customised screens for use at a later time. Using technical indicators to evaluate potential investments is not possible.
Customers can make a watchlist for equities, exchange-traded funds (ETFs), or cryptocurrencies, which will assist them in keeping tabs on all of their investments. Customers who have created watchlists have access to a variety of information regarding the investments on those watchlists, including the performance of the investment over a range of time intervals, statistics regarding the investment, news regarding the investment, and the categories into which the investment is classified.
A Screener for ETFs and Mutual Funds
Wealthsimple does not provide its consumers with any mutual funds but does provide them with access to a select group of exchange-traded funds (ETFs). The ETF screener offered by Wealthsimple has a restricted set of functions. Customers are unable to construct or personalise their own ETF screens, which also means that they are unable to store customised screens for use at a later time. Technical indicators cannot be used to screen exchange-traded funds (ETFs).
Customers have the ability to compile a watchlist for exchange-traded funds (ETFs) to assist them in monitoring each ETF. Customers who have created watchlists are granted access to a variety of information regarding the ETF, including the ETF’s performance across a range of time intervals, statistics regarding the ETF, news regarding the ETF, and the categories into which the ETF is classified.
Alternatives Analyzer
Since Wealthsimple does not provide customers with the ability to trade options, the company does not have an options screener.
a Screener for Fixed Incomes
Because Wealthsimple does not provide access to fixed income securities, the platform does not provide a screener for fixed income.
Instruments, Including Calculators
The platforms offered by Wealthsimple provide a restricted selection of tools and calculators. They offer a TFSA calculator, an RRSP calculator, an income tax calculator, and a Canadian retirement calculator, all of which may be accessed for free online. There is no comprehensive portfolio or market analysis software available.
Customers have the ability to receive price notifications and stock news through the Wealthsimple app. Customers using Wealthsimple Trade get access to a charting tool that has a relatively limited set of features. Both the website and the mobile application platforms offer access to the charting tool. There is a restricted watchlist feature available on Wealthsimple Trade. Customers are only able to create a single watchlist at a time or choose from a variety of predefined watchlists.
Charting
The charting feature in Wealthsimple Trade is somewhat limited. Both the website and the mobile app include the charting tool in their respective offerings. There are no sketching tools, and the sole option for modification is a choice between a number of different timeframes. There is only one chart type available, which is a line chart by default.
Trading Idea Generators (from the French:
Trading idea generators are not a service that is provided by Wealthsimple.
News
Customers who have a stock on their watchlist are given access to any fresh information regarding that stock. Within the Wealthsimple mobile application, users have access to stock news as well as price alerts. On the other hand, Wealthsimple does not make it possible for users to access key headlines from the financial news on their platforms. There is a distinct news section of Wealthsimple’s online magazine, Wealthsimple Magazine, in which the company announces new products and services in addition to other significant company news.
Research Conducted by a Third Party
Customers of Wealthsimple are not provided with access to research conducted by third parties.
Management of Cash Flow
With Wealthsimple Trade, there is neither a sweep on money that are not invested nor interest paid on cash balances.
Customers have access to two distinct cash management alternatives through Wealthsimple, which are referred to respectively as Wealthsimple Spend and Wealthsimple Save. There are no fees or account minimums associated with the Wealthsimple Spend service, and it comes with both a digital and a physical Wealthsimple card. In the Wealthsimple app, users have the ability to manage the characteristics of the card. When consumers use the card, they are rewarded with 1% back in cash, cryptocurrency, or stock. The Wealthsimple Save account does not charge consumers any fees, and they receive 1% return on their savings. In addition, Wealthsimple now offers Wealthsimple Cash, which is a cash app that enables clients to send and receive monies to and from their cash account. Customers can send funds to and receive funds from their cash account using the app.
Plan for the Reinvestment of Fractional Dividends (DRIP)
There are no dividend reinvestment options available via Wealthsimple.
Research Facilities for SRI and ESG
Customers of Wealthsimple do not have access to any research tools that are either proprietary or provided by third parties. Customers who use Wealthsimple Trade for self-directed investing are out of luck when it comes to the availability of research tools for ESG and socially responsible investments (SRIs).
Wealthsimple Invest is an automated investment platform that makes use of a robo-advisor. Clients that would rather have their portfolios managed can use Wealthsimple Invest. The customer’s needs are met by the robo-advisor, which performs the necessary research. The standard SRI and ESG portfolios offered by Wealthsimple include corporations that have a minimum of three women serving on their board of directors and corporations that have the lowest carbon emissions in their respective industries. Wealthsimple also provides clients with the option of investing in a portfolio that is Halal and in accordance with Islamic law.
If you live in Canada and are interested in trading socially responsible investments (SRI) or Halal investments, Wealthsimple is one of the best options available to you.
Portfolio Analysis
The Wealthsimple platforms only include a limited number of different types of analytical tools. On the Wealthsimple Invest platform, there is a digital investment manager that conducts portfolio analysis, although this service is only available for managed portfolios. Customers have access to four different free online calculators provided by Wealthsimple, which may be used for analysing various data.
Wealthsimple provides prospective clients who are not yet customers with a free analysis of their existing investment portfolio. If your portfolio has a minimum balance of $50,000, a Wealthsimple advisor will examine your portfolio and help you determine if a Wealthsimple managed portfolio is better suited to your goals and needs. This evaluation is free of charge.
Education
The modest training tools offered by Wealthsimple are purposefully not intended to be overbearing for beginning investors. There is a wealth of educational resources available to help prospective investors become familiar with the fundamentals. The educational resources will seem lacking to active traders and experienced investors, but the platform itself is not designed for even intermediate trading tactics like multi-asset position trading. This makes it impossible to use these strategies.
Wealthsimple offers a wide variety of suggestions, pieces of advice, articles, podcasts, and even has a channel on YouTube. In addition to that, you can find their magazine, Wealthsimple, on their website. On their website, Wealthsimple offers free access to a retirement savings calculator for Canadians. There are two primary forms of instructional resources, which are as follows:
• Personal Finance 101, personal finance videos, articles, and guides.
• Investing Master Class, a collection of ten short movies in which a different person teaches various aspects of finance, including the stock market and investing 101.
Assistance to Customers
• You can contact customer care via email, live chat, or the telephone. Email and live chat with customers are both available around the clock (with a virtual assistant). During regular business hours (which may vary from day to day), you will be able to chat with a real person seven days a week.
• During regular business hours (which are listed on their website), you can reach customer support representatives by phone any day of the week.
On their website, Wealthsimple provides users with a support centre where they may locate solutions to frequently asked questions.
• The Frequently Asked Questions section can be found at the bottom of several product pages.
• Customers can conduct transactions with the assistance of a broker over the phone. This service comes with a cost of $45 for the price.
Both Safety and Trustworthiness
• Users can log in to the Wealthsimple app using a variety of biometric identifiers.
• The Canadian Investor Protection Fund guards the financial assets held in the customers’ investment accounts (CIPF).
Customers’ cash balances in their Wealthsimple Cash, Wealthsimple Spend, and Wealthsimple Save accounts are protected by the Canada Deposit Insurance Corporation (CDIC). The Canadian Deposit Insurance Corporation (CDIC) provides insurance for cash accounts in the amount of up to one hundred thousand dollars for residents of Canada.
• Wealthsimple is the first cryptocurrency broker to be regulated. The security of crypto assets cannot be guaranteed. Wealthsimple, on the other hand, claims that their custodian, Gemini, Inc., has a commercial criminal insurance coverage with a limit of up to $200 million, which protects them against the loss of cryptocurrency assets that have been stolen as a consequence of a breach, a hack, fraud, or theft.
• Both the Wealthsimple website and the Wealthsimple mobile app provide support for Wealthsimple’s two-factor authentication feature. Two-factor authentication is necessary for every single one of our customers.
• Wealthsimple uses encryption to safeguard the personal information of its users.
• Wealthsimple satisfies the requirements set forth by the industry and ensures that all of its security policies and procedures are continually modernised.
Transparency
On their website, Wealthsimple includes a legal section that provides a variety of disclosures of information.
Wealthsimple makes it easy to understand the various price structures and fees associated with their various products and services.
Account Types That Are Available
Wealthsimple is dedicated to the Canadian market, and as a result, it provides services that are par for the course for Canadian brokers. These are the following:
• Privately held stock brokerage accounts
• Accounts with commercial stockbrokers
• A savings account that is exempt from taxes (TFSA)
• Registered Retirement Savings Plan (RRSP)
• Spousal RRSP
• The Canadian Tax Shelter for Education Savings (RESP)
• Retirement Account That Cannot Be Touched (LIRA)
Final Verdict
Wealthsimple has a lot of features that make it appealing for passive investors. The quantity of educational content that is offered on the mobile and web platforms offered by Wealthsimple is not going to be overwhelming for new investors, but it does a good job of easing you into the process of investing. The digital investment management method is the most passive approach, and despite the fact that it is not as feature-rich or affordable as its rival located in the United States, it gets the job done with regard to diversification and automated rebalancing. The Wealthsimple Trade platform, on the other hand, is more difficult to categorise.
Trading platforms, tools, educational materials, and research are not as extensive as those offered by Wealthsimple. What Wealthsimple offers may or may not be sufficient for investors, depending on the sort of investor and the goals they have set for themselves. If you are primarily interested in buy-and-hold rather than trading, then the zero commissions offered by Wealthsimple Trade can help balance some of the shortcomings of the platform. If this describes you, then Wealthsimple Trade is a good option. Active traders and experienced investors who are looking for analysis tools, research tools, and educational resources that are more powerful and extensive will need to examine other possibilities. For people living in Canada, this almost certainly refers to a different brokerage firm within the country, such as Questrade, or a broker linked with a bank. Even better, Interactive Brokers also services the Canadian market with its robust trading platform.
