Is Wealthsimple Invest Canada's best robo-advisor?

By   |   Verified by Nikita Sheth   |   Published 16th April 2021

Finty review Weathsimple
  • Wealthsimple Invest rounds up purchases in connected accounts then automatically invests.
  • A great way for novice investors to get invested with very little effort.

Wealthsimple Invest presents Canadians with a unique way of investing in the market. Hiring a personal financial advisor or portfolio manager can cost a fortune, with many firms charging up to 6% or more in annual management costs. Wealthsimple slashes these management costs by using a robo-advisory service that's every bit as effective as using a human advisor to manage your money.

How does Wealthsimple Invest work?

With Wealthsimple, you make your deposit, answer a brief questionnaire, and start investing right away. There's no need to spend time analyzing markets or investment products; the platform’s AI does everything for you. The result is you can start investing your money, even if you personally know nothing about how the markets work or investment strategy.

Who is Wealthsimple Invest designed for?

Wealthsimple Invest is a hybrid robo-advisory that's ideal for new investors with limited understanding of the markets. You get a passive, hands-off approach to investing that matches your risk tolerance. Wealthsimple also offers socially-responsible and halal investment portfolios, ideal for those that want to align their investment strategy to their values.

Tradable assets

When you sign up with Wealthsimple, you answer a short questionnaire about your risk tolerance and investment strategy. The AI chooses the right blend of eight to ten ETFs to match the results in your questionnaire. Your portfolio allocation may also include stocks if you choose a halal portfolio. Some seasoned investors might feel frustrated that they don't have as much control over choosing their investment vehicles.

How much does it cost?

When you open an account with Wealthsimple, you don't have to pay any direct fees. Wealthsimple charges investors an annual fee, similar to mutual funds and hedge funds, calculated as a percentage of your assets it holds under management. Wealthsimple provides investors with three account options when starting with the fintech firm.

Basic accounts

This entry-level investment account comes with full automated investing strategies, including dividend reinvestment and auto-rebalancing, for a passive, hands-off approach to growing your investments. Clients investing between $0 to $100,000 automatically receive the Basic account, and will pay an annual management fee of 0.5% of assets under management.

Black accounts

If you have more than $100,000 invested with Wealthsimple, you get access to the Black account. Black account holders get a reduced annual management fee of 0.4% of assets under management.

Black account holders also get free financial planning services, free consultation with a real human advisor, and access to strategies to help reduce your taxes. You'll also get access to Wealthsimple's Priority Pass network for exclusive access to more than 1,000 airport lounges across six continents.

Generation accounts

If you have more than $500,000 invested with Wealthsimple, you get access to the Generation account. Investors receive all the same benefits as the Black account, with access to a team of human, financial advisors.

Pros and cons

Pros

  • Ideal for millennial and zoomer investors. This is an easy way to build a portfolio without actively managing it yourself.
  • Simple questionnaire to understand your risk tolerance and investment preferences. Onboarding is quick and easy, making it accessible for any level of investor.
  • Additional perks for high-level account holders. Airport lounge access is a nice bonus for frequent flyers.
  • Hybrid advisory services with real humans and robo-advisors. This could be useful if you want to invest a larger lump sum.

Low fees are a fraction of other advisory firms. Keep more of your capital appreciation.

Cons

  • Limited analysis tools and research. This is a passive investing service that is not designed for the active trader.
  • The human advisory team isn't free with basic accounts.

Alternatives

Wealthsimple Invest is not the only robo-advisor available in Canada. In our opinion, these are the best picks if you don't want to go with a different service.

Justwealth

Our top pick

Justwealth

With what's regarded as Canada's most comprehensive offering, Justwealth uses a team of experts to pick ETFs providing optimal returns for investors. Management fees are low, charging investors between 0.4% to 0.5%. Unlike most robo-advisors, every client gets a dedicated portfolio manager, providing the investor with financial planning services and portfolio rebalancing. Justwealth clients get access to personalized investment strategies like tax-loss harvesting and annual target-date portfolio for your RESP. This unique investment solution rebalances your portfolio to choose assets that mature around the time you need to send your child to university.

Pros

  • Dedicated portfolio manager.
  • Low transaction fees.
  • USD and CAD portfolios available.
  • Tax minimization strategies.

Cons

  • $5,000 minimum account balance requirement.
  • .No socially responsible investment options.
CI Direct

Runner-up

CI Direct

This Canadian robo-advisory provides investors with automated investment management tools and financial planning services. CI Direct blends robo-advising with real human financial advisory services, giving you the best of technology and human innovation to formulate your investment strategy. CI Directs invests your funds into a private investment and ETF portfolio managed by experts, making it one of the top choices for Canadian investors. Unlike other hybrid advisory services, you get up to $10,000 managed for free, with no advisory costs.

Pros

  • Access to private investments such as private equity, real estate, mortgages, and other alternative investments along with low-cost ETFs.
  • Dedicated personal financial planner to help you reach your financial goals.
  • First $10,000 managed for free.

Cons

  • Higher fees than competitors, with sliding scale from 0.6% to 0.4%.
  • Requires minimum $1,000 to invest.
Moka

Honourable mention

Moka

Formerly known as "Mylo" before it rebranded, Moka is a robo-advisory service that rounds up your purchases to the nearest dollar and sends it to your Moka account. When the funds land in your Moka account, the app's AI directs the money into a portfolio of ETFs. All you need to do to start is link your debit or credit card to the app, and you're ready to start investing.

Pros

  • User-friendly interface and easy setup to help you get started quickly.
  • Automated investment strategies geared to your risk tolerance.
  • Unlimited accounts with several account types offered.
  • No account minimum so you can start investing immediately.
  • Socially responsible investment options.

Cons

  • Limited investment portfolio options.
  • Expensive fees compared to other robo-advisors.
  • Complaints of poor customer service.

FAQs

What's the difference between Wealthsimple Invest and Wealthsimple Trade?

Wealthsimple Invest is a robo-advisory. You let the app do the investing for you, taking a passive, hands-off approach. Wealthsimple Trade is a self-directed investment platform, allowing you to control your investment strategy and portfolio.

Is Wealthsimple Invest safe?

Yes, Wealthsimple is a safe platform for investing your money. The firm is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor's Protection Fund (CIPF), offering you up to $1 million protection and insurance on your account.

What's the minimum investment?

Wealthsimple doesn't have a minimum investment amount, and you can start with any amount you like. If you deposit $250 or less into your Wealthsimple account, your funds are instantly available.

How long should I plan to invest for?

A: If you're an investor, you need to sit down and think about your investment goals. Typically, investors will take a short-term portfolio (less than a year holding an asset), a mid-term portfolio (1 to 3 year timeframe), and a long-term view (3 to 5 years or longer). It's up to you which strategies you decide to employ to meet your investment objectives.

Verdict

If you are new to investing in the markets, Wealthsimple Invest can immediately help you get started. In fact, it's one of the easiest ways to get invested for Canadians. With no account minimum required and low fees, you can quickly direct your money into an automated investment portfolio, including socially responsible investment options, geared towards your investment objectives. As your account grows, Wealthsimple will take care of rebalancing your portfolio for you.