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Wealthsimple Review 2018 – What is Wealthsimple?

Wealthsimple Expert Review

Based in Toronto, and with offices in New York and London, Wealthsimple is a Canadian based robo-advisor operating in Canada, the US and the UK. The platform was launched at the beginning of 2017, and now has more than $1 billion in assets under management (AUM), from more than 40,000 clients.

The firm is backed by $100 million in capital provided by the Power Financial Group, a financial holding company with $1.4 trillion in assets under administration. The company is staffed by a team of software engineers, designers and data scientists, out of prominent tech companies such as Amazon, Google and Apple.

As is typical of robo-advisors, Wealthsimple creates portfolios based on Modern Portfolio Theory (MPT), and provides automatic rebalancing and dividend reinvesting, as well as tax-loss harvesting. They invest using a globally diversified portfolio of low-cost index funds

Wealthsimple Robo-advisor Features at a Glance

OverviewAutomated investment management robo-advisor platform, covering everything from portfolio allocation to automatic rebalancing, dividend reinvesting, SRI and Halal investing.
Minimum Investment AmountNo minimum initial investment required.
Fee StructureFirst $5,000 managed free, ($15,000 for signups through this site) then 0.50% of AUM up to $100,000. For accounts valued over $100,000, 0.40% of AUM.
Top FeaturesHuman finacial advisor advice. Socially Responsible Investing (SRI), and Halal investing consistent with Islamic principles.
Free ServicesFree Portfolio Review of your non-Wealthsimple financial accounts to evaluate fees and tax efficiency.
Contact & Investing AdvicePhone or text, Monday through Friday, 8:00 am to 8:00 pm Eastern Time. Email 24/7.
Investment Funds Diversified index funds from 10 different asset classes on regular portfolios, with six in the SRI portfolio; the Halal portfolio includes the stocks of 50 different companies.
Accounts AvailableIndividual and joint taxable accounts; trusts; traditional, Roth, rollover and SEP IRAs.
PromotionsTransfer fees covered on retirement account transfers of $5,000 or more. First $15,000 managed for free.

What Differentiates Wealthsimple Robo-Advisor From Competitors

This Wealthsimple review highlights several unique features, seldom found combined in one digital investment manager.

Free Financial Advisor Advice. All Wealthsimple customers have access, during normal business hours to consultations with a Certified Financial Planner. You can plan a consultation, to fit in with your schedule.

Socially Responsible Investing. Although not the only robo-advisor that offers SRI investing, Wealthsimple has a comprehensive take on the strategy. The SRI strategy invests in Exchange Traded Funds (ETFs) that track the global economy and are weighted according to environmental and social impact along with performance.

Portfolio Review. This is a free service that provides an objective evaluation of your entire financial portfolio, exclusive of your holdings with Wealthsimple. They evaluate your investing fees, as well as the tax efficiency of your account, and will make appropriate recommendations. This gives Wealthsimple a more holistic position on your investments than is typical for many robo-advisors.

Halal Investing. There are 3.45 Muslims in the US today and are expected to reach 2.1% of the population by 2050, according to the Pew Research Center. The Halal investing option complies with Islamic investing principles that include  screening by Sharia scholars, no gambling, smoking, arms or related companies, and no business that derives most of their income from loan interest.

Wealthsimple Gift Cards. This is definitely a unique feature. You can purchase and send a gift card to another person, that will enable them to open an account with Wealthsimple. They refer to them as ”the only gift cards that aren’t terrible.”

Denominations can range from $25 up to $10,000, and can be purchased using Visa, MasterCard or American Express. There is a fee of 2.9%, plus $.30 for each gift card purchased. You enter the recipient’s name for delivery when purchasing the card. What’s more, you don’t need to be an account holder to purchase a gift card.

 

Wealthsimple review for Halal, SRI and index fund investors.

Who Benefits from the Wealthsimple Robo-Advisor?

Wealthsimple is a good choice for anyone who is:

  • Seeking phone contact with a Certified Financial Planner.
  • Looking for a robo-advisor platform that also includes socially responsible investing.
  • Desiring a robo-advisor compliant with Sharia law.  (the Halal Portfolio – see below).

Wealthsimple Robo-Advisor Drill Down

Wealthsimple offers four distinct portfolios: Basic, Black, Socially Responsible Investing (SRI) and Halal. The specific asset allocation in each portfolio is unique, but the platform does offer services common to all four. This expert Wealthsimple review drill down outlines the investment management basic services and  platform choices.

Reblancing. Wealthsimple rebalances your portfolio anytime an allocation varies by 20% in either direction. For example, if you have a 10% TIPS bond allocation, rebalancing will take place if that allocation rises to 12%, or falls to 8%.

Tax-loss harvesting. Wealthsimple uses this investment strategy in all of its portfolios, at no extra charge. Tax-loss harvesting involves selling losing positions, to offset taxable gains in winning positions. It represents a form of tax deferral, outside the confines of a tax-deferred account. The service is of course only available in taxable accounts, since it is of no benefit in tax-sheltered accounts.

The Wealthsimple portfolios are described below.

Wealthsimple Basic Portfolio

This portfolio is just what the name implies, the basic portfolio used for most accounts with fewer than $100,000 AUM. Your account can be set up in one of three basic risk-tolerance structures; Conservative, Balanced and Growth. The portfolio allocation for each will look like this:

  • Conservative portfolio, 65% bonds and 35% stocks.
  • Balanced portfolio, 50% bonds and 50% stocks.
  • Growth portfolio, 80% stocks and 20% bonds.

The portfolio is constructed from the following 10 ETF’s. Six are stock funds, and four are bond funds.

Asset ClassSymbolETFPortfolios
US StocksVTIVanguard Total US Market ETFAll
US Mid-Cap ValueVOEVanguard Mid-Cap Value ETFAll
US Small-Cap ValueVBRVanguard Small-Cap Value ETFAll
Foreign StocksVGKVanguard FTSE Europe ETFAll
Foreign Stocks (exporter & dividend tilt)DXJWisdomTree Japan Hedged Equity FundAll
Emerging Market StocksVWOVanguard FTSE Emerging Markets ETFAll
Municipal BondsMUBiShares National Muni Bond ETFAll taxable accounts*
US Inflation Protected (TIPS) BondsTIPiShares TIPS BondConservative and Balanced*
USD Govt and Corporate IG Bonds (includes EM)BNDVanguard Total Bond Market ETFAll*
High Yield BondsANGLVanEck Vectors Fallen Angel High Yield Bond ETFConservative and Balanced*

The specific mix of ETF will vary slightly between taxable accounts and retirement accounts. For example, retirement accounts won’t include a municipal bond allocation, since it is completely unnecessary. More aggressive portfolios will have greater allocations to stock funds and more conservative portfolios will hold greater percentages of bonds.

*Halal or Sharia compliant portfolios are all equity and exclude bonds.

Wealthsimple Black Portfolio

This is very similar to the Wealthsimple Basic Portfolio, and uses the same portfolio allocations. But it provides special perks for larger investors. You must have a minimum of $100,000 to be eligible for the Wealthsimple Black portfolio.

Wealthsimple Black Portfolio benefits:

  • An annual management fee of 0.40%, representing a 20% reduction from their Basic fee.
  • Additional tax efficiency, such as the use of tax efficient funds.
  • Quarterly, scheduled financial planning session with an expert advisor, to help you meet your goals.
  • Priority Airport Lounge access when traveling.

The Black Portfolio also comes with VIP access to more than 1,000 airport lounges across the country, as well as a Priority Pass membership for you and a traveling companion. I don’t know how much appeal this will have to investors, unless of course you are a frequent traveler.

Wealthsimple Socially Responsible Investing (SRI) Portfolio

The SRI Portfolio focuses on investing in companies with low carbon admissions, those that support gender diversity, and those that support affordable housing. It gives investors a chance to invest in companies that are consistent with their personal values. The portfolio provides allocations based on Conservative, Balanced and Growth profiles. It uses the following six funds – four stocks funds and two fixed-income – to create those portfolios:

  • iShares MSCI ACWI Low Carbon Target (CRBN) – Low Carbon, comprised of global stocks with a lower carbon exposure than the broader market.
  • PowerShares Cleantech Portfolio (PZD) – Cleantech, comprised of cleantech innovators in the developed world.
  • iShares MSCI KLD 400 Social Index Fund (DSI) – Socially Responsible, comprised of American companies that are socially responsible.
  • SPDR Gender Diversity (SHE) – Gender Diversity, comprised of companies with more gender diversity among their leadership.
  • PowerShares Build America Bond Portfolio (BAB) – Local Initiatives, comprised of bonds issued by municipalities to support local initiatives.
  • iShares GNMA BD ETF (GNMA) – Affordable Housing, comprised of government issued securities that promote affordable housing.

Wealthsimple Halal Portfolio

Recognizing the growing Muslim population in the US and Canada, Wealthsimple has created the Halal Portfolio to invest in companies that are in line with Islamic principles of investing. For example, profiting off debt is prohibited, which leaves bonds out of the investing equation.

There is only one version of the portfolio, and it can’t be customized. It is designed as a fully diversified portfolio of stocks that comply with Sharia law, constructed by the expert team at MSCI. The fund invests in 50 individual stocks that have been selected to track the broad market, while complying with Islamic law. It is considered an actively managed portfolio, as opposed to the other portfolios that are comprised entirely of ETFs.

Because the portfolio excludes bonds, the Growth allocation is the only option. The Conservative and Balanced options don’t apply. However, they do caution that the portfolio is higher risk, since it’s an all-equity allocation. For this reason, they recommend keeping more of your assets in cash as a diversification strategy.

Click for Direct Access: Wealthsimple — Low Fees, Perfect Investing

The fee structure for the Halal Portfolio matches that of the Basic and Black Portfolios. The stock portfolio consists of some of the biggest names in the market, including Johnson & Johnson, Exxon Mobil, Procter & Gamble, SAP, Pfizer, Canon, Unilever, Chevron, Royal Dutch Shell, Alibaba, Merck, DowDuPont, Intel, BP, Broadcom, Starbucks, Union Pacific, FedEx, Eli Lilly, Barrick Gold, Bristol-Myers Squibb, Kraft Heinz and Tesla.

Wealthsimple Robo-Advisor Sign-up Process

The entire Wealthsimple sign-up process takes place online, and is completed in three simple steps.

  1. Complete the online application, which includes answering questions about your previous investment experience.
  2. Respond to the risk tolerance questionnaire.
  3. E-sign the Investment Management Agreements.
  4. Link your bank account(s). A bank verification enables you to fund your account.

Wealthsimple Robo-Advisor Pros and Cons

Wealthsimple Review – Robo-Advisor Advantages

  • No minimum initial investment required, which is perfect for new and small investors.
  • The first $15,000 is managed for free, with siignup through Robo-Advisor Pros.com – again, a great feature for new and small investors.
  • Socially responsible investing option gives investors the ability invest in what they believe in.
  • The Halal Portfolio provides a portfolio that is constructed and managed consistent with Islamic law.
  • Human-assisted advice. The opportunity to call, text or email a financial professional for any money related question, is a nice feature.
  • Tax-loss harvesting on all taxable accounts.

Wealthsimple Review – Robo-Advisor Disadvantages

  • The basic fee structure of 0.50% is on the higher end in the purely digital robo-advisors space. Although, it’s competitive when comparing this robo-advisor to Ellevest and Betterment’s Premium plans. Betterment Digital and Wealthfront charge just 0.25%, with Wealthfront managing the first $10,000 for free. Meanwhile,  M1 Finance and Charles Schwab Intelligent Portfolios have no management fees at all.
  • The WisdomTree Japan Hedged Equity Fund (DXJ) seems a bit random. We’re not certain why there’s an allocation to this specific country, albeit a small exposure.

Wealthsimple Robo-Advisor Review Wrap Up

For most small investors seeking an all digital robo-advisor, Wealthsimple may have limited appeal. The fee structure is on the high end of the robo-advisor range, particularly with the Basic Portfolio, where the fee is twice as high as other popular competitors. Given that robo-advisors as a group seek to match the performance of the general market through passive investing, it’s hard to justify paying an extra quarter-point for what is essentially the same service.

But, if you want a robo-advisor with financial advisor access, have a larger portfolio, are seeking socially responsible of Halal investments, Wealthsimple is great. The fees are fair, for the products and services that you receive. For many investors, having a human advisor to consult with is very important.

Bonus; Robo-Advisors with Human Financial Advisors 

Wealthsimple is a unique robo-advisor, with specializations in socially responsible investing and the Halal Portfolio. The fee structure for these portfolios is reasonable considering that they are highly specialized. Still another attraction is for new and small investors, who can definitely benefit from the lack of a minimum initial investment requirement, as well as having the first $15,000 managed free (if they sign up through this site).

If you’d like additional information, or if you’d like to sign up for the service, visit the Wealthsimple website and get $15,000 managed for free.

Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe is valuable.

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Barbara A. Friedberg, MBA, MS

Barbara A. Friedberg, MBA, MS

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