Our Wealthsimple review takes a look at what makes up this Canadian investment firm. This is an investment firm that’s mainly geared toward millennials. They have options to invest in crypto, no account minimum balance, and zero dollar trading.
Wealthsimple Review of What They Are
Wealthsimple is a Canadian investing platform that is focused on helping younger generations with their investments. The company was founded back in 2014 and is headquartered in Toronto, Ontario.
While Wealthsimple does operate as its own brokerage, the majority of the company is owned by the Power Corporation of Canada (TSE: POW). This is an asset management firm that focuses mostly on financial and insurance-based subsidiaries. As of 2021, Wealthsimple had over $15 billion CAD in AUM or assets under management.
Wealthsimple is an all-in-one financial site for young Canadian investors. Although it operates as an extension to a normal bank account. Instead, it focuses on offering investing and savings products for its users with an entirely online model. Currently, in a Wealthsimple review, they have over 1.5 million Canadian users. In fact, a majority of these clients are from the millennial generation.
Is Wealthsimple Available in the United States?
As of now, Wealthsimple is strictly for Canadian investors. While you can definitely buy shares of American companies and trade stocks on the US markets, the platform is only for users north of the border. We shouldn’t feel too left out though.
There are dozens of investing and financial products we have in America that Canadians do not have access to. Some of these include SoFi (NASDAQ: SOFI), Square (NYSE: SQ) and its Cash App, PayPal’s (NASDAQ: PYPL) Venmo app, and of course, Robinhood (NASDAQ: HOOD).
What Sets Wealthsimple Apart from the Competition?
In Canada, there are just not as many options for people who want to invest. The current landscape of brokerages mostly consists of the major banks. They charge an arm and a leg for trading fees. Wealthsimple entered the chat and revolutionized the Canadian investment market by providing features that the big banks won’t match. Let’s take a look at some of the best features they offer their Canadian clients in this Wealthsimple review.
Wealthsimple review of Zero Dollar Trading Fees
I know, I know. Zero dollar trading fees have become the norm in the US. But as I said, in Canada, it’s a very different story. The major banks have a near-monopoly in Canada. In fact, they often charge up to $10.00 per stock trade! Wealthsimple is one of the first platforms to offer zero-dollar trading.
And that has been a very popular feature amongst younger investors. While Wealthsimple does charge slightly higher than normal account management fees, stock traders can save a small fortune by trading here rather than with the big banks. If you like zero-dollar trading fees, you’ll be happy to keep reading this Wealthsimple review.
Socially Responsible Investing
This movement has gained some popularity in recent years and Wealthsimple is very much into it. Socially Responsible Investing or SRI is a method that eliminates companies that can be deemed harmful to society. These include companies that deal with weapons, drugs or alcohol, tobacco, and even fossil fuels.
Wealthsimple offers its users a few different risk-weighted SRI portfolios to choose from. While these certainly aren’t for everybody, it is another way that the company has appealed to younger investors. Hence our Wealthsimple review.
Wealthsimple even offers something called a Shariah-compliant portfolio. If you are familiar with Islamic law, there are many things deemed to be sinful. Similar to the SRI portfolios, the Shariah-compliant portfolios provide those who follow Islamic law, peace of mind investing. This has been especially popular in Toronto where there is a significant Muslim population.
Wealthsimple Review of Fractional Share Investing
Again, you can see the state of the investing market for our neighbors to the north. Most brokerages in the US offer fractional share investing these days, but in Canada, only a handful do. In fact, none of the big banks allow it at the moment, and only a few brokerages that are available in Canada do.
This is certainly another feature that this Wealthsimple review found added to appeal to younger investors who generally have less money at their disposal. While the merits of fractional share investing are still debated, it helps new investors who want to buy shares of companies like Amazon (NASDAQ: AMZN) or Alphabet (NASDAQ: GOOGL).
No Account Minimum Balance
Yet another feature in this Wealthsimple review that helps younger investors get started in investing. Since Wealthsimple targets users who are millennials or younger, a lot of times they will not have a lot to invest. Allowing them to just open an account without a minimum balance definitely helps them feel more welcome and are usually more inclined to fund their accounts.
Keep in mind that there are different levels of Wealthsimple accounts. And only the Wealthsimple Basic offering has no minimum balance requirements. If you maintain a balance of at least $100,000 CAD, then Wealthsimple will bump you up to the Wealthsimple Black account.
Wealthsimple Invest is the core of the platform and the part of the site that attracts the most users. The zero dollar trading fees alone are worth it for most Canadian investors, especially those who are high-volume traders. The platform allows users to buy and sell stocks or ETFs from both the US and Canadian markets. Wealthsimple does charge a foreign exchange fee though if you do make a transaction with a US asset.
The Wealthsimple Invest platform has received high ratings from across the industry. It is fast, intuitive, and helps make investing simpler for younger investors. There are some shortcomings with Wealthsimple’s platform though.
First, you cannot trade options contracts so if you are an options trade it’s best to look elsewhere. Big banks in Canada will allow options trading, but the fees are higher and you generally need permission from the bank to do so. The asset management fees for Wealthsimple are a bit higher than the market rates as well. For most investors, this won’t matter, but for people with large balances, it can have a long-term effect on your portfolio.
We found in this Wealthsimple review that they even offer accounting management support. Which can offer investors advice and suggestions to help balance their portfolios. The company also added a micro-investing service that takes a few cents from purchases and transfers, and directly adds those to your Wealthsimple account. You can then allocate these funds as you wish, and the more you do it, the more your balance will compound over time.
That’s right, another feature that definitely sets Wealthsimple apart from the big banks is the ability for users to trade cryptocurrencies. Cryptos have become a major investment market around the world. And yet somehow Canada is lagging once again. Wealthsimple is actually Canada’s very first regulated crypto platform, where you can buy tokens or fractions of Bitcoin, Ethereum, Dogecoin, and much more. One of the largest complaints about how Wealthsimple handled crypto trading was that the platform held those assets in its own ecosystem. Crypto traders would not be able to remove their crypto from the site, in the event they’d want to invest it elsewhere or store it on a cold storage device.
Wealthsimple recently announced that it would soon be allowing transfers to and from the platform. This means that crypto traders on Wealthsimple will be able to trade cryptos on the site and then move them wherever they want. Once again, who likes to trade cryptos? Millennials and younger investors looking for big gains over a shorter period of time. Wealthsimple has done well to add crypto trading right into the foundation of its platform.
What Are the Cons of Wealthsimple?
Hey, there’s no such thing as the perfect brokerage site and Wealthsimple certainly has its share of cons. First, I already mentioned the account management fees which can range from 0.40% to 0.50% depending on the size of your balance. Most other brokerages charge rates that are 0.30% or lower.
Second, Wealthsimple lacks any financial tools to help young investors plan for the future. There are not many calculators or tools that can help plan your future through your investments. While it is easy to find these on the internet for free, it would be nice if all of this was included right in the platform.
Wealthsimple Review Conclusion
We hope you enjoyed this Wealthsimple review. If you’re a Canadian investor, Wealthsimple offers a very convincing list of features for your online brokerage. There are things that Wealthsimple provides that are nowhere near being offered at the traditional big banks.
The list includes zero dollar trading fees, crypto trading, and fractional share investing as well. In my opinion, the zero-dollar fees for trading are worth switching over on their own. The thought of paying $10 per trade is enough to turn anyone into a passive investor.
Adding in crypto trading was impressive, and the company is making it even more enticing by adding in the ability to move your cryptos off the site. The pros far outweigh the cons for Wealthsimple, and any Canadian investor should take advantage of this incredible site!