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Wealthsimple Review 2017: Robo-Advisor for Socially Responsible Investors

WealthSimple

Investing

Wealthsimple Review 2017: Robo-Advisor for Socially Responsible Investors

Overview

This Canadian robo-advisor giant has crossed the border to attract US investors with investment choices that will make you “feel good” financially and morally. Investors can choose between three low-cost ETF portfolios – a globally diversified, Socially Responsible Investment (SRI), and Halal Investment portfolio. WealthSimple is betting investors are just as green on this side of the border, and across the pond – where it has begun its U.K. expansion.

By bundling together a portfolio of ETFs for you from its wide selection of quality funds, it seeks out diversification, and tax and fee reduction opportunities to improve your returns. The digital advisor prefers if you grow your wealth while doing good, so it will be delighted if you choose its low cost Socially Responsible Investment portfolio.

The wide selection of ETFs screen for a range of environmental, social and governance goals, from clean technology to gender diversity. However, the choice is yours – choose between the regular or SRI portfolios. 

Founding: 2014

Assets Under Management: C $1 billion

Client Profile: With no minimum investment, WealthSimple is attracting socially conscious Millennials. Higher net worth Baby Boomers are also signing up.

9.5 Reviewer
Pros
  • No minimum investment
  • Low fees
  • Auto rebalancing
  • socially responsible ETFs
  • Integration with Mint
  • Cons
  • No personal financial advisors under $100K
  • No daily tax-loss harvesting under $100K
  • Account Fees9
    Platform Features10
    Asset Allocation10
    Customer Support9

    Table of Contents

    Getting Started

    What do you need to start? 

    A good place to start is WealthSimple’s Portfolio Review. This free portfolio review service of all your non-WealthSimple accounts will seek out inefficiencies such as excessive fees, tax losses, and low diversification. To receive your free evaluation, submit your latest financial statement for each account and a WealthSimple advisor will ring you in a few days with their findings. Hopefully, you now have more insight into shortcomings and gaps in your financial plan as you move onto the next step.

    What questions do they ask?

    In addition to the basic profile questions, you will be asked about your primary reason for investing, estimated savings and investments, total asset value, total debt, investing experience, and time horizon. Finally, you will be asked if you want to invest exclusively in Socially Responsible funds. Yes or No. No pressure. The choice is yours.

    Your suggested portfolio will be generated and display the specific funds suggested. As for the asset allocation breakdown, a nifty tool is the ability to adjust the risk profile from 1 to 10 and see your asset allocation change in real time.

    Many robo-advisors focus on conducting a risk assessment only on retirement planning, but may offer goal tracking tools for college, big purchases, and other financial goals. WealthSimple allows you to define any investment objective from the initial assessment stage. A portfolio will then be developed for that specific objective, be it retiring in 20 years or buying your first home.

    You also have the option of free phone financial consulting, as the consultants are prepared to discuss your financial goals beyond retirement. If you decide to change your investment goals, you may consult by phone with advisors at anytime.

    Platform Features

    If for no other reason, you have to visit WealthSimple to find out why it won the Webby award for the Best Financial Services Website two years in a row. One minimalistic screen provides all the information you need to monitor your portfolio. The balance, earnings and returns percentage are shown on all your taxable and non-taxable accounts. To let you know this robo is working for you, the savings on fees, free trades made, and dividends reinvested are displayed. This succinct page is also easy to read on your mobile screen. To ensure your portfolio is on track to meet your financial goals, one graphic displays the timeline of your portfolio value at future dates.

    WealthSimple also syncs with the budgeting tools of one of the most popular personal finance apps, Mint.

    WealthSimple Features

    Account Minimums  The minimum deposit is $0.
    Accounts Supported  Personal, Roth IRA, Traditional IRA, SEP IRA, Joint, Trust
    Account Management Fees 0.0% < $5,000, 0.5% < $100,000, 0.4% >$100,000.
    Investment Expense Fees The average ETF expense ratio is 0.18%.
    Asset Allocation ETFs from various asset classes.
    Tax Harvesting Yes. WealthSimple Black
    Auto Re-balancing Yes. Free.
    Dividend Reinvesting Yes.
    Mobile App Yes –  You can download the iOS app here and Android app here.
    Customer Support Financial Advisors available by phone, text, email. Phone — M-F 11A-8P ET, Email — 24/7

    Asset Allocation

    WealthSimple uses non-proprietary ETFs to provide the optimal diversification strategy for your risk profile.

    Fund families include BMO, iShares, Purpose, Vanguard, and a broader selection of sustainable investment ETFs.

    WealthSimple portfolios allocate investments across the following investment classes, plus sustainable investing categories:

    • US stocks
    • Foreign stocks
    • Emerging market stocks
    • Dividend stocks
    • Government bonds
    • Short term bonds
    • High yield bonds
    • Real estate

    The below screenshot shows the diversity of Socially Responsible funds offered by WealthSimple.

    WealthSimple Review

    The Socially-Conscious ETFs offered by WealthSimple

     

    WealthSimple Product Lines

    WealthSimple Basic

    Minimum Required Account Balance: $0

    You may choose a standard diversified portfolio comprised of quality ETF funds or the Socially Responsible ETF portfolio. Automated portfolio rebalancing and dividend reinvesting are free on all accounts. Dividends are reinvested the day after they are credited to your account, rather than quarterly, allowing you to immediately start benefiting from compound earnings.

    The annual account management fee is 0.5%.

    Socially Responsible ETFs

    ETF fees are slightly higher on Socially Responsible funds owing to the more sophisticated screening process and tools. Following is the list of SR funds listed by WealthSimple. Many more funds appear in the hypothetical portfolio.

    • iShares MSCI ACWI Low Carbon Target ETF – stocks with low carbon exposure
    • PowerShares Cleantech Portfolio – developed world cleantech innovators
    • iShares Jantzi Social Index ETF – Canadian stocks meeting ESG screen
    • Vident International Equity Fund – developed/emerging economies sustainable growrh
    • BMO Mid Federal Bond Index ETF – fixed income exposure

    WealthSimple Black

    Account Minimum: $100,000

    WealthSimple Black accounts also benefit from the tax savings from tax loss harvesting. The management fee drops to 0.4% annually and you also have access to the WealthSimple financial planning team to discuss your financial goals at any moment.

    An added perk is VIP air lounge access to over 1,000 airport lounges across the world.

    For account transfers to WealthSimple over $5,000, WealthSimple will cover the fees.

    Halal Investment Portfolio

    The Halal Investment Portfolio in the first robo-advisor to invest according to Islamic law. The Halal ETFs avoid haram “forbidden” investments such as alcohol, smoking, gambling, and usury (lending money at unreasonably high-interest rates).

    What’s next for the 2016 Fintech 100 company? WealthSimple plans on expanding its low-cost financial service offerings. “Today we do investment management, but we’d like to help our clients be successful across all their financial needs at the same time, and bringing that simplicity and experience is what we do best. We’re just getting started,” says Michael Katchen, WealthSimple’s 29-year-old CEO (Ivy Business Review).

    Competitor Comparison 

    WealthSimple

    Betterment

    Vanguard Personal Advisor

    Review

    Read Review

    Read Review

    Rating

    9.5

    9.8

    9.3
    Features
    • Socially Conscious Investing
    • Access to Financial Advisors
    • First Halal-friendly robo advisor
    • Automatic Investing
    • Free Portfolio Rebalancing
    • Access to Financial Advisor
    • Tax Loss Harvesting
    • Account minimums
    • Tax harvesting
    • Human advisor for a fee or >$500,000
    Fees
    •  0.5% annually for all accounts <$100,000
    • 0.4% annually for all accounts >$100,000
    • First $5,000 is managed free the first year
    • Annual fee starts at 0.25% of account balance
    • No trade fees
    • Additional fees for access to financial advisors
    • .30, human advisers for a fee or >$500,000
    Asset Allocation Invests in U.S. and International stock and bond ETFs Invests in U.S. and International stock and bond ETFs  Invests in U.S. and International stock and bond ETFs

     

    Summary

    WealthSimple not only wants to help you make an investment impact but also a social impact with a low-cost ETF portfolio.

    WealthSimple’s fast growth proves investors are willing to pay a smidgen of a percent more in advisory and fund expense fees for sustainable investments. Once your account balance hits $100,000 with personal advisory services, the .40% fee is well below other $100,000 plus robo-advisors with personal advisory services such as Betterment (0.50) and PersonalCapital (.89). Vanguard at .30 is competitive but if you are seeking sustainable investments, WealthSimple has carved out an enviable niche.

    Pros of WealthSimple

    You may like WealthSimple for the following reasons:

    • No minimum investment
    • No fee on the first $5,000. Low fees of 0.5% < $100,000, 0.4% >$100,000.
    • Auto rebalancing
    • A wide selection of quality socially responsible ETFs
    • Integration with Mint’s popular budgeting app
    • A 2X Webby award winning website
    • VIP air lounge access for WealthSimple Black clients

    Cons of WealthSimple

    The reasons below might be why you won’t like WealthSimple.

    • No access to personal financial advisors for accounts below $100,000
    • No daily tax-loss harvesting for accounts below $100,000

    Is WealthSimple Right for You?

    WealthSimple’s wide selection of sustainable ETFs makes it irresistible to many socially and environmentally conscious investors. One factor to weigh when deciding on a robo-advisor is when you will need a financial advisor. WealthSimple makes personal financial advisors available after assets hit $100,000 (WealthSimple Black). This is much lower than the limits of Fidelity and Vanguard ($500,000) and PersonalCapital ($200,000). WealthSimple has further lowered the hurdle by launching WealthSimple for Advisors. Investment advisor members can offer WealthSimple funds for below the minimum investment, thereby combining the digital product with personal investment advisory services. Remember, the digital advisor does provide financial consultation by phone, and this may be enough handholding to get you off and running with a sustainable portfolio that makes you feel good.

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