Canada's Wealthsimple

[mjh]

I have no clue what I'm doing when it comes to investing, so I did a little research into "roboadvisors" here in Canada. I compared them all and chose wealthsimple. I've been using it for a little under a year. I have to say I am quite pleased with it. A very nice man  spoke with me over the phone and we determined my risk level and he explained in very basic terms how it all works. It's been very easy to add funds and contact someone if I have questions.

 Perhaps it's because I'm a millennial, but I do really like the app they have. It's clean and simply breaks down my investments and has a nice little graph and everything. I'm new to the whole investment world and I'm young (24) so I feel like it's been a good fit.

Just wondering if anyone else is using Wealthsimple or has considered it and what you think of it. I'd like to hear some people's concerns about it (if any) or other experiences with roboadvisors.

[iamlindoro]

First post on forum includes review of financial product and plug for referral?  Check.

I swear I don't work for wealthsimple nor am I trying to scam you in any way.

Oh, whew!  That's a relief.

[meghan88]

I have my TFSA with Wealthsimple.

One thing that is giving me cause for concern is that they bought ShareOwner, so they now own their own discount brokerage.  I felt more at ease when they used BBS Securities as their back office.

[ransom132]

I prefer something more simpler, using questrade in order to invest in Canadian Couch Portfolio recommended ETF's. All you do is invest and then just leave it alone until the day you have more money to invest.

[GreatLaker]

I also prefer something simpler.

Wealthsimple uses some specialized high cost ETFs, resulting in overall higher MERs than a simple 3-fund ETF portfolio. For example the Risk Level 1 (most risk-averse portfolio) holds 25% ZHY which is a high yield US corporate bond fund, and it shows in the recent portfolio volatility. The portfolio MER is 0.327% and holds 9 ETFs.
http://help.wealthsimple.com/hc/en-us/articles/214186978-How-has-the-Risk-Level-1-portfolio-performed-

Contrast that to a simple 3-fund ETF portfolio with XIC/XAW/XQB or VCN/VXC/VAB.

[scottish]

We were at the local BMO branch last week and the nice lady there tried to get us to sign up for their robo-advisor service.    It's only 1% of your portfolio per year she said.

I said, "so if we give you $1M to manage, we'll have to pay you $10K/year?   That sounds like a lot of money."

"How much could we safely withdraw from the portfolio every year?", I asked.   She wasn't sure, so I suggested the portfolio could afford to have 3-4% withdrawals annually.   I explained that we couldn't afford to give them 25%-30% of our income for their robo-advisor.   Still not sure if she understood.

However, as a BMO share-holder I'm glad to see that they're trying innovative new business ideas.   :-)

[Heckler]

Wow. 1% BMO - that's shameful.  Not helping the goal of the protesters saying they aren't the 1%.

https://en.m.wikipedia.org/wiki/Occupy_movement#.22We_are_the_99.25.22_slogan

[Heckler]

Well, now I am spreading rumours.   BMO robo advisor fee is 0.4% / year on a million, plus 0.2 - 0.35 MERs depending on the portfolio.   It's 0.7 plus MERs on low account values. Still shameful, but I can see the benefits compared to my 2.8 %, 6% DSC fucking mutual funds I used to blissfully look at my account value once a year. 

Automating your savings when you're young and have much better things to spend life on will greatly benefit older you!

http://www.bmo.com/img/smartfolio/pdf/en/Fee_schedule_en.pdf

[Heckler]

MJH, to answer you're question, no I don't have any experience with a robo advisor, but I do believe they are a good start for someone starting out.  Wealth simple appears to be following the Canadian Couch Potato methods, if you can get a asset allocation that is simple from them. 

Looking at their funds, a mix of XIC, VTI and IEFA and maybe ZCS to balance things out would be similar to a 2014 Couch Potato.  (See option 4 - http://canadiancouchpotato.com/2015/01/09/couch-potato-portfolio-returns-for-2014/ ). (Full disclosure, that's pretty much my asset allocation)

You could buy these same funds for no commission with a minimum $1000 Questtrade account, but would need to learn to manage your own future ( hey, doesn't that sound like a great idea?). You could also open self directed accounts at your bank and pay $9.95 per trade to buy the exact same funds ( although some of the Wealthsimple funds are in USD, which will also cost exchange fees). 

So, for someone starting out, $8/ month fee on $25,000 is reasonable if you contribute small amounts every two weeks.   To buy 4 ETFs per month would cost you $40/ month and $100/ year small account fee with a typical big bank self directed account, but $0 with Questtrade.   

Now, let's say you save up $100,000.  Now WS is charging you $40/ month on your balance.  Big bank is still charging $10/ trade, but no account fee. Questtrade is still $0 per buy unless you want to sell.  At this point in your life, you might save up $2500 at a time and invest into ETFs with no monthly fee instead of much smaller contributions you're doing now.  $40/ month going to Wealthsimple is pretty steep at this point in life.

Now, let's look at you the millionaire. $290/ month for WS is chump change, right?  Wrong.  That's when the big banks are clamouring to make you happy.  You're still paying $40/ month maximum trading fees to manage 4 ETFs with your self directed account at a big bank, and account admin fees are long gone a thing of the past.  Questtrade has now started charging you fees to sell your ETFs

[Heckler]

So, here's the question - do you want to set yourself up with a cool app and forget about it, or do you want to learn about and manage the simple planning that the robo advisor will automate for you for a fee?

[Lathome]

I signed up with wealthsimple and have been pretty happy with them. I'm mainly using them for my non-registered account and an RESP and have kept my RRSP and TFSA in self-directed accounts. I've recommended them to others who have no real interest in learning more about managing their own funds as they are a better option than what the banks have on offer through their mutual funds.