# Thoughts on Wealthfront/Wealthsimple?



## Kaitlyn (May 13, 2011)

Wondering if anyone here has looked into the offerings like Wealthsimple/etc.

It seems comparable to TD eFunds in terms of cost, whereas ETFs are cheaper. But ETFS (unless you're with a couple brokerages) cost to buy AND sell.

Plus it sounds like their services take care of all the rebalancing, etc. for you. It truly takes the "couch potato" to true set-it-and-forget-it. At least that seems to be the pitch.

What do you guys think?


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## avrex (Nov 14, 2010)

I like the idea of robo-advisers. 
They are *low-fee* and can serve the needs of many investors.

Based on your risk tolerance, an asset allocation is built for you with low-fee ETFs by the company. It is automatically rebalanced as necessary.

For those that don't have the inclination or interest in Do-It-Yourself stock or ETF selections, through a discount broker, a robo-adviser is a great solution.


This article includes a table comparison of the different robo-advisers, The Globe and Mail Guide to Online Advisers.
If you find the web chart difficult to scroll through (or need to get around the Globe paywall), here's a spreadsheet version of it.


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## GreatLaker (Mar 23, 2014)

I also like robo-advisers for investors that don't want to manage their own portfolio directly. They are a huge improvement from the typical bank or brokerage model that peddles mutual funds with a 2% or higher MER combined with biased advice. I wish these services were available when I first started investing. I will, however, continue to manage my own portfolio at a discount broker, because I had already started that by the time robo-advisers became available.

Before choosing one, ensure that its style and choice of investments meets your needs. Some stick to low-cost cap-weighted ETFs like BMO, Vanguard and iShares); others use more exotic managed ETFs that have higher MERs. The spreadsheet Avrex provided is a good source for that info.

Here are two blog posts from Sandi Martin:
How (and Why) to Choose Between NestWealth, Wealthsimple, WealthBar, ShareOwner, and Steadyhand
Canadian Investment Fee Calculator​And a link to her Google Docs spreadsheet evaluating the costs: 
Canadian Online Investment Options - Fee Calculator​
P.S. to Avrex: excellent blog.


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## latebuyer (Nov 15, 2015)

One thing to watch is that with wealthsimple at least it takes up to 5 days to withdraw your money. This seems ridiculous.


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## gibor365 (Apr 1, 2011)

Out of curiosity checked Modern Advisor, on 500K they would charge 4K (0,8%) and invest
Canadian Stocks	15.70%	$78,500.00
US Stocks	10.80%	$54,000.00
International Stocks	14.40%	$72,000.00
Emerging Market Stocks	11.80%	$59,000.00
Canadian Bonds	27.00%	$135,000.00
Emerging Market Bonds	11.40%	$57,000.00
Canadian Real Estate	8.90%	$44,500.00

I don't understand .... they gonna buy 7 ETFs, maybe 2-3 times in a year rebalance and charge for it 4,000?!


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## lonewolf (Jun 12, 2012)

gibor said:


> Out of curiosity checked Modern Advisor, on 500K they would charge 4K (0,8%) and invest
> Canadian Stocks	15.70%	$78,500.00
> US Stocks	10.80%	$54,000.00
> International Stocks	14.40%	$72,000.00
> ...


 Fee is .35% - .5% 

For 500,000 the fee is .4% which is 2000, over 500,000 fee is .35%. In a volatile market rebalance could be more often.

The ETFs they buy would have MER as would the ETFs that would be held in a DIY


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## gibor365 (Apr 1, 2011)

lonewolf said:


> Fee is .35% - .5%
> 
> For 500,000 the fee is .4% which is 2000, over 500,000 fee is .35%. In a volatile market rebalance could be more often.
> 
> The ETFs they buy would have MER as would the ETFs that would be held in a DIY


Fee is 
ModernAdvisor Management Fee	0.60% per year
Portfolio Fees	0.20% per year
So 0.8 % in total ...
There is MER on ETFs, but you gonna pay regardless if you buy it directly or this company buys it for you....
It's only 7 ETFs, so it's 4000/7 = 571 trades , about 2 trades per day.... there is no such volatility in market


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## GreatLaker (Mar 23, 2014)

In my post upthread I wish I had been more clear, robo-advisors are a better choice than typical bank or brokerage accounts selling mutual funds with 2+% MER. They are a more expensive alternative for anyone that has the knowledge and guts to DIY. From Sandi Martin's blog that I linked to above:

http://blog.springpersonalfinance.com/2014/11/how-and-why-to-choose-between.html

I unequivocally believe that – provided you have the relatively small amount of time necessary to set it up and maintain it, and the relatively large amount of intestinal fortitude to stick with your plan no matter what the markets are doing – a self-directed, simple Couch Potato portfolio of low-cost, index ETFs or mutual funds is the best investment strategy for most Canadians.

However, intestinal fortitude when it comes to market gyrations, investing fads, and scary or exuberant magazine covers doesn’t come easily or naturally to everyone. There’s no shame in wanting someone else to manage your investments, offer sound asset allocation advice, rebalance across multiple accounts, watch for tax-efficiency, and act as a dispassionate barrier between you and impulsive action when you’re tempted to abandon your long-term plan in light of short-term events, provided you know what you’re paying for…and receiving it.​
Once a portfolio gets above $300k, Nest Wealth seems the cheapest because it charges a flat monthly fee, not a % of assets. I don't like Wealthsimple because it uses some complex, costlier and riskier ETFs like iShares US High Yield Bond Index ETF and Purpose Duration Hedged Real Estate Fund. I prefer to keep it simpler (and lower cost).


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## GreatLaker (Mar 23, 2014)

*Wealthsimple to acquire ShareOwner Investments*

http://www.theglobeandmail.com/glob...quire-shareowner-investments/article27549056/

Online portfolio manager Wealthsimple is gaining ground among competitors as it acquires online brokerage Canadian ShareOwner Investments Inc.

It is the first acquisition in Canada between two online advice platforms, also known as robo-advisers, and the deal reveals that Wealthsimple will now manage 10,000 clients and $400-million in client assets – financial details that have been widely anticipated in the wealth-management industry.​
Could be the start of a wave of consolidation. Also they are ripe to be acquired by the big banks & brokerages.


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## avrex (Nov 14, 2010)

GreatLaker said:


> Once a portfolio gets above $300k, Nest Wealth seems the cheapest because it *charges a flat monthly fee, not a % of assets*. I don't like Wealthsimple because it uses some complex, costlier and riskier ETFs like iShares US High Yield Bond Index ETF and Purpose Duration Hedged Real Estate Fund. I prefer to keep it simpler (and lower cost).


I agree. When one has a larger portfolio, the charging based on one's % of assets, doesn't make sense for the service that is provided. Keep costs low.  

I also agree with Sandi above. She perfectly captures why many of us should consider robo-advisers. (i.e. cost and investor psychology.)


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## latebuyer (Nov 15, 2015)

That's what i don't like - the lack of control over your portfolio. Wealthbar also includes high yield bonds and covered call. I liked national banks investcube the best but it charges 1%.


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## PharmD (Dec 21, 2011)

I think that one of the things that cannot be forgotten when dealing with these services is the level of advice that they are providing. Wealthbar in particular markets themselves as being full-service advisors that are just dispensing that advice via the phone rather than in person. Others such as Wealthsimple provide more piecemeal financial advice (that is, it is on a as you contact them basis). Finally there are others such as Nest Wealth and Modern Advisor that either only provide investment advice or if they provide actual financial planning that information does not seem to be easily available.

I do not use any of these services, but I do think that they are valuable if they are successful in stopping peoples own behavioural problems. I have seen estimates of a drag of anywhere from the low 1%'s to over 4% that the average investor has compared to what they invest in. A 0.5% fee for investment management and advice may not sound that compelling on it's own, but if it can eliminate this gap it starts to look like a pretty good deal. If you are getting financial planning for that 0.5% then it gets really tempting.

I think that there is a lot still to happen in this space that is exciting, but I personally really hope that it moves towards providing more advice rather than less. No one should have to be in 2.5% MER mutual funds just to get some quality advice (and I would be hesitant of the advice of the person putting you in those funds).


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## latebuyer (Nov 15, 2015)

I'd be interested in hearing from someone who has actually used a roboadviser. Anyone?


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## latebuyer (Nov 15, 2015)

I just noticed virtual brokers kickstart program. You make an automated monthly payment towards a basket of etfs you select then virtual brokers purchases them for you. No rebalancing. It only costs 50.00 per year. I assume there is still a cost to sell but buying is free.


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