What is Wealthsimple and How Does it Actually Work?

I’ve heard the name. But what do you actually do?

We’re a financial technology company. Sure, that’s fun to say at parties (kidding), but it actually means something. It means we use innovation to build powerful financial tools — like an app that lets you trade stocks for free, or hands-off portfolios that put your money to work like the world’s smartest investors — that work better and cost less. Our mission is to help everyone achieve financial freedom no matter who you are or how much you have.

We operate with a few principles in mind.

Keep efficiency high and fees low. When it comes to being smart with your money, fees (even ones that look small) are a huge impediment. That’s why we make financial products that have among the lowest possible fees — from pay-what-you-want tax preparation, to no-commission stock trading, to investing portfolios that charge a fraction of what financial institutions do.

Paperwork is for big banks. We believe that a product isn’t really simple unless it’s dead simple to get started on. That’s why you can sign up from your phone or laptop from anywhere. You just answer a few questions, skip the paperwork, and you’re ready to go in a few minutes.

Technology + Humans. As we’re human beings ourselves, we value people. They give great advice and sometimes they’re nice to talk to. So we have a team of experts at Wealthsimple who can walk Invest clients through any questions they may have. And for those who never want to talk to a human, we hear you: that’s an option, too.

But you’re still not saying what you actually do!

You’re right! Sorry. To make it simple, we offer five financial products (there’ll be more soon, so watch this space) to help Canadians grown and manage their money:

Wealthsimple Invest

The product we started with. Wealthsimple Invest builds smart, super cost-efficient portfolios made up of the perfect mix of equities and bonds all tailored to your goals. It also comes with real human advice, if that’s your thing.

The way it works is: you tell us a bit about yourself, your financial situation, goals, and appetite for risk – and in a couple of minutes we build you an investing portfolio tailored to you. Our portfolios are different because instead of a human picking and choosing stocks, your portfolio will track the broader market, because research shows that picking stocks (like what a mutual fund does) is more expensive and less effective. By the time the average Canadian retires, they could end up paying about $300,000* total in fees throughout their life if they opt for active investing.

This all helps us keep fees incredibly low. How low?

• 0.5% fee for accounts up to $100,000

• 0.4% fee for accounts above $100,000

Note: we’re not always passive. As your assets change in value, we automatically rebalance your portfolio. And the money you invest with us is protected by the Canadian Investor Protection Fund (CIPF).

Wealthsimple Trade

Wealthsimple Trade is Canada’s only commission-free trading platform. So you can buy and sell thousands of stocks, without extra fees.

You can use it to build your own passive investing portfolio of ETFs, like the ones we make, or just to buy shares in companies you believe in. And like Wealthsimple Invest, your account is protected by the CIPF.

Wealthsimple Crypto

Wealthsimple Crypto is Canada’s first regulated crypto platform lets you buy and sell cryptocurrencies like Bitcoin and Ethereum, while knowing your investments are safe.

Wealthsimple Tax

Wealthsimple Tax is online pay-what-you-want tax software. It helps you do your taxes quickly, simply, cheaply, and guarantees you’ll get the maximum refund you’re owed.

Wealthsimple Cash

Wealthsimple Cash is a mobile app that lets you send, request, and receive money instantly from your friends and family (and pretty much anyone else) with the press of a button.

All accounts are protected by the Canadian Deposit Insurance Corporation (CDIC).

But how are you guys going to make money if you charge so little in fees?

At a traditional bank, 50% of the fees you’re paying go toward advisors’ sales commissions. But we don’t think those salespeople are seeing all that money. Plus, traditional firms typically have a huge back office — people pushing paper whose salaries you pay in the form of fees.

In contrast, we still operate like a tech start-up. We’re very frugal, we don’t pay to put our name on stadiums, and we don’t pay for tons of branches. We think it’s a better business to take that money and put it back into our clients’ pockets.

Last updated April 30, 2021.

*Source: Advisors Edge. This assumes an initial investment of $10,000 at age 25, annual contribution of $5,800 thereafter, 6.5% rate of return, and 2.35% fee over a 40-year period.

Written By

The Editors