Wealthsimple is one of the big names in the investment industry of Canada. This is obviously so for good reasons.
Whether you’re looking for a DIY investing platform, or an automated wealth management institution, Wealthsimple is one of the top options you will find in Canada.
Behind such popularity are unique features that compete significantly with other investment platforms in Canada.
In this article, I present the key reasons why Wealthsimple is such a household name in the Canadian industry.
I will go further to expose the main weaknesses of the company that make many investors look for Wealthsimple alternatives in Canada.
At the end of this article, it should be easy to make an informed decision about the best investment platform that suits your needs in Canada.
Let’s get started.
Table of Contents
Wealthsimple doesn’t need an introduction to existing Canadian investors. This section exists mainly for the sake of new investors or newcomers to Canada.
By definition, Wealthsimple is a Toronto-based investment institution and financial service provider. The company was founded in 2014 to provide smart and simple investment solutions.
Wealthsimple also offers savings and spending, payment and tax filing solutions that compete with some of the big banks in Canada.
With over 2.5 million users and $15+ billion in assets under management, Wealthsimple is seen as one of the largest online wealth management institutions in Canada.
Little wonder, Wealthsimple’s unique solutions have attracted several awards from FINTECH100 and Webby Awards among others.
Despite all this, some Canadians are looking for Wealthsimple alternatives. But why?
The answer lies under Wealthsimple’s major products — Wealthsimple Trade and Wealthsimple Invest.
In what follows, we’re going to take an overview of these two products to identify their best alternatives in Canada.
Wealthsimple Trade is the Do-it-Yourself solution of Wealthsimple. It allows self-directed investors to trade their favourite securities with no commission.
Notably, Wealthsimple Trade is the first to attain this feat in Canada.
Available securities on the platform include Canadian and US-listed ETFs and stocks.
The commission-free rendering of Wealthsimple Trade serves as the major catch of the online discount brokerage.
Other interesting features of the Wealthsimple Trade app include access to a USD account, crypto trading and zero minimum deposit on investment.
All this and many other unique features add up to make Wealthsimple Trade one of the leading online discount brokerages in Canada.
To have a balanced view of Wealthsimple Trade, let’s take a brief look at its pros and cons below.
What’s Unique About Wealthsimple Trade?
- No minimum deposit required: Some brokerages require a given deposit limit before one can start trading with them. This is not the case with Wealthsimple Trade which has no deposit requirements. As a result, you can start trading even with $1 on the platform.
- No commission on trading: Many brokerages in Canada charge trading commissions to sustain themselves in business. With Wealthsimple, you can buy and sell ETFs and stocks without paying any commission.
- Trade with USD: When trading US securities with a CAD, you will be required to convert your CAD to US which normally attracts an FX fee. Wealthsimple Trade offers a USD account that helps you save on the FX fee. Although this account is under the Wealthsimple Plus plan which costs $10 a month. If you trade US securities frequently, you may find that the $10 monthly fee is worth it compared to the 1.5% FX fee on the Wealthsimple Basic plan.
- Fractional shares trading: Till date, some people see stock trading as the exclusive business of the rich. That shouldn’t be so. You can now buy stocks with as little as $1 through Wealthsimple fractional shares. Not many brokerages support fractional shares trading in Canada. As a matter of fact, Wealthsimple Trade is the first brokerage to support fractional trading in Canada.
- No monthly fees: If you choose to trade through the Wealthsimple Basic plan, you will enjoy all the unique features of Wealthsimple Trade without paying any monthly fees. This will save you more in the long run.
Drawbacks of Wealthsimple Trade
- Limited securities: One of the major drawbacks of Wealthsimple Trade is that it has limited securities. DIY investors can only trade stocks, ETFs and cryptos on the brokerage at the moment. Other brokerages in Canada support more securities.
- Limited tools: Both beginner and experienced investors need tools to ease their trading. The available tools on Wealthsimple Trade are limited unlike other brokerages in Canada.
Wealthsimple Invest is an automated wealth management platform.
As a robo-advisor, Wealthsimple Invest makes it possible for everyone to invest regardless of their investment experience.
With Wealthsimple Invest, you can have your funds invested automatically using robots. Your deposit, portfolio rebalancing and dividend reinvestment can also be automated on Wealthsimple Invest.
Depending on your investment objective and risk tolerance, Wealthsimple Invest will automatically invest your funds in an ETF, socially responsible investing or halal portfolio.
Like Wealthsimple Trade, Wealthsimple Invest also allows you to invest with any amount as there’s no minimum investment required.
That being said, let’s have a balanced look at Wealthsimple Invest below to understand why Canadians look for its alternative.
What’s Unique About Wealthsimple Invest?
- No minimum investment required: Wealthsimple Invest allows investors to invest passively with any budget. This eliminates the pressure of investing outside the budget.
- Unique portfolios: While ETF portfolios are popular, not many robo-advisors support SRI and halal portfolios in Canada.
- Autopilot investing: Wealthsimple Invest has redefined hands-off investing by automating the entire investing process.
- Tax-loss harvesting: The robo-advisor helps cut capital gains tax on taxable accounts through tax-loss harvesting.
- Human advisor: With Wealthsimple Invest, you will get the best of robots and professional human advisors in one platform.
Drawbacks of Wealthsimple Invest
- High fees: Robo-advisors charge management fees in exchange for automated investing solutions. The management fees of Wealthsimple Invest are on the high side as they range between 0.5% for investments under $100,000. and 0.4% for a $100,000 and above investment. Passively managed robo-advisors like Wealthsimple Invest are expected to have lower management fees as they have less human intervention.
Best Wealthsimple Trade Alternatives in Canada
In this section, we’re going to look at the best Wealthsimple Trade alternatives in Canada bearing in mind the benefits and drawbacks of Wealthsimple Trade.
Questrade is also a popular name in the Canadian online discount brokerage industry.
The robo-advisor has been in existence since 1999 and it’s one of the best alternatives to Wealthsimple Trade in Canada.
Having $30 billion in assets under management shows that Questrade is entrusted by millions of Canadian investors.
This is possible because Questrade supports more securities than Wealthsimple Trade. You can trade the following securities on Questrade at the moment:
- Mutual funds
- Foreign equities
- Precious metals
Available investment accounts on Questrade range from taxable, margin, TFS, RESP, RRSP RRIF, LIF and LIRA accounts.
In terms of commission, Wealthsimple Trade is ahead of Questrade. While Wealthsimple Trade offers a full commission waiver on stocks and ETFs, Questrade waiver is limited to ETF buying.
That’s, Questrade charges a commission on selling ETFs and trading other securities such as stocks, options etc.
On the other hand, Questrade has comprehensive tools for research and analysis that are lacking in Wealthsimple Trade.
Below is a quick overview of the good and ugly sides of Questrade to help you understand how it compares with Wealthsimple Trade.
What’s Unique About Questrade?
- No monthly fees: There’s no monthly maintenance fee required on Questrade as is the case with Wealthsimple Trade Basic plan.
- Multiple securities and accounts: Questrade outshines Wealthsimple Trade in terms of supported securities and accounts as shown above.
- Comprehensive tools: Questrade offers far more tools than Wealthsimple Trade. This includes practice accounts, charts, snap quotes and more.
- Low fees: Even though it has a limited commission waiver, Questrade is low-cost as it waives common brokerage fees such as inactivity fees.
Drawbacks of Questrade
- High minimum investment requirement: Unlike Wealthsimple Trade which allows you to start trading with as little as $1, Questrade requires a minimum of $1,000.
- Limited commission waiver: Commission waiver is limited to ETFs buying on Questrade. There’s a 1cent/share commission on selling ETFs and trading stocks on the brokerage.
Qtrade is another best Wealthsimple Trade alternative in Canada that’s popular for its unique offerings.
This online discount brokerage was established by Aviso Wealth in 2000 to provide competition to the existing brokerages in Canada.
From its inception to date, Qtrade remains one of the competitive discount brokerages in Canada.
With Qtrade, DIY investors can trade 100+ Canadian and US ETFs with a full commission waiver. Some of the selected ETFs include:
- Desjardins RI Canada – Low CO2 Index ETF (DRMC)
- Desjardins RI Emerging Markets Low CO2 Index ETF (DRME)
- iShares ESG Aware MSCI EM ETF (ESGE)
- iShares MSCI Global Impact ETF (SDG)
In addition to the commission waiver, Qtrade is also unique for its excellent customer service. The excellent customer service is what makes the brokerage more famous in Canada.
Moreso, there are multiple investment securities, accounts and tools on Qtrade. This makes the brokerage a full-fledged DIY investing platform in Canada.
What’s Unique About Qtrade?
- No minimum investment required: Like Wealthsimple Trade, Qtrade doesn’t require a minimum investment to start investing. This remarkable feature is lacking among many online brokerages in Canada.
- Commission waiver: Qtrade eliminates commissions on 100+ selected Canadian and US ETFs. This ranks it among the discount brokerages in Canada.
- Multiple securities and accounts: From stocks, ETFs, options, mutual funds, and bonds to treasury offerings, Qtrade has a comprehensive collection of securities. Available investment accounts on the brokerage include TFSA, RRSP, RRIF, LIRA, LIF, RESP and taxable accounts.
- Comprehensive tools: Qtrade simplifies self-directed investing by providing advanced trading tools for investors.
- Excellent customer support: The level of customer support at Qtrade has attracted numerous awards.
Drawbacks of Qtrade
- Expensive: Besides charging high commissions on non-selected securities, Qtrade also charges a quarterly administration fee of $25. This makes it one of the most costly discount brokerages in Canada.
Learn more: Qtrade vs Wealthsimple
Best Wealthsimple Invest Alternatives in Canada
If you’re a passive investor or are looking to invest through a robo-advisor in Canada, you may find Wealthsimple Invest less suitable due to its high management fees.
In this section, we’re going to look at two Wealthsimple Invest alternatives with competitive management fees and offerings.
Questwealth Portfolios (formerly Portfolio IQ) is an automated investment platform that was launched in 2018.
Like Wealthsimple Invest, Questwealth also invests on your behalf based on your investment objective and risk tolerance.
However, the investment strategy of Questwealth Portfolios differs from that of Wealthsimple Invest.
With Questwealth Portfolios, your funds are actively managed compared to the passive strategy of Wealthsimple Invest.
What this means is that Questwealth uses a hybrid of robots and professional human advisors to manage your funds while Wealthsimple Invest uses mainly robots.
The high human intervention in Questwealth is supposed to translate to higher management fees as is the case with mutual funds.
However, it turns out that Questwealth Portfolios have lower management fees than Wealthsimple Invest.
Moreso, Questwealth Portfolios outshines Wealthsimple Invest in terms of the number of securities, accounts and tools.
That being said, it’s worth considering the pros and cons of Questwealth Portfolios to understand how it compares with Wealthsimple Invest.
What’s Unique About Questwealth Portfolios?
- Low management fees: Despite using an active management strategy, the robo-advisor manages to have low management fees that compete with those of other robo-advisors in Canada including Wealthsimple Invest.
- Competitive returns: The ETF and SRI portfolios of Questwealth Portfolios offer competitive returns to investors.
- Tax-loss harvesting: As with Wealthsimple Invest, Questwealth Portfolios also reduce capital gains tax on taxable accounts through tax-loss harvesting.
Drawbacks of Questwealth Portfolios
- Minimum investment requirement: You must have a minimum balance of $1,000 to start investing in Questwealth Portfolios. This positions Wealthsimple Invest on a favourable angle here as it doesn’t require a minimum investment amount.
The last but not least Wealthsimple alternative in Canada on my list is Justwealth.
Justwealth also rings a bell in the Canadian robo-advisory industry due to its unique solutions.
Like Questwealth Portfolios, Justwealth also invests funds using a passive investment strategy. But despite this, Justwealth has the same management fees as Wealthsimple Invest (0.4-0.5%).
If you want to invest in US securities, you will find Justwealth more suitable as it has USD accounts that eliminate FX fees. There are no USD accounts on Wealthsimple Invest.
Among the investment accounts on Justwealth, RESP receives special treatment. This is because the Justwealth RESP doesn’t require a minimum investment and it has a lower management fee.
With such special treatment, Justwealth is regarded by many as the overall best Canadian RESP robo-advisor.
What’s Unique About Justwealth Portfolios?
- Dozens of portfolios and accounts: The robo-advisor supports multiple Portfolios and investment accounts to accommodate various investment objectives.
- RESP Robo-advisor: The features of Justwealth RESP accounts are unique compared to those of other robo-advisors in Canada.
- CAD and USD accounts: You can invest with CAD or USD accounts on Justwealth. This eliminates FX fees on your foreign investment.
- Tax-loss harvesting: Like Wealthsimple Invest, Justwealth also reduces capital gains tax on non-registered accounts via tax-loss harvesting.
- Personal Portfolio Manager: You will get one-on-one access to a dedicated professional portfolio manager who will assist you throughout your investment journey.
Drawbacks of Justwealth Portfolios
- High minimum investment requirement: Unlike Wealthsimple Invest, Justwealth has a minimum investment requirement. The robo-advisor requires a minimum of $5,000 (on non-RESP accounts) which is on the higher side.
- High management fees: Justwealth management fee also ranges between 0.4-05% as with Wealthsimple Invest. The fee is one of the highest in Canada.
- Limited availability: While Wealthsimple Invest is accessible to all Canadians, the residents of Nunavut, Yukon and Northwest Territories can’t access Justwealth at the moment
Learn more: Justwealth vs Wealthsimple Comparison
How to Choose the Best Wealthsimple Alternative in Canada
No investment platform is suitable for every investor.
No matter how good it is, some will find it unsuitable. And no matter how bad it is, others will find it sustainable.
So finding the best Wealthsimple alternative in Canada has much to do with your needs and personal situation.
When you sort those out, you can decide whether to go for a Wealthsimple Trade alternative or a Wealthsimple Invest alternative.
Regardless of the type of investment platform you’re going with, you should consider the following factors when choosing a Wealthsimple alternative in Canada.
- Minimum investment requirement
- Available investment accounts and securities/portfolios
- Customer support
Believe it or not, Wealthsimple has raised the standards of automated and DIY investing in Canada.
As such, finding Wealthsimple’s best alternative requires rigorous analysis.
From the above, you can see how Wealthsimple competes with some of the existing investment platforms in Canada.
If not for its few drawbacks, you may be tempted to stick with Wealthsimple instead of its alternative.
But it’s always essential to narrow your selection based on your investment needs and situation.
The ball is now in your court to decide. Where do you go from here? Let me know in the comment section.
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