Deciding to save for your child’s post-secondary education is one of the best lifetime decisions you can make. Wealthsimple RESP does it!
There are different Registered Education Saving Plan (RESP) accounts offered by different banks and financial institutions in Canada.
One such RESP account worth checking out is offered on Wealthsimple Invest, a reputable Canadian automated investing platform.
Many Canadians are expressing interest in the Wealthsimple RESP account because it’s managed automatically by a robo-advisor.
This article provides a comprehensive Wealthsimple RESP review to help you decide if the account is suitable for your child’s post-secondary education savings.
Table of Contents
Overview of Wealthsimple RESP
The Wealthsimple RESP is a registered tax-free account that gives you the freedom to save funds toward your child’s post-secondary education.
Before getting into an in-depth review, let’s take a moment to look at some key features of the account as shown in the table below.
|Wealthsimple Invest (Robo-advisor)
|Wealthsimple Individual RESPWealthsimple Family RESP
|Lifetime Contribution Limit
|$50,000 per beneficiary
|Annual Contribution Limit
|Maximum Allowed Contribution Period
|Government education grants or bonds (including CLB, CESG)
|Up to 20% of your annual contribution
Let’s now go into the details of Wealth RESP accounts.
Wealthsimple RESP Accounts
There are two types of Wealthsimple RESP accounts namely, family RESP and individual RESP.
Wealthsimple Family RESP Account
This account lets you include more than one child or beneficiary in an RESP account.
So long as the beneficiaries are blood relatives, you can add them to a single Family RESP account.
This account type is most suitable for parents and guardians with many children who are yet to reach post-secondary education level.
In a situation whereby one of the account beneficiaries refuses to attend post-secondary studies, Wealthsimple allows the funds to be used to fund other beneficiaries’ education.
Wealthsimple Individual RESP Account
Only one beneficiary can be registered under the Individual RESP account type. It doesn’t matter whether the beneficiary is related to you or not.
Parents with only one child will be better off opening an Individual RESP account.
Also, the account is good for parents that want to run separate RESP accounts for each of their children.
Wealthismple Individual vs Family RESP
Now the question is, should you go for the Wealthsimple Individual or family RESP?
By considering the factors listed below, you should be able to decide which of the RESP account type fits your needs.
- Are you saving for the education of one child or more?
- In the case of multiple kids; will you like to have individual accounts or just one family account for all of them?
- Are you saving for different kids who are not related by blood?
Bear in mind that Wealthsimple allows you to have both an Individual account and a Family RESP account at the same time.
Available Government Grants
Besides your contributions to a RESP account, you can also receive government grants and bonds from the account.
Different RESP providers may support different government grants. But with a Wealthsimple RESP account, you can access the following government grants:
- Canada Learning Bond (CLB): This provides you with a total of $500 for the first year and then $100 subsequently till the lifetime limit of $2,000 is reached. You do not necessarily need to make RESP contributions to get the CLB grant.
- Canada Education Savings Grant (CESG): This is an annual federal government grant that matches up to 20% of your RESP contributions. It has a $500 annual cap per beneficiary and $7,200 as a lifetime limit.
- Additional Canada Education Savings Grant (A-CESG): This grant is only available to lower-income Canadian households. It matches up to 20% of the first $500 RESP contribution annually.
- British Columbia Training and Education Savings Grant (BCTESG): This is a $1,200 one-time grant for residents of British Columbia province.
Advantages of Wealthsimple RESP
Some of the major benefits associated with Wealthsimple RESP accounts are discussed below:
- Low cost: While a traditional mutual fund can charge up to 1.98% as a management fee, the Invest platform only charges a maximum of 0.50% for RESP accounts.
- No minimums: Wealthsimple RESP accounts require no minimum investment amount.
- Convenience: It takes just a few minutes to open a Wealthsimple RESP account and a Robo-advisor manages the investment on your behalf.
- Auto rebalancing: The Wealthsimple automated service automatically balances your investment portfolio, saving you time and effort.
- Proven investment strategy: The Wealthsimple Invest platform uses a passive investment strategy that has proven to be cost-effective over active management.
Drawbacks of Wealthsimple RESP
Below are some of the drawbacks that are associated with Wealthsimple RESP accounts:
- You can’t do it yourself: Currently, Wealthsimple does not offer a self-directed RESP account for those who want to manage their RESP account investments by themselves.
- Complex withdrawal: The withdrawal process is slightly complex compared to other RESP providers as you have to contact Wealthsimple’s support team to withdraw from the account.
Wealthsimple RESP Returns/Performance
Though past performances do not guarantee future results, the Wealthsimple RESP account has shown good returns over the years.
Needless to mention that your risk level will determine the overall performance of your investments.
The Wealthsimple Invest platform currently offers many investment portfolios for different risk levels. The three major portfolios include:
- Growth Portfolio
- Balanced Portfolio
- Conservative Portfolio
Below is a table showing the individual performances of the three Wealthsimple portfolios available to RESP accounts holders:
|Returns since inception (2014)
Compared to the returns of similar RESP accounts, it’s obvious that Wealthismple RESPs have provided competitive returns since their inception on August 20, 2014.
Wealthsimple Invest platform charges the same management fees on all accounts including RESPs.
Wealthsimple RESP accounts with a balance of $100,000 or less are charged 0.50% as a management fee.
As for the accounts with more than $100,000 balance, a management fee of 0.40% is charged.
And for all Wealthsimple RESP account sizes, an additional Management Expense Ratio (MER) is charged based on the underlying investment securities of each account.
How to Open an Account
No paperwork is required when opening RESP account because the process is completely done online.
In just 5 minutes, you should be able to open a new Wealthsimple RESP account and sign all the required forms digitally through the online platform.
To get started, you need to first sign up for a Wealthsimple account via the mobile app or the web platform here.
Once you have a Wealthsimple account, follow the steps below to open a new Wealthsimple RESP account via the web platform:
- Visit my.wealthsimple.com and log in to your account
- Navigate to your Invest & Save profile
- Select “Add or transfer an account”
- Choose “No, I’ll start with a fresh account”
- Select “RESP” from the account menu on your screen
- Follow the prompts
To open a new Wealthsimple RESP account using the mobile app, follow these steps:
- Open the Wealthsimple mobile app and sign In to your account
- Check the bottom of your screen and tap the Arrow icon
- Tap on “Add an account”
- Select “Automate your investments”
- Choose the “RESP” menu item and tap on “Continue”
- Follow the prompts
Note: Your Social Insurance Number (SIN) and that of your child or children will be required to complete the Wealthsimple account registration.
How to Transfer RESP to Wealthsimple
Wealthsimple Invest allows users to transfer an existing RESP account from another provider to Wealthsimple RESP. Let’s look at the transfer process below:
1. Open a new Wealthsimple RESP account
Log on to the Wealthsimple Invest platform. Ensure that you open a new Wealthsimple RESP account with the following important factors in place.
- The beneficiaries of your new Wealthsimple RESP account must match that of your existing RESP account with another provider.
- The owner(s) of your new Wealthsimple RESP account must also be identical to the owner(s) of your existing RESP account with the other provider.
Note that inconsistent or contradictory RESP account beneficiaries and owner information can make the transfer fail.
2. Download your existing RESP account statement
Sign in to your existing RESP account and download the account statement from there.
This download account statement of your existing RESP account will be required by Wealthsimple to set up your transfer request.
You should double-check the information on the account statement to be sure that it matches the one you used to register a Wealthsimple RESP account.
If you notice outdated information on your existing RESP account statement, try contacting the provider or company to update such information. Then, you can re-download the updated account statement.
3. Choose the fund transfer method
When transferring an existing RESP account to Wealthsimple, you have two funds transfer options and they include.
- Entire account cash: This option involves selling your holdings in the existing RESP account and moving the money to your new Wealthsimple RESP.
- Entire account as it is: This is usually the recommended transfer option for RESP funds. It involves moving all your holdings from the existing account as they are to Wealthsimple.
4. Request for a transfer to Wealthsimple
Go to the Wealthsimple website, sign in to your account platform, and follow these steps:
- Check the top menu and select “Move funds”
- Click “Transfer an account”
- Choose the account type you want to transfer
- Enter your existing account number from the other institution
- Choose how you want the existing funds to be transferred into Wealthsimple (in cash or as it is)
- Enter the estimated value of your existing account being transferred
- Upload the statement of your existing RESP account
- Agree to the transfer into Wealthsimple RESP
- Confirm the beneficiaries details
- Review the transfer request and sign it digitally
After completing step 4 above, it can take 4-8 weeks before the transfer to Wealthsimple will be completed.
This is because RESP transfers are slightly more complex than that of other accounts like TFSA and RRSP.
However, Wealthsimple covers the transfer fees whenever you are transferring your RESP account to it with up to a $5,000 balance.
Is Wealthsimple Good for RESP?
Several reasons make Wealthsimple a good option for opening RESP.
First, the company is a reputable online investment management company in Canada with over 2 million customers.
Also, Wealthsimple has a custodial broker, Canadian Share Owner Investment Inc which is a registered member of the Investment Industry Regulatory Organization of Canada (IIROC).
Through this membership, Wealthsimple provides CIPF protection to all its customers. This simply means that each Wealthsimple RESP account has a CIPF coverage of up to $1 million.
Additionally, Wealthsimple uses two-factor authentication and other encryption technology to protect the data of its users and account holders.
With no minimum balance, an automated investing approach, and access to multiple government grants, Wealthsimple is worth considering for RESP investing.
But if you’re concerned about fees, and the complex withdrawal process, you may want to check out the following top RESP providers:
Verdict on Wealthsimple RESP Review
Wealthsimple RESP is worth considering for parents or guardians looking to start saving for their children’s post-secondary education.
This Wealthsimple RESP review has discussed everything you need to know about the account.
Hopefully, after comparing its features to that of other RESP accounts, you can now determine if opening an RESP account with Wealthsimple is worth it.
Which RESP provider are you going with? Let me know in the comment.
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