What is Wealthsimple?
Wealthsimple is an online wealth manager also known as a robo-adviser
Wealthsimple was founded in Canada in 2014 and launched in the UK in September 2017. It has amassed 175,000 clients with £4.8bn in assets under management (as at end February 2021).
The company’s mission is to offer ‘simple, sophisticated, and affordable financial products. And make sure they’re available to everyone’.
Wealthsimple Expert Review
Wealthsimple offers a pension, stocks and shares ISA, Junior ISA and a personal account. It offers multiple portfolios that can be run on a socially responsible or traditional basis.
There are three levels of service for each of its products: Basic, Black and Generation. Access to the black and generation packages is dependent on the amount customers have available to invest, and the accompanying fees fall as investors move from the basic to generation service. The range of service levels shows Wealthsimple is trying to attract everyone from those with limited funds to the very well off.
While the company is all about its tech, investors can access humans over the phone and via webchat.
Wealthsimple also offers an ‘award winning’ magazine which it says provides helpful news and content for its investor base.
Investing with Wealthsimple
Wealthsimple is all about passive investment and diversification.
The wealth manager says that active managers usually fail to beat the index and that the key to making money lies in spreading risk across asset classes.
Wealthsimple offers traditional and socially responsible investment portfolios. There is no minimum investment for the traditional, but investors need at least £5,000 to access the SRI funds.
As with other robo-advisers, investors sign up online following a straightforward process. It is simple and quick, and ultimately recommends a portfolio based on answers to a risk assessment questionnaire.
The only notable difference to other robo-advisers is Wealthsimple’s transparency. They make clear the funds included in the portfolio before you invest.
Wealthsimple stands out thanks to its SRI offering and the fact it does not impost a minimum investment for its traditional portfolios.
As you should expect from a robo-adviser Wealthsimple offers an app that can be downloaded to mobile devices from which investors can access their accounts.
It is essentially a mobile version of their website, which was twice awarded the Webby Award winner for the world’s best financial website for being simple, intelligent and user-friendly.
The app is certainly easy to use and intuitive.
Potential investors can set up an account using the app, and once registered and investing, investors can make contributions, check balances and keep up to date with performance.
Wealthsimple’s app also hosts comprehensive educational content and articles.
Wealthsimple Charges and Fees
The charges from Wealthsimple are transparent and – as is typical for robo-advisers – they are pretty low. Wealthsimple is comparable to its nearest competitors but it is not the cheapest on the market.
The basic service has an annual management charge (AMC) of 0.7% with additional fees averaging at 0.2%, which cover the costs charged by the underlying funds.
The Black and Generation services both have an AMC of 0.5% and additional average costs of 0.2%. There are additional services included for these offerings but are only available to those with more to invest (see table below).
Wealthsimple’s AMCs are 0.05% cheaper than Nutmeg and Moneyfarm but 0.04% higher than Wealthify.
Wealthsimple does not charge exit fees and will also cover any transfer fees charged by other providers.
The manager also has an offer of zero fees on pension transfers.
|What’s on offer?||Basic||Black||Generation|
|Annual Management Charge||0.7%||0.5%||0.5%|
|Services||Perfectly matched portfolio|
|Access to investment advice|
|Direct debit contributions|
|Dedicated investment adviser|
|Ongoing portfolio monitoring|
|Portfolio and pension reviews|
Wealthsimple Personal Account
A personal account is useful for those who have reached the £20,000 investment limit for their tax efficient ISAs, but who still want their money invested. Personal accounts incur capital gains and income tax, but they are not subject to investment limits. Wealthsimple imposes no minimum investment nor does it charge for withdrawals.
Wealthsimple charges 0.7% AMC for the personal account run on a basic package. For those with £100,000 to invest the Black package charges 0.5% and for those with £500,000 the Generation service is available.
Wealthsimple offers a range of asset classes that reflect investors’ risk levels. These are restricted to stocks and bonds, but they do span different geographies. There are also socially responsible investment strategies available.
While Wealthsimple may not be the cheapest, it offers a host of services that justify the extra cost. It has put genuine effort into the tech supporting the services and also offers access to human advisers.
Wealthsimple Investment ISAs
A stocks and shares ISA is a tax efficient way to invest. Subject to a £20,000 investment limit, investors do not pay capital gains or income tax.
The costs for the ISA are the same as for the other Wealthsimple products: 0.7% AMC for the stocks and shares ISA run on a basic package. For those with £100,000 to invest the Black package charges 0.5% and for those with £500,000 the Generation service is available.
Stocks and shares ISAs are invested passively across equities and bonds. Depending on the investors’ appetite for risk, their money will be allocated differently across the available assets. For example, for the most risk averse investors, 80% of their fund is allocated to fixed income, of the remaining 20% in stocks, the lion’s share goes to the UK and US. For the most aggressive investors, 100% can be allocated to stocks.
The SRI strategies are also available, but Shariah compliant funds are limited to investors in the US and Canada.
Fees are comparable with competitors but the access to different service packages suggests Wealthsimple understands about catering to different types of client perhaps better than others.
The manager’s median risk balanced portfolio delivered 7.12% in the 12 months to end of January 2021, outperforming Nutmeg, Wealthify and Moneyfarm.
Wealthsimple Junior Investment ISAs (JISA)
Junior ISAs can be set up for children under 18. The tax-free contribution limits are £9,000 a year.
The junior ISA costs are the same as for the other products offered by Wealthsimple: 0.7% AMC for the JISA run on a basic package. For those with £100,000 to invest the Black package charges 0.5% and for those with £500,000 the Generation service is available.
The range of investment strategies are the same as for the ISA and Pension.
Relatively few other platforms have been willing to offer junior ISAs since they have quite low contribution limits, so this already sets Wealthsimple apart. In addition, its zero minimum investment levels make it attractive for those with small sums to pay in.
Wealth simple offers a self-invested personal pension (SIPP). These products give individuals tremendous flexibility on how they invest their retirement fund.
As with the ISAs and personal account, Wealthsimple charges: 0.7% AMC for the SIPP run on a basic package. For those with £100,000 to invest the Black package charges 0.5% and for those with £500,000 the Generation service is available.
As with the other investment products, there are a range of strategies available to SIPP investors including SRI. Wealthsimple will ask investors to fill out a questionnaire online or via the app which establishes appetite for risk. A tailormade investment portfolio is then offered which outlines allocations to stocks and bonds, and the recommended underlying funds.
Wealthsimple yet again sets itself apart from many robo-advisers by offering a pension as well as an ISA in its product range. Its performance beats that of its closest competitors and its fees are comparable (see other sections).
Wealthsimple Investment Portfolios
Wealthsimple invests on a passive basis and diversifies assets across equities and bonds.
The robo-adviser offers three strategies balanced, growth and conservative – which it also extends to socially responsible investment funds.
The balanced portfolio offers 50%, 60% and 70% equity allocations, the growth portfolio has 80%, 90% and 100% equity allocation while the conservative offers 20%, 30% and 40% allocations to stocks.
The manager will rebalance portfolios regularly to reflect changes in market conditions and ensure strategies are still in line with investors’ risk profiles.
The assets available are:
- UK Government bonds
- Global Company bonds
- Emerging Market Government Bonds
- UK Stocks
- North American Stocks
- Europe excluding UK Stocks
- Asian Stocks
- Emerging Market Stocks
Wealthsimple’s asset range is similar to that of other equivalent robo-advisers, but rival Wealthify also offers access to commodities and property.
Transferring ISAs to Wealthsimple
It is easy to transfer ISAs to Wealthsimple and not only do they not charge investors for joining but they offer to pick up the bill if the incumbent provider is demanding an exit fee. Wealthsimple does all the work for you and you can transfer in stocks and shares or cash ISAs, but it must be the whole balance.
Wealthsimple is also offering to waive fees on transfers in.
Wealthsimple is categorised as robo-adviser which means investors can access off the shelf, products online which are aligned with investor’s willingness to take risk.
Its main competitors are Nutmeg, Wealthify and Moneyfarm, and in this section we look at how they compare.
Overall Wealthsimple is slightly cheaper than Nutmeg and Moneyfarm, but marginally more expensive than Wealthify. Its notable edge is in offering different packages based on the amount customer’s have to invest, which none of the others do, and a dedicated investment adviser for the biggest investors. For all other customers, they offer access to advice ‘whenever the need arises’.
Wealthsimple versus Nutmeg
Nutmeg is the UK’s most established robo-adviser and probably presents the strongest competition for Wealthsimple. They are both targeting first time investors, but Nutmeg sets minimum investment amounts. Nutmeg’s offering is not as attractive to those with large sums to invest since it offers no discount on fees, giving Wealthsimple the edge.
Like Wealthsimple, Nutmeg offers personal accounts, pensions, ISAs and Junior ISAS, but it also offers a Lifetime ISA.
Nutmeg’s investment strategies comprise fully managed, smart alpha and fixed allocation. Like Wealthsimple it also offers an SRI portfolio. Investors can dial the risk up and down to suit their appetites.
Nutmeg’s AMC is 0.05% higher than Wealthsimple’s. While the targets for the investment strategies are slightly different, for the sake of comparison, over the three years to February 2021 Nutmeg’s risk level 5 fixed allocation portfolio returned 21.9% while Wealthsimple’s risk level 5 balanced portfolio returned 23.3% to January 2021.
Wealthsimple versus Wealthify
Wealthify has a similar target market to Wealthsimple. There is £1 minimum investment and fees are lower than Wealthsimple’s suggesting it is targeting those with smaller sums.
Wealthify recently added a SIPP to its product range which already includes an ISA, Junior ISA and general savings account. Minimum investment to set up a Wealthify pension is £50.
Investment strategies are run on a passive basis, but the manager includes more asset classes than Wealthsimple. In addition to equities and bonds, investors have access to commodities and property.
The robo-adviser also offers access to several ethical funds.
Wealthify’s fees are lower than Wealthsimple coming in at 0.76% including underlying charges. In terms of performance, Wealthify’s adventurous fund returned 5.06% for the 12 months to end of 2020.
Wealthsimple versus Moneyfarm
Moneyfarm appears to be targeting those with at least a fair sized investment since it imposes a £5000 minimum to start, or £1500 initial investment which must then be topped up with a regular direct debit to get it to £5000.
Moneyfarm does not offer a junior ISA but otherwise it has the same product suite as Wealthsimple.
Moneyfarm has seven different investment portfolios which are matched to investors based on their risk appetites. As with Wealthsimple they invest in a mix of bonds and equities.
In terms of performance, Moneyfarm lags Wealthsimple. The risk five portfolio performance from Moneyfarm over the three years to January 2021 was 12.7%.
Fees are slightly higher than Wealthsimple’s at 0.75% although these fall to 0.35% for those investing more than £100,000.
Wealthsimple 2020 performance
The following table lists Wealthsimple’s performance for the 12 months to 31 March 2020 versus its peer group
|Strategy||Wealthsimple return||Peer group||Difference|
|Growth portfolio 90% equity strategy||-11.98%||-9.65%||-2.33%|
|Balanced portfolio 60% equity||-6.75%||-7.71%||0.96%|
|Conservative portfolio, 30% equity||0.81%||-2.29%||3.1%|
|Growth SRI portfolio, 90% equity||-4.39||-9.65||5.26%|
|Balanced SRI portfolio 60% equity||1.54%||-7.71%||9.25%|
|Conservative SRI portfolio, 30% equity||2.26%||-2.29%||4.55%|
Wealthsimple 2019 performance
The following table lists Wealthsimple’s performance for the 12 months to 31 March 2019 versus its peer group
|Strategy||Wealthsimple return||Peer group||Difference|
|Growth portfolio 90% equity strategy||5.69%||6.04%||-3.05%|
|Balanced portfolio 60% equity||5.11%||4.85%||0.26%|
|Conservative portfolio, 30% equity||4.17%||1.71%||2.46%|
|Growth SRI portfolio, 90% equity||9.07%||6.04%||3.03%|
|Balanced SRI portfolio 60% equity||8.04%||4.85%||3.19%|
|Conservative SRI portfolio||5.71%||1.71%||4%|
Wealthsimple Customer Reviews
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Wealthsimple is by far the best robo-advisor with a human touch. Have experimented with many other providers but stuck with these guys as they were the most transparent and had the best returns from all services.
Can’t wait to see what the future holds.
Wealthsimple Frequently Asked Questions:
Is Wealthsimple any good?
The short answer is yes. It has outperformed in most strategies and for most risk profiles. Wealthsimple offers good value for money, and the option to scale up packages in return for larger contributions makes sense. The commitment to technology is impressive but Wealthsimple also offers a high level of human contact when needed.
Does Wealthsimple have fees?
Yes. 0.7% AMC for its basic package plus 0.2% underlying charges. For those with £100,000 to invest the Black package charges 0.5% and for those with £500,000 the Generation service is available.
How does Wealthsimple make money?
Wealthsimple makes money by charging a management fee for investing passively across the stock markets and in bonds.
How do you invest with Wealthsimple?
The provider calls it ‘autopilot investing’ in other words you pass all the decision making to them. It is just a matter of setting up an account online and then filling out Wealthsimple’s risk questionnaire. Once they have established your risk profile you just hand over the money and they get started.
How to withdraw funds from Wealthsimple?
This can be done via Wealthsimple’s website and is usually straightforward. However, there are numerous reviews suggesting that it can take time to get hold of your money, which has caused some anecdotal frustration.