What is Wealthsimple?
Wealthsimple is an online Canadian financial services provider that offers a suite of low-fee and easy-to-use products including investing, trading, spending and saving. Its suite of services includes a robo-advisor that offers beginners—or investors who prefer to be hands-off with their investments—a choice of three investment portfolios to suit their risk tolerance and financial goals. For DIY investors and traders who want to be hands on with their investments, Wealthsimple offers a discount online brokerage on which investors can trade stocks, ETFs and options. To sweeten the deal for customers, they now also offer spending and saving accounts (Wealthsimple Cash), with a cash back debit card.
Who owns Wealthsimple?
Millennial entrepreneur and self-described “boring investor” Michael Katchen launched Wealthsimple in September 2014 as a low-cost, low-effort approach to investing. Since then, CEO Katchen has seen his company transform from a humble Toronto start-up to the largest online-only financial services company in Canada, serving more than three million Canadians, and with over $70 billion in assets under administration.
Wealthsimple is primarily owned by Power Corporation of Canada, under the subsidiary Power Financial. The nearly 100-year-old international management and holding company has over $470 billion in assets, including Power Financial, IGM and Pargesa and focuses on insurance, retirement, wealth management and investment businesses, including a portfolio of alternative asset investment platforms. Described as a “Canadian financial giant,” Power Financial also has majority stakes in Great-West Lifeco and Portag3.
Is Wealthsimple safe?
The short answer is: Yes. But it’s important that your money be invested in a way that suits your financial goals and risk tolerance. And that’s the case with whichever investment service you choose. Wealthsimple is built to cater to a wide set of clients, so if you don’t need that one-on-one care, but want a simple way to create and build a portfolio with little to no maintenance, then it could be for you.
Another positive: Your Wealthsimple investment accounts are eligible for protection by the Canadian Investor Protection Fund (CIPF), meaning that if Wealthsimple Investments Inc. goes out of business, securities and cash missing from those accounts (not market losses) are eligible for up to $1 million in losses per account type. Wealthsimple Investments Inc. is a member of the Investment Industry Regulatory Organization of Canada.
What can I do with my money at Wealthsimple?
Wealthsimple is best known for its robo-advisor service, which is a “set-it-and-forget-it” service of low-fee portfolios built using ETFs called Invest. (It was its own app called Wealthsimple Invest, but now can be accessed on the Wealthsimple app under Invest.)
In a nutshell, most ETFs allow you to invest your money across an entire market—such as Canadian stocks, US stocks, high yield bonds, Canadian real estate investment trusts (REITs), etc.—instead of trying to pick and choose the winning companies in each market.
In this way, Wealthsimple provides an easy solution for clients to diversify their portfolios and earn decent returns on their investments over the long term, while taking on the amount of risk that’s appropriate for their investment goals and time horizon.
The company’s other main offerings include a discount brokerage. Again, Wealthsimple Trade is no longer a separate app, but is called Trade. It is a service that allows DIY investors to purchase stocks, ETFs, options and cryptocurrency; and Wealthsimple Chequing, which includes spending accounts, an interest rate of 1.75% or 2.75%, and a cash back prepaid Mastercard that lets you send, spend or receive money instantly with no fees and 1% cash back.
(See above for how each of these services works—and how much they cost).
