WealthSimple- A Product Analysis
Originally appeared on an older personal blog Feb. 28, 2016
Wealthsimple is one of the first robo-investing startups to make itself widely available on the Canadian market, which is a Godsend for people like me who have been waiting (in vain!) for Betterment and Wealthfront to expand their services to the Great White North.
I have been advocating that people ditch their bank-based financial advisors since I knew enough to say so, so I opened my Wealthsimple account almost immediately after I came across it. I’d spent some time with more complicated self-guiding investment tools like Questrade in the past, and I’d ended up extremely frustrated and discouraged. The language the financial industry uses as a smokescreen to make simple topics seem more complicated was still present there and I had a hard time getting started.
What I wanted was not a stock trading platform- leave that to Wall Streeters who think they’re smart enough to beat the market (here’s a hint: most don’t). What I wanted was a super easy way to invest in high interest ETF’s and not give most of my interest to the bank. Wealthsimple is making a go of being that, and here’s what I think of them.
I’m smitten from the beginning. When someone can take the entire world of finance and investing and reduce it to two tabs that say “Why Invest” and “How it Works”, I’m halfway sold already, no matter what lay behind those buttons.
The home screen rotates through several funny videos all about “Future You”which focus on how they take the burden off you to make your investments. Simple, automated, and pretty- that’s the feeling I get from this page.
Creating a Fund
If I had a dollar for every moment I spent researching ETFs, bonds, TFSAs, RRSPs, I’d still be broke because it didn’t teach me how to invest well, at all. What I did learn, however, is the way that financial institutions and advisors manage to screw most people, whether they think they are or not. Those BMW’s don’t buy themselves.
Wealthsimple gives your two options- building a TFSA (Tax Free Savings Account) or a more traditional RRSP. You can have both, of course, if you like, but we’ll use the TFSA for this example- they’re both structured the same. Here’s the sidebar:
Click “Plan” and you’re taken to what I think is the unmoved mover of simplicity of what makes this thing tick. Instead of having to learn how to invest, you just tell Wealthsimple the mettle with which your stomach is made. In other words, your risk tolerance.
Instead of picking stocks, you’ll be placed in one of Wealthsimple’s ten different funds, all with different concentrations of riskier and more stable portfolio pieces based on your risk tolerance. They determined that I was an 8 and my portfolio composition appeared right in front of me like this.
Once this is determined, it’s time to add funds.
Connect a bank account and then this appears. I had a couple problems with this but after a phone call, everything was straightened out. There are two options- “Just this once” or “Recurring”, meaning monthly. It took me literally thirty seconds to pop an initial amount in and set a monthly recurring transfer.
I think I like this part as much as I like anything abut this site. First, the graph. Is there anything more intuitive and easy to understand as a value/time graph?
The “Total Returns” tab is brilliant as well. I have an RRSP with a well known big 4 Canadian bank, and it would be next to impossible for me to figure out what I’ve gained in interest vs. what I put in, and I am certain that they do it that way on purpose so people don’t catch on as quickly that their interest is being taken away. Here, it’s transparent, clear, and above all, simple.
Wealthsimple is off to a great start and I look forward to see what their future iterations decide to tackle first. There are a couple things I’d like to see as the Wealthsimple platform evolves.
I’d like to have the ability to have a little more say in the allocation of funds in my TFSA’s and RRSP’s. As of now, if I wanted to invest in a particular ETF and not a rounded fund, I’d have to use another investing platform to do so- I’d like it to be all under one roof.
As for the product itself, there’s a couple things I’d like to see changed. A total portfolio would be nice to be able to access- a total amount invested and returns over time. Now it is necessary to see your TFSA and RRSP separately.
Wealthsimple is also putting out some really good content (their newsletter basically told me why I should start an RRSP before the end of February in the simplest way ‘d ever seen), but it’s hidden away once you’re past the homepage and into your account on their site. This content should be accessible underneath the page in which they would be more useful. For example, when I am looking at my RRSP page, related blog posts should be available at the bottom in case I want to learn more. This would help not only from an ease of use perspective, but I bet it would increase sales too by providing useful information just as someone is in a position to buy, like this:
In addition, in the interest of simplicity and ease, it would be helpful to explain why certain stocks and funds are chosen under your assumed risk tolerance level. Also, a time-horizon based model would be extremely helpful. When do I plan on using the money? Next year? Ten, twenty years? These questions are super important when it comes to investment strategy, and doubly so for those who are inexperienced, who I assume is a large part of Wealthsimple’s target demographic.
I love the way Wealthsimple is going and I want it to keep growing. There’s always going to be more to do to help educate, inform, and ease action, but I think they’re well on their way.