After readers learned about Wealthsimple from this article more questions followed. In fact, one reader in particular reached out to Wealthsimple to get more details about how much this service might cost him and how many benefits this service may provide. Thanks to that reader, Sebastien, here are some questions and answers about Wealthsimple services and how you might benefit from them as well.
On the subject of “balancing” assets across investment accounts
Our reader was curious if Wealthsimple might treat all accounts an investor has as “one big portfolio”, and in doing so, investors could “balance” assets across various investment accounts (i.e., between RRSP, TFSA and non-registered accounts). (You can read more about asset location strategies I use here as an example from my site.)
Our reader confirmed with Wealthsimple that cross-account balancing is planned for the future but resources and the software interface to support investment selections, balances and advice are where resources are dedicated in the short-term.
On the subject of currency diversification
Our reader confirmed Wealthsimple can make investments for investors into U.S. dollar-listed securities, such as Exchange Traded Funds (ETFs) from Vanguard U.S. (e.g., ETF VTI). This will provide currency diversification for investors. (You can read about some great international ETFs here.)
On the subject of currency denominations
Our reader confirmed with Wealthsimple that account balances will be shown in Canadian dollars (conversions between U.S. dollars and Canadian dollars will occur daily based on investments and transactions in the accounts).
On the subject of fees and transparency of them
Our reader confirmed with Wealthsimple there will be full disclosure and transparency about fees paid for investment securities and investment advice, for each client, line-by-line. Absolutely nothing will be hidden.
On the subject of “institutional pricing” on investment products
In my interview with CEO Michael Katchen, he said this:
“We have one of the lowest fees in Canada. Our management costs are 0.35-0.50% of AUM (Assets Under Management), and we have negotiated institutional pricing on all our investment products.”
Our reader confirmed with Wealthsimple “institutional prices” mean there will be monthly or quarterly reimbursements from the ETF companies (e.g., Vanguard, iShares, Purpose Investments) back to the client which makes for, effectively, a discount.
On the subject of referral programs
Our reader learned Wealthsimple has a referral program, whereby the referrer and the referee BOTH get an additional $5,000 managed for free. This effectively translates into $25 per year for each referral, for each year you have an account with Wealthsimple. This is a great program, so much so I’ve included a link to this referral program as a thank-you to Sebastien for sharing his questions and the Wealthsimple answers with me.
Wealthsimple has arrived to leverage what “smart investing” has meant all along: keeping money management costs low, diversifying as much as possible, staying disciplined, and saving regularly for your financial future. With this type of customer-focus, it appears they have at least one big fan (Sebastien) and in time probably many, many more.
Thanks again to this fan of My Own Advisor for sharing this information with me and to Dave Nugent from Wealthsimple as well.