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  • Wealthsimple Trade Review February 2024 – Canada’s Commission Free Brokerage

Wealthsimple Trade Review February 2024 – Canada’s Commission Free Brokerage

Posted on May 28, 2021 by Dan Kent
Equitable Bank dividend

Wealthsimple Trade Review Summary

Wealthsimple Trade is perfectly suited for a particular type of Canadian investor. One that is just starting out and looking for a no-frills approach to investing.

The platform is perfectly suited for those who simply want to buy and sell Canadian stocks commission-free. It will allow you to start with any amount of capital and eliminate the issue of commissions eroding your overall returns.

It's without question the easiest setup and purchase process I've witnessed from a brokerage.

It has also come a long way since being launched a few years ago. It has added all sorts of different options over the years, morphing from a bare-bones offering to something much more robust.

Some key downsides include the limited amount of account options, somewhat high foreign exchange rates on U.S. trades, and a few more issues.

Overall Rating: 
4.25/5 stars

Accounts

Commissions

Customer Service

Security

Platforms

Extras

...a new brokerage has come along and changed the Canadian landscape for the better.

Many Canadians who are learning how to buy stocks often don't have a lot of capital to start out.

As such, commissions tend to chip away at returns, and many can become discouraged when it comes to self-directed investing.

However, a new brokerage has come along and changed the Canadian landscape for the better.

That brokerage is Wealthsimple Trade. In this article, I'm going to review the platform in-depth to see if Canada's first commission-free trading platform is worth your hard-earned investment dollars.

Much like any other brokerage review, we do here at Stocktrades.ca, I'm going to cover 6 key elements of Wealthsimple Trade:

  • Accounts
  • Commissions
  • Customer Service
  • Security
  • Platforms
  • Extras

With that being said, let's get right into it!

Wealthsimple Trade pros and cons

Let's first go over some of the key pros and cons of this Wealthsimple Trade review.

Wealthsimple Trade pros:

  • Commission-free Canadian stock and ETF purchases
  • You can buy fractions of a share, which is great for new investors without much capital
  • The easiest account setup process I've encountered
  • No minimum account size
  • An intuitive and simple platform
  • The Wealthsimple Trade app for trading on the go
  • Majority owner being Power Corporation, one of the most trusted asset managers in Canada. Also regulated by IIROC and CIPF
  • No inactivity or quarterly account fee, overall low fees
  • Offers stock lending and dividend reinvestment programs
  • Recently introduced option trading

Wealthsimple Trade cons:

  • Although its currency fee is lower than most brokerages, Norbert's Gambit cannot be performed to save on commission fees
  • You cannot participate in IPOs, buy mutual funds, or buy individual bonds
  • Must pay $10 per month to trade in USD commission-free
  • As a no-frills commission free brokerage, a lot of functionality in terms of charting isn't available, nor are the numerous stock screeners and research reports made available to members at full-service or discount brokerages

Wealthsimple Trade Account Types

Wealthsimple Trade offers a bunch of account types, with some just perfect for an investor just starting out. It also has more complex accounts for sophisticated investors. Account types include:

  • Tax-Free Savings Accounts
  • Registered Retirement Savings Plan
  • First Home Savings Accounts
  • Non-Registered Personal Accounts
  • Spousal RRSPs
  • Registered Education Savings Accounts (RESPs)
  • Corporate Accounts
  • Locked-In Retirement Account (LIRA)
  • Registered Retirement Income Fund (RRIF)
  • Cryptocurrency

Many of these investment accounts have been added only recently, making Wealthsimple a legit player for all investors, not just ones looking for the basics. 

Many Canadians open up tax-sheltered accounts like the TFSA and RRSP at Wealthsimple Trade so they can start trading stocks without paying a commission and then open more advanced accounts later.

In addition, Wealthsimple's customer base skews much younger than average, meaning many of these investors just need the basic accounts anyway. 

You don't have to have 100% of your capital allocated to a single online brokerage, either. A smart move might be to allocate something like a USD account to another brokerage with lower fees. 

Wealthsimple Trade Plans

Wealthsimple Trade groups customers into three different groups, depending on how much money they've deposited in the total Wealthsimple ecosystem -- including Wealthsimple Invest (the robo-advisor part of the company) and Wealthsimple Cash (Wealthsimple's chequing account alternative).

The first tier is Core, for users with up to $100,000 in assets. Core users are the lowest-level users and don't really get any perks. They pay full fees on everything, although Wealthsimple's fees are pretty low in the first place. So this isn't a huge issue. 

The next tier is Premium, which includes users with $100,000 to $500,000 in assets. Premium users get a free USD account and don't have to pay commission or exchange fees on any U.S. trades.

Premium users also get a higher interest rate in their Wealthsimple Cash account, as well as reduced management fees in managed Wealthsimple accounts. 

Wealthsimple Premium was previously called Wealthsimple Black, but it has been renamed.

The highest tier is Generation, which is for customers with more than $500,000 in Wealthsimple assets. Generation users get everything Premium users get, plus even lower management fees in managed Wealthsimple accounts, access to a dedicated team of financial advisors, and a comprehensive financial plan.

Wealthsimple Trade Fees & Commissions

The main attraction to Wealthsimple Trade is the fact that it lets you trade stocks on the Toronto Stock Exchange (TSX) from any of their account options commission-free. To someone with a smaller account balance or even to someone who likes to be more active when it comes to trading, this is a huge benefit.

There are no back-end hidden fees when it comes to their Canadian stock purchases and sales. You truly do not pay a commission on these transactions.

There are a lot of rumours about the company offering wide spreads to profit off the difference, but I can put those to bed right now.

Where Wealthsimple Trade can get expensive is when you buy and sell US-denominated assets, whether it be stocks or ETFs. The costs can become quite extensive if you're an active trader of these securities while using Wealthsimple Trade.

That's because Wealthsimple Trade charges a 1.5% currency conversion fee on both the purchase and sale of US-denominated assets.

This is lower than most major brokerages like Questrade, RBC Direct Investing, and Qtrade. However, on those brokerages, you can perform Norbert's Gambit to save a significant chunk of money when turning CAD to USD, and you can also keep the capital in USD when you sell your stocks.

Wealthsimple Trade fee structure on the purchase of a U.S. asset

  • You purchase a stock for $1000 USD
  • Let's assume that at the time of trading, the exchange rate is 1.3
  • So it costs you $1300 to buy $1000 worth of U.S. stock
  • Take your $1300, and multiply it by 1.015 (the 1.5% exchange fee)
  • This purchase costs you $1319.50, or $19.50 in fees

Let's assume that over the course of the next year, this purchase gains 25%, and you'd now like to sell.

Wealthsimple Trade fee structure on the sale of a U.S. asset

  • You sell your U.S. stock for proceeds of $1250
  • Let's assume that at the time of trading, the exchange rate is 1.3
  • The true value of your $1250 USD is 1.3 X $1250, or $1625 CAD.
  • Take the 1.3 exchange rate and take away 1.5% (1.3 - 0.0195)
  • Take this 1.2805 rate and apply it to $1250 USD
  • You'll receive $1600.62 CAD from the sale.
  • You've paid $24.38 in total fees ($1625 - $1600.62)

So, as you can see, the purchase and sale of a U.S. stock has cost a total of $43.88.

Users can open up a USD account to avoid this, but there are stipulations. You'll need to keep U.S. Dollars in that account. And you'll have to pay $10 per month to have this account. And if you fund that USD account from your main Wealthsimple Trade account, you'll have to pay the 1.5% currency conversion fee. 

The other way to avoid the currency conversion or commissions on U.S. Dollar accounts is to have at least $100,000 invested in Wealthsimple. That makes you a Premium member, opening up certain perks. 

All in all, if you're looking to purchase Canadian stocks, Wealthsimple Trade is the best brokerage in the country to do so. There are no hidden fees and no back-end charges. Simply commission-free trading.

However, as we went over in the examples above, it's important to be aware of what you're being charged when it comes to trades involving a currency exchange.

Although Wealthsimple Trade is still lower than most major brokerages at 1.5%, it's still a fee investors should know about. And as mentioned, there are ways to minimize or even eliminate these fees on the U.S. side.

Wealthsimple Trade only offers trading in the Canadian and U.S. markets. 

Other Wealthsimple Trade fees

Wealthsimple Trade currently charges the following fees on specific actions and requests:

  • $20 for paper account statements
  • $75 per hour for special requests and investigations
  • $30 for wire transfers
  • $45 for broker-assisted phone trades
  • $50 for voluntary corporate action or election

There are also the following fees for option trading:

  • $2 option contract fee for Core users
  • $0.75 option contract fee for Premium and Generation users
  • $45 options early exercise fee
  • $20 options auto-exercise fee
  • $45 options do not exercise instruction

Keep in mind that almost none of these fees are unique to Wealthsimple Trade. You'll find them at almost all brokerages. And on the options side, Wealthsimple is much cheaper than its peers, who often charge $10 for option contract fees. 

Wealthsimple Trade customer service

In this day and age, people want information and solutions, and they want it fast.

Fortunately, Wealthsimple Trade does offer this. I was fairly impressed by their FAQ and the ability to provide me with helpful articles to get started without having to contact them.

A company with a well-designed FAQ and help section shows you one thing: that they truly listen to their customers. The ability to find out what you need to do to solve a specific problem without waiting 24 hours for a reply from customer service is a huge bonus.

I was able to find out how to make my first deposit, troubleshoot orders, where to find specific documents I needed in terms of contributions, taxes, transfers, and withdrawals, all from their article base.

Furthermore, if you don't find what you need in there, you can always give them a call or submit an e-mail request. They'll do their best to direct you to a relevant article prior to submitting an e-mail, but if you do end up contacting them, typically, you'll receive a reply within a day or two.

In terms of calling in, wait times can be in excess of an hour, a negative experience you are likely to face with not only Wealthsimple Trade but many other brokerages.

With the surge of new investors into the markets in 2020 and 2021, I can't blame many brokerages for being overwhelmed when it comes to customer service. I can assure you that although it may seem like the grass is greener on the other side in terms of customer service, it likely isn't.

And let's face it. Wealthsimple's lower fees translate into having less money available to pay support staff. It's a trade-off investors make for those lower fees. 

At least Wealthsimple Trade has a live chat feature; it takes away the annoyance of waiting on hold if you don't have to.

Overall, I am liking what I see with Wealthsimple Trade in terms of customer service. They know the majority of their clients are new investors, ones that will surely have many questions, and they make sure they're available to answer them.

Wealthsimple Trade security

In terms of security, Wealthsimple Trade has all the features that are included in many major brokerages. Wealthsimple currently holds over $3 billion in assets and is a Canadian ShareOwner Investments Inc. division.

Canadian ShareOwner Investments is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investors Protection Fund (CIPF), which will protect you up to $1 million in the case of insolvency or bankruptcy.

Two-factor authentication (2FA) is easily set up, and the company uses 256-bit encryption when it comes to the storage of your data.

Wealthsimple Trade offers peace of mind in terms of protecting your capital. However, and I can't stress this enough, it is still up to you to ensure your accounts are protected to the highest degree possible.

This means selecting difficult passwords and changing them frequently, setting up 2FA as soon as possible, and never sharing your password with anyone.

This is your hard-earned money we're talking about here. Protect it to the best of your ability!

Wealthsimple Trade platforms 

...one thing that Wealthsimple Trade does better than any other brokerage platform I've ever reviewed is the ability to buy and sell with ease.

If I were to sum up Wealthsimple Trade's platforms in a single word, it would be "simple."

And it's important to understand that this will be a benefit to some investors and a disappointment to others.

This isn't your typical brokerage platform. You don't have access to fancy charts, technical indicators, or research reports that you see provided by most all major brokerages.

However, most investors don't need this. Many are not huge fans of technical analysis. In fact, if you're a beginner, it's more than likely just going to get you into trouble.

It's important to understand that there is going to be somewhat of a trade-off here in terms of functionality compared to a major brokerage that charges commissions.

The trade-off is that Wealthsimple Trade is allowing you to buy and sell commission-free.

Wealthsimple Trade's browser-based platform

Its browser-based platform is simple. When you want to buy a stock, you simply enter a ticker into the top search bar, and you're presented with a basic chart and typical snapshot metrics like market cap, price to earnings, yield, volume, etc.

From there, you select to buy, enter the number of shares you want, select a type of order like market, limit and stop limit and submit it. It's that easy. You can even do fractional shares if you'd like.

If there is one thing that Wealthsimple Trade does better than any other brokerage platform I've ever reviewed, it's the ability to buy and sell with ease.

Some major brokerages tend to convolute their platforms, and beginner investors will find 95% of what is on their screen either useless or downright confusing. This is not the case with Wealthsimple Trade.

Wealthsimple Trade's mobile app

There isn't much to say about Wealthsimple Trade's mobile application that hasn't already been said about its browser-based platform.

Both are very similar in the fact the process of buying and selling is about as easy as it gets.

Again, when we compare Wealthsimple Trade to something like Questrade's mobile app, it clearly can't do as much in terms of charting and such. But at this point, I think it's important to ask yourself a couple of questions.

For one, are these charts even necessary to view, or should you simply be making your decisions based on the strength of the companies behind the stock? And secondly, is it really necessary, or even productive, to be using charting functionality on a 4-inch screen to make on-the-go trading decisions?

As someone who was a Questrade client for a decade and used their mobile app every day, I can tell you that Wealthsimple Trade's app, despite having significantly less features, did not feel like a downgrade at all.

In fact, I had a better experience.

You can find the app on both the Android and iOS app stores.

Wealthsimple Trade extras

There aren't too many extras when it comes to Wealthsimple Trade.

However, we have to understand that we're signing up for a no-frills, commission-free platform here. We have to be willing to sacrifice added features for the benefit of not having to pay commissions to buy and sell stocks.

But, I have to give props to the Wealthsimple Team, as they are consistently making improvements to the platform and adding extra features that do feel like a bonus.

Wealthsimple Crypto

Wealthsimple launched a cryptocurrency platform that is extremely convenient for users of Wealthsimple Trade to access.

However, keep in mind that their Crypto platform is not free to trade. Core users will pay a 2% commission to trade, with Premium and Generation users paying 1% and 0.5%, respectively. 

The one benefit to Wealthsimple Crypto is the fact they don't charge to deposit or withdraw, something you'll see with many crypto platforms out there.

Another huge benefit to Wealthsimple's Crypto offering is you can trust it. With so many crypto exchanges shutting down in the last year, many investors are rightfully wary of putting their money into an exchange that might shut down.

There's no guarantee that Wealthsimple will offer crypto trading forever, of course, but if it does shut down that part of the business, you can rest easy knowing that your deposits are safe. 

Quick deposits

Every Wealthsimple Trade user has a quick deposit limit, which allows you to deposit a certain amount that can be accessed instantly. The limit is for up to $5,000 and resets every three days. However, some users have reported a quick deposit limit of only $250.

Standard deposits are split into two tiers. Any standard deposit of under $5,000 will be available to trade in three business days. Any standard deposit of over $5,000 will be available to trade in five business days. 

Again, for long-term investors, this shouldn't be a huge deal. After all, I think we're all used to a world where banks won't let you access some of your funds instantly. 

And you can deposit up to your limit for a quick deposit, which will let you get started instantly.

In the age of instant gratification, this is a feature that many will enjoy.

Overall, Wealthsimple Trade doesn't have many bonus features unless, of course, you pay for them. However, I'm not going to dock them any points for this on the overall basis of my review.

That's because the number one draw to Wealthsimple Trade is the fact it charges no commissions.

This truly is a "you can't have your cake and eat it too" situation.

Opening an account with Wealthsimple Trade

If you're convinced that Wealthsimple Trade is right for you, you're in luck.

Why?

Because when it comes to setting up an account with Wealthsimple Trade, the process is the easiest I've witnessed, by a landslide.

I had an account open and viewed stock quotes in less than 5 minutes.

Funding your Wealthsimple Trade account

After your account is set up, you'll need to fund it in order to start trading on the platform.

Funding is relatively easy. In fact, if you've ever executed an e-transfer before, you'll be able to fund your Wealthsimple Trade account with ease.

When you've opened up your account, select "Move Funds" in the upper menu and connect your bank account. There's everything from major institutions to small credit unions in the bank selection, so it's unlikely that you have any issues finding your bank.

From there, you'll be able to deposit funds instantly.

Keep in mind, over and above the $250 in instant deposits they offer, or $1000 in the case of Wealthsimple Premium members, deposits can take up to 3 business days to hit your account.

Wealthsimple Trade Review FAQ

I've decided to include a FAQ in this review as there are many questions that I can't "review" but can certainly provide answers for.

How does Wealthsimple Trade make money?

This is a perfectly valid question to ask. The brokerage does not charge commissions, so how does it survive? Well, it does so primarily on the back of a 1.5% conversion fee to buy foreign stocks and the $10 per month fee to have a USD account, which allows you to trade stocks listed on the NYSE and NASDAQ for free.

Wealthsimple Trade also makes money on option and crypto trading fees. 

What happens if Wealthsimple Trade goes bankrupt?

In the rare situation where Wealthsimple Trade was to go bankrupt or insolvent, your investment capital would be covered by the Canadian Investor Protection Fund (CIPF) up to a maximum of $1 million.

However, the company is owned primarily by one of our favourite stocks here at Stocktrades Premium, Power Corporation of Canada, which gives another level of security.

Is it safe to link my bank account to Wealthsimple Trade?

Absolutely. The platform uses a secure service to link your bank account to your Wealthsimple Trade account, allows you to get started trading earlier, and also makes future deposits much easier.

Can I trade options on Wealthsimple Trade?

Wealthsimple Trade has recently added options trading, and it's a popular part of the service. However, be warned: many options trading strategies are extremely risky in nature, and there's the very real possibility your options trades could lose money.

Is Wealthsimple Trade safe?

Wealthsimple itself is owned primarily by one of our favourite stocks here at Stocktrades Premium, Power Corporation of Canada. Power Corporation has been around for more than a century and has over $450 billion in assets.

So, in that regard, I have absolutely zero doubts about the safety and security of Wealthsimple Trade.

Overall, Wealthsimple Trade is perfectly suited for a specific type of investor

If you're just starting out and looking to get your feet wet, I couldn't think of a better platform in Canada than Wealthsimple Trade.

Prior to discount brokerages like Questrade emerging and changing the landscape in terms of commissions, you often needed tens of thousands of dollars to justify paying the $25-50 in commission most brokerages were charging.

Fast forward to not even 20 years later, and we now have a platform in Canada that allows us to start with nearly any dollar value you want. It is a massive step forward and a game changer when it comes to self-directed investing for Canadians.

If I had a large account balance, would I be moving my money to Wealthsimple Trade? If I'm being honest, no. There is a ton of value in a full-service brokerage like Qtrade, and for some people, commissions are only a slice of the pie when it comes to choosing a brokerage.

But if I had a small balance and were looking to purchase individual stocks and develop a diversified portfolio, one where commissions would simply eat up too much of my capital at a full-service brokerage, Wealthsimple Trade would without question be where I'm heading.

The platform is extremely simple and easy to use and allows you to do absolutely everything any other brokerage would in terms of buying and selling Canadian stocks and ETFs. And you can do it without getting charged a dime.

Disclaimer: The writer of this article or employees of Stocktrades Ltd may have positions in securities listed in this article. Stocktrades Ltd may also be compensated via affiliate links in this post. Stocktrades Ltd will run advertisements on our posts. These advertisements do not represent an endorsement by us.

Dan Kent

About the author

An active dividend and growth investor, Dan has been involved with the website since its inception. He is primarily a researcher and writer here at Stocktrades.ca, and his pieces have numerous mentions on the Globe and Mail, Forbes, Winnipeg Free Press, and other high authority financial websites. He has become an authority figure in the Canadian finance niche, primarily due to his attention to detail and overall dedication to achieving the highest returns on his investments. Investing on his own since he was 19 years old, Dan has compiled the experience and knowledge needed to be successful in the world of self-directed investing, and is always happy to bring that knowledge to Stocktrades.ca readers and any other publications that give him the opportunity to write. He has completed the Canadian Securities Course, manages his TFSA, RRSPs and a LIRA at Qtrade, and has compiled a real estate portfolio of his primary residence and 2 rental properties, all before his 30th birthday.