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 eliminates the issue of commissions eroding your overall returns.
It's without question the easiest setup and purchase process I've witnessed from a brokerage.
Some key downsides include the limited amount of account options, and the expensive price tag that comes with buying US listed stocks and ETFs.
...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:
- Customer Service
With that being said, lets get right into it!
Wealthsimple Trade pros and cons
Lets 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
- The easiest account setup process I've encountered
- Provides the key tax sheltered accounts (TFSA, RRSP)
- An intuitive and simple platform
- A mobile 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
- Get $40 FREE when you open an account through this link and deposit $200
Wealthsimple Trade cons:
- The inability to hold USD makes trading stocks outside of Canada expensive
- Although its currency fee is lower than most brokerages, Norbert's Gambit cannot be performed to save on commission fees
- The ability to trade options contracts, participate in IPOs, or buy mutual funds is not available
- Quotes, unless you're a Wealthsimple Premium member ($3 a month) are 15 minutes delayed
- 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 3 primary account types, most of which will be perfect for an investor just starting out.
- Tax Free Savings Account
- Registered Retirement Savings Plan
- Non-Registered Personal Accounts
However, if you're looking for more advanced options like corporate accounts, RESPs, LIRAs, RIFs, or LIFs, you'll likely need to head to a major brokerage such as Qtrade.
Although Wealthsimple Trade doesn't have the best account options, many Canadians open up tax sheltered accounts like the TFSA and RRSP at Wealthsimple Trade to gain access to commission free Canadian stocks, and then open more advanced accounts at a major brokerage.
You don't have to have 100% of your capital allocated to a single brokerage. So, if you need more than these 3 account types offered, it's reasonable to consider splitting up your capital.
Wealthsimple Trade Fees & Commissions
The main attraction to Wealthsimple Trade is the fact that it lets you trade Canadian stocks 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 rumors about the company offering wide spreads to profit off the difference, but I can put those to bed right now.
Where Wealthsimple Trade undoubtedly gets 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 US asset
- You purchase a stock for $1000 USD
- Lets assume that at the time of trading, the exchange rate is 1.3
- So it costs you $1300 to buy $1000 worth of US 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
Lets 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 US asset
- You sell your US stock for proceeds of $1250
- Lets 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 US stock has cost a total of $43.88.
All in all, if you're looking to purchase Canadian stocks, Wealthsimple Trade is the best brokerage in the country to do so. There is no hidden fees, 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%, you cannot mitigate these fees through a strategy like Norberts Gambit.
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
Keep in mind, almost none of these fees are unique to Wealthsimple Trade. You'll find them at most all brokerages.
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, with Wealthsimple Trade having 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 including in many major brokerages. Wealthsimple currently holds over $3 billion in assets, and is a division of Canadian ShareOwner Investments Inc.
Canadian ShareOwner Investments is a member of the 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.
In terms of protection of your capital, Wealthsimple Trade offers peace of mind. 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, it's 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 buy, enter the amount of shares you want, select a type of order like market, limit and stop limit and submit it. It's that easy.
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.
Wealthsimple Trade extras
There isn'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 commission 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 Trade Premium
Wealthsimple Trade Premium is a new feature that has hit the platform, and allows for investors to do a couple of key things.
For one, you can request snap quotes for stocks you're looking to buy. If you don't have Wealthsimple Trade Premium, the prices you see will be 15 minute delayed.
Secondly, you'll be able to fund your account instantly with up to $1000 every 3 business days. If you're a non Premium member, you are allowed $250 in instant deposits.
Wealthsimple Trade Premium will run you $3 per month plus tax, relatively inexpensive in the grand scheme of things.
Overall, I can't blame Wealthsimple Trade for developing the Premium end. Clients are demanding it, and Wealthsimple Trade is simply supplying it.
However, an investment should be made with a long term attitude, primarily 5-10 years.
So, the idea of paying to have quotes that are live instead of 15 minute delays, and being able to have $1000 hit your account instantly instead of waiting 3 days shouldn't really appeal to long term investors.
If you're buying a stock based on a strong underlying company, nothing is going to change in the 15 minutes of price movement or the 3 days it takes for the money to hit your account.
Wealthsimple launched a cryptocurrency platform that is extremely convenient for users of Wealthsimple Trade to access.
However keep in mind, their Crypto platform is not free to trade. In fact, fees are quite expensive at 1.5%-2% per transaction. Compare this to a platform like Bitbuy which offers 0.2% per trade, and you may be better off elsewhere.
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.
Overall, the platform is relatively young at less than a year old, and I'm positive they'll look to make improvements moving forward.
Again, for long term investors this shouldn't be a necessary feature, but I do understand the urgency of some people to get started immediately.
As such, Wealthsimple does allow you to deposit $250 instantly, allowing you to get started buying and selling stocks on the platform immediately.
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.
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 viewing 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 instantly deposit funds.
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.
Because your account at Wealthsimple Trade can only hold Canadian Dollars, you'll be charged every time you buy and sell a stock outside of Canada.
What happens if Wealthsimple Trade goes bankrupt?
In the rare situation where Wealthsimple Trade were 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 favorite stocks here at Stocktrades Premium, Power Corporation of Canada.
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, and allows you to get started trading earlier, and also make future deposits much easier.
Can I trade options on Wealthsimple Trade?
With Wealthsimple Trade's simplistic functionality, you are able to buy equities like stocks and Exchange Traded Funds. However, you're unable to participate in things like options trading, or IPOs.
If you're looking for something along these lines, a full service brokerage like Qtrade would be best.
Is Wealthsimple Trade safe?
Wealthsimple itself is owned primarily by one of our favorite 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 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 was 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, 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.