When I first heard of WealthBar and Wealthsimple, I thought they were the same company. With many new robo-advisor providers cropping up in Canada, it was hard to keep track. Now, a few years later, robo advisors have established themselves to be an excellent investing option for Canadian investors, those who are not interested in the DIY investing approach, and who do not want to be paying high mutual fund fees.
There are different pros and cons of robo advisors but on the whole, I think they are a great way to start investing, especially if you’re anxious to take the plunge. Here’s my analysis of WealthBar vs Wealthsimple so you can decide which robo-advisor is more suited for your personal finance journey. In this head to head comparison post I will go over a brief background on WealthBar and Wealthsimple. I’ll review WealthBar and Wealthsimple’s:
- Security measures (for your investment money and data)
- The fee differences
- The perks available
- The account types available
- The access to financial advisor support
Table of Contents
What is a Robo Advisor?
But first, what is a Robo Advisor? A robo advisor is a financial technology “fintech” creation where you can invest your money on autopilot. You just need to deposit the money to invest, and your money is invested automatically into an exchange traded fund portfolio. You will be tracking the index instead of trying to beat the market. Index investing is like the enlightenment journey in the 7 stages of investing. With a robo-advisor, your money is automatically rebalanced and you don’t need to be making any trades on a brokerage to make sure you have the correct asset allocation.
If you are a Canadian millennial looking to invest and you don’t know how to start, or you don’t want to get involved with opening up a brokerage account and making trades yourself, then a robo advisor is a great option for you. I have a colleague who is absolutely not interested in investing, and would rather be hiking, or doing outdoorsy stuff rather than looking at if she has too much Canadian home bias in her asset allocation. I glanced over at her computer screen one day on break and saw a beautiful upward trending graph that looked like the S&P500, it turned out it was her WealthBar portfolio. She loves using a robo advisor.
CI DIrect Investing
WealthBar is the original Canadian robo advisor and they are based out of Vancouver, BC. They recently partnered with CI Financial and are now backed by the largest independent asset manager in Canada, which is CI Financial. Recently, CI Financial acquired WealthBar and now they are relabelled as CI Direct Financial.
CI Direct Investing (WealthBar) was actually the first pioneer robo advisor in Canada who paved the way in 2013. WealthBar is a registered portfolio manager in all provinces and territories in Canada. WealthBar is also a full Life Insurance Agent in British Columbia and Ontario. WealthBar has over $375 million in assets under management. They are based only in Canada.
What makes CI Direct Investing unique is that they offer investing available to Canadians who live abroad, offer RDSP accounts, offer portfolio customization, and offer private investment portfolios for everyone. These premium asset class portfolios incur more fees but they contain a mix of asset classes, leaving them less susceptible to the swings of the stock market. These private investment portfolios were traditionally reserved for those who had more than $1 million to invest, but CI Direct Investing makes it available to the 100%.
Wealthsimple is the largest robo advisor in Canada (gauged with AUM, assets under management). They are backed by Power Corporation of Canada. an online investment manager which also provides financial advice. Wealthsimple was founded in 2014, and have over $5 billion in assets under management and over 175,000 individuals investing with Wealthsimple. Wealthsimple has clients in the United States, U.K., and Canada. They are based out of Toronto, New York, and London.
What makes Wealthsimple is a bit more ‘different’ and unique is that they have more options of what you could do with your money. They have a high interest savings account, a robo advisor portfolio, and a trading option. You can even buy Wealthsimple gift cards to give to friends and family as a minimalist gift. Wealthsimple allows you to put your money in a managed robo advisor portfolio (Wealthsimple Invest), do self-directed trading (Wealthsimple Trade) or put your money in a high-interest savings product (Wealthsimple Save). Wealthsimple Save offers 2% interest rate on your deposits annually, which is on the higher end of high interest savings accounts available in Canada. Wealthsimple even recently acquired and added Simple Tax to their offerings, a way for you to keep things like doing your taxes even more simplified.
Is CI Direct Investing safe? Is Wealthsimple Safe?
Considering that a recent major robo advisor (Get Planswell) went under and out of business, your concerns are definitely valid. Anyone would want their hard earned after tax dollars safe and would not want their money to end up in a company who may go insolvent.
Your investment with WealthBar is protected by the Canadian Investor Protection Fund up to $1 million per account through third-party custodians within specified limits, if WealthBar were to go insolvent.
This is also the case for investments with Wealthsimple, your investments are protected from insolvency for up to $1 million.
Both of them also have two-step verification and data encryption as measures to keep your money safe when investing online.
Wealthsimple vs CI Direct Investing Fees
The fee structure for Wealthsimple and CI Direct Investing is different.
For Wealthsimple, if you have $1-$100,000 net DEPOSITS the management fee is 0.5% annually. If you have over $100,000 in the Wealthsimple portfolio, the management fee drops down to 0.4% annually and you are considered Wealthsimple Black status. If you have over $500,000 invested, it is still 0.4% as a management fee. This is in addition to the fees for the ETFs.
I could not find how much Wealthsimple’s portfolio ETF MERs cost but I anticipate them to be around 0.20% on average.
This post contains affiliate links. Please see genymoney.ca’s disclaimer for more information.
For CI Direct Investing, the fee structure is tiered (kind of like the Canadian tax system). If you have less than $150,000 invested, the management fee is 0.6% annually. On your next $350,000 invested, it is 0.40% annually. Then on your next $500,000 invested, the cost is 0.35% annually. To get to a straight up 0.40% in annual fees on your investments, you would need $1,100,000 invested. These annual fees are charged on a monthly basis.
Similar to other robo-advisors in Canada, on top of the fees mentioned above, you have to add the ETF MER fee. WealthBar’s MERs for their ETF portfolios range from 0.19% to 0.26% annually (which is not unlike other Canadian robo-advisors). The MERs for their private investment portfolios range from 1.00-1.56%. These are more costly because they are more diversified and the portfolios are geared towards those with more than $1 million to invest. These ETF fees won’t get deducted from your account but are built-in within the ETF funds.
In terms of fees for transferring in your money, both Wealthsimple and CI Direct Investing will take care of the transfer fee from another financial institution. Wealthsimple will reimburse you if your investments from the other financial institution are more than $5000. CI Direct Investing will reimburse you up to $150 in transfer fees if your investments from the other financial institution are more than $25,000. CI Direct Investing will also not charge you any fees when you withdraw your investments from your robo-advisor account (e.g. if you need the money for a down payment or to retire early or to invest elsewhere).
Wealthsimple vs CI Direct Investing Perks
There are some unique perks when you invest your money with Wealthsimple and CI Direct Investing.
For Wealthsimple, if you reach a $100,000 minimum threshold investments (net deposits), you will a Priority Pass Prestige membership. After you get to the $100,000 minimum, you will get an email from Wealthsimple with instructions on how to register for Priority Pass. You get a Priority Pass Prestige membership for FREE for 12 months. This is worth $429 USD. With the Priority Pass Prestige membership through Wealthsimple Black, you are covered for 10 visits to lounges annually for you and a guest (if you bring a guest, that would count as two passes used).
Yes, you are getting charged $400 a year in Wealthsimple robo-advisor fees, but some people may argue they are investing anyway so why not have access to this perk?
You won’t have to resort to travel hack credit cards like the CIBC Aventura like I do to get free cooked food prior to your flights. In context, signing up for these cards that provide lounge access usually only provides four free passes per year. I recently got hooked onto lounge access, it is fantastic when you travel.
For CI Direct Investing perks, you get a dedicated financial advisor, financial planning, and a diversified portfolio. WealthBar provides commission-free advice from a Certified Financial Planner®. You can also contact WealthBar via a chat function if you prefer to not talk on the phone.
Wealthsimple Vs CI Direct Investing Account Types
You can open these same account types with both Wealthsimple and CI Direct Investing:
- Joint accounts
- Spousal RRSP
- RIF/ RRIF
- RESP (both CI Financial and Wealthsimple are eligibile for the BC Training and Education Savings Grant of $1200)
- Trust accounts
However, these account types are unique to CI Direct Investing
- RESP for Quebec residents
- Group TFSAs & RRSPs (for example, if you are a company and you want to offer staff this)
- Accounts for charitable organizations
Wealthsimple vs CI Direct Investing Financial Advisor Support
Wealthsimple is a much bigger robo advisor and hence there is less of a personalized feel. When you look at the Who We Are page, you don’t even see who the financial advisors are. With Wealthsimple Black (net deposits of over $100,000), you get one free financial planning session to discuss your money goals with a Wealthsimple Black portfolio manager. With the Wealthsimple Generation (net deposits of over $500,000) you get a dedicated team of financial advisors to optimize your wealth. With the Generation account, you will also get a personalized financial report customized to your goals. If you are looking for financial advice as a Wealthsimple client who has less than $100,000 in net deposits, you can contact 1-855-782-3559 or email email@example.com.
CI Direct Investing offers estate planning, insurance needs analysis, corporate tax planning, and tax optimization advice. They are more ‘full service’.
Genymoney.ca’s Verdict on Wealthsimple vs CI Direct Investing
Reviewing both Wealthsimple and CI Direct Investing, I like the variety of options available with Wealthsimple (Wealthsimple Trade, Save, and Invest) and their Priority Pass membership option.
If I were someone who did not want to be too involved with my investments but wanted to have someone I could trust to talk to for financial advice and life planning (e.g. insurance needs, estate planning, tax optimization etc.) I would go with CI Direct Investing. Although CI Direct Investing is more expensive in terms of fees if your portfolio is smaller than $1,100,000, I feel that it is worth the little bit extra you would pay in fees for the easier more personalized access to financial advice and expertise.
However, personal finance is personal, and what works for one person might not work for another.
If you are a jet-setter, and you travel a lot and are addicted to Priority Pass lounges and lounge access, investing with Wealthsimple might be more your cup of tea.
If you want more of a boutique personalized customer service, and someone you can talk to (basically the closest thing to having a fee-only financial advisor without the added cost of paying for a fee-only financial advisor), like I mentioned earlier, you should invest with CI Direct Investing as a robo advisor.
If you have over $1,300,000 to invest (lucky you) and you want to save on fees, go with CI Direct Investing. Fees are lower for WealthBar if you have over $1,300,000 invested (it drops to below 0.40% cost annually to invest which is what Wealthsimple Generation costs). At 0.38% compared to 0.40%, that’s another $220 a year you could be spending on lattes, for example.
Related: Wealthsimpe vs Justwealth RESP
Finally, if you want to open up an investing focused RDSP (Registered Disability Savings Plan), go with CI Direct Investing. Wealthsimple simply doesn’t have that account option.
Hopefully you enjoyed this head-to-head comparison of CI Direct Investing vs Wealthsimple, two robo advisors in Canada that are both great options for your hard earned investing dollars, so that you can reach financial freedom sooner.
Do you invest your money with a robo advisor?
What has your experience been investing your money with Wealthsimple or CI Direct Investing?
GYM is a 40 something millennial writing about personal finance since 2009 and interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for a free dividend yield spreadsheet and the free Young Money Bootcamp PDF.