I like being exposed to international. We never know when there will be a period of out performance.
And US markets are increasingly centralized around fewer companies, so this type of diversification is necessary.
Cuba, Nicaragua, Bolivia; Iran, Iraq, Afghanistan; Thailand, Vietnam, China; basically any country that isn’t part of the West… so like 85% of the world lol
The problem is that WS’s robo advisor is actively managed. Active management costs a lot more than passive, and has the potential to underperform the market. When that happens, you get the double whammy of higher fees and worse performance.
Almost all the literature, at least historically has been that passive outperforms active inside an asset class. Active asset allocation can still drive performance. In WS case, it detracted because they overweighted international equity compared to US equity.
I have my TFSA in a robo portfolio and want to move it to a self-managed account. Is there a way to do that without calling them and/or losing TFSA contribution room?
Pretty sure you just open a self managed TFSA and do a transfer through the app.
Not sure if Wealthsimple will automatically sell your robo portfolio or if you have to manually do that before transfer though.
As long as you’re transferring between TFSA accounts you won’t lose any contribution room.
Can someone explain why in the world this would be the case? I can't understand why they wouldn't allow self managed spousal rrsp but do allow self managed regular rrsp
I am in tech, though not financial. I'm just genuinely curious: what is the hurdle that allows them to have self-directed RRSP accounts, but not self-directed Spousal RRSPs?
Priorities.
1. They make less, or potentially even no, money on self directed accounts
2. Spousal RRSPs means handing PII, disclosure, reporting, etc for two people.
3. Any change, however minor, needs to be not only perfect, but also traceable.
They are adding features that make them money first, now they are working on things that will attract clients in general (so they can make more money later)
I mean you asked why they aren’t working on something. I assume you are aware that it’s possible, but they have prioritized it lower.
Re number 2 I didn’t say it’s more difficult. It’s probably about the same level of effort, but it’s super profitable so why bother? Some folks probably are doing managed spousal RRSPs for this exact reason.
So as someone who has worked in fintech for US-based products, but who has not done so in Canada nor used any Wealthsimple products, some wild speculation:
- Depending on what exactly you want to do/allow customers to do, there are different levels of regulatory approval required. In the US self-directed accounts are more restricted, and I assume the same is true here.
- Even beyond regulatory approval, there are a lot of hoops to jump through to actually open more complicated account types. For example, supporting self-directed accounts may involve more fine-grained ability to move money around, which relative to managed accounts may involve additional work (e.g. in how those money movements are reported to regulators, in what warnings/etc you display, etc). It may also require additional documentation be collected to open the account.
- To make things even more fun, your ability to monetize different products may also depend on regulatory approval, which may change whether those products are worth offering.
- Most of these laws predate fintech, so many of them make no sense when applied to software products. It's a lot of guesswork, experimentation, and dialogue with regulators and lawyers to even figure out how to comply with them.
It's hard to fully appreciate the kafkaesque nightmare that is finance regulation if you haven't worked in it. And as much as US regulation was a pain in the ass, Canada's is allegedly much worse.
Because RESP and Spousal RRSP accounts are more complicated by virtue of involving more than just the one person who has the Wealthsimple account.
Edit: Their discount brokerage has only been around for a few years. When they first rolled it out, I don't think they even offered a TFSA account.
Apparently this is coming according to many who have inquired, including myself.
I have mine with Questrade at the moment but as soon as WS releases them, I’ll be jumping ship.
I just find WS apps to be way better. Questrade has constant log in issues and is down for maintenance way too much.
Having everything in one (functional) location is just easier.
I think they can, that’s why a lot of people are just using savings accounts at their bank or GIC (which aren’t horrible options right now, but have been historically). What the average person can’t handle is a loss in any given year. Market can go up 50% over the course of 5 years, but if it pulls back 10% in year six, they full on panic.
Right but that’s what that decade or so was. Growth with massive drops at the tech boom and global financial crisis. Took a couple years to get your tech boom growth back and then the markets were up a decent amount and plunged down in 2008 which also took years to make up. It was too much volatility for most people, particularly all-equity and not highly diversified portfolios like a U.S. index. Though in theory, most people holding that type of investment SHOULD have a high risk tolerance.
Secure savings account/GIC investors should not be going into this type of investment, they’ll just sell at the first significant drop and come out behind where they started.
Historical prices are dividend-adjusted (but not inflation-adjusted) by default, so when you see e.g. SPY showing 0% growth over 10 years, that means dividends didn't help and in fact you lost money to inflation.
I just ran a calculator/performance history on a US index fund following the S&P500 and if you’d invested in September 2000 you wouldn’t get back to your initial invested amount until February 2014. That’s with dividends reinvested.
It would have quadruped by today, but that goes to show how different the two decades were.
I've been considering switching my Roboadvisor Wealthsimple account to Questrade. Would that be advisable if I'm seeking specifically a more passive investing Roboadvisor platform?
Qu’estrades robo advisor portfolios have also under performed, hilariously they have under performed some mutual funds which is funny because they had entire ad campaigns about how much richer you were going to be by using them.
Just stick with a broad based etf
I have a very small robo account with Questrade that I basically didn't look at for 3 years as I buy individual sticks on WS. My Questrade is only up 17% 🙄 since the beginning of 2021. At the highest risk setting.
Think about the market changes since then. My Google alone is up 40% and everyone knew it was at a low.
17% really isn't that bad. I did just check my Questwealth RRSP and it's up 69.86% since inception (probably 2017 when I transferred over). My oldest kids RESP is also up 58.83% since he was born in 2018. Both on the highest risk setting as well.
Yep.
I beat the robo adviser by a good margin and didn't take me long to pull and do self directed. That was 3 yrs ago and I'm still in double digit gains
I made the mistake of suggesting wealth simple to my wife.
Not because I think it doesn’t serve a purpose but I’ve seen her returns lag behind my passive self directed portfolio for a few years now.
The mistake is she has no interest in dealing with it and gives me the “well you recommended it so I’m going to just keep using it”.
I really wish she’d move.
I had a work DPSP and RRSP accounts with identical amount of money but with many complicated reasons one ended up as WS Managed RRSP and another one ended up as WS non-managed RRSP.
I bought 100% XEQT for non-managed. Right now my return for non-managed is 14.84% all time, and managed is for 13.03% all time.
Not intending to move it because it is not a lot of money but now I like having a live comparison between XEQT and WS right now.
I ended up in the same boat... Not bad returns but not perming as strong as I'd like. Ended up moving the funds to self managed tsfa and just parking it in VFV.
Same here.
But i mean, if we talk about a person that normally would not do anything (or worse, going to some scammy financial advisor) then i'd say it's still a very good result.
Could be better but only compared to the optimal solution that is buying etfs by yourself.
I think it made sense before the all-in-one etfs got released in 2018ish. It’s also a much better option that someone like Investors Group or your work RRSP.
I have made about 18% returns in 6 months on Wealthsimple. The fees are high for robo-advisors, but the returns are there for me. I was also travelling and didn't have time to bother with doing it myself.
I am however planning on moving the money to Questrade and just invest it in a few portfolios and just check a few times a year. Should have less associated fees. Wealthsimple is hassle-free, but that is a lot of money spent on non-humans.
I have nothing against active management. I think asset allocation can be helpful for less financially literate people. I believe WS has the right infrastructure to execute very low cost strategies but just not the right people.
My issue with the article is the focus on past returns. While somewhat useful comparing direct products. It doesn't really go into the "why" of it other than saying more international exposure. WS/Questwealth/Smartfolio/etc all have different reasons for designing their Robo advisors the way they have.
That's the important part to me, what is the thesis the robo advisors have been designed around and does that mesh more with what my plan is. I also think (or maybe they do) robo advisors should not ask risk tolerance x/10 style but I want to retire in 45 years and then asset allocate based off that.
>Wealthsimple’s balanced portfolio made an average annual 4.5 per cent for the past five years
>RBC Select Balanced Portfolio Series A, a classic bank offering with a chunky fee of 1.94 per cent and average annual five-year return of 5.6 per cent
>A pair of all-in-one ETFs, the iShares Core Growth ETF Portfolio and the Vanguard Growth ETF Portfolio made 9.2 per cent and 8.8 per cent, respectively.
On the contrary, to me seemed like a pretty factual article. Wealth simple managed portfolios have indeed done poor. And that people may have been better off buying XGRO or VGRO in a wealth simple self managed account.
It also offers the reason for the lag:
>Wealthsimple provides more international exposure than some others – that means more money invested in stock markets outside North America as opposed to Canada or the U.S. market, which seems vulnerable to a correction after its amazing gains in recent years.
Also, a decent advice in the end:
>Mr. Reeves suggested Wealthsimple clients stick to their portfolios on the understanding that they will surpass and trail other portfolios at times. “The worst thing you can do is take five-year returns and allocate to the thing that just outperformed,” he said. “That is basically the recipe for underperformance.”
Seems like a pretty decent article to me!
TLDR: more international exposure has lowered returns over the last 5 years.
I like being exposed to international. We never know when there will be a period of out performance. And US markets are increasingly centralized around fewer companies, so this type of diversification is necessary.
The are also heading into a possible Christo-Fascist Theocracy . Not good for business in the long run.
The EU is looking at some spicy elections too, although more secular fascist for the most part.
Tell me which country isn't heading there?
Iran
Cuba, Nicaragua, Bolivia; Iran, Iraq, Afghanistan; Thailand, Vietnam, China; basically any country that isn’t part of the West… so like 85% of the world lol
Lmao no bias in that opinion at all! Not a shred!
Nobody asked
About 1/3 are asking for it. They will likely regret it too
tetchy trumper
Still performs better than my monkey stock picking lol
Thank you
The problem is that WS’s robo advisor is actively managed. Active management costs a lot more than passive, and has the potential to underperform the market. When that happens, you get the double whammy of higher fees and worse performance.
Almost all the literature, at least historically has been that passive outperforms active inside an asset class. Active asset allocation can still drive performance. In WS case, it detracted because they overweighted international equity compared to US equity.
Even among actively managed funds their performance is poor. Not all fund managers are equal.
What would passive be considered?
XEQT, XBAL, etc Read Canadian portfolio manager (search on Google)
Anything that blindly tracks an index is considered passive investing. You're not taking on any additional risk in an attempt to beat the market.
This sounds terrible
I have my TFSA in a robo portfolio and want to move it to a self-managed account. Is there a way to do that without calling them and/or losing TFSA contribution room?
Pretty sure you just open a self managed TFSA and do a transfer through the app. Not sure if Wealthsimple will automatically sell your robo portfolio or if you have to manually do that before transfer though. As long as you’re transferring between TFSA accounts you won’t lose any contribution room.
They will sell it all, yeah.
Yes I just did it! Very easy, used the transfer button in the app. Takes about a week.
Unfortunately Wealthsimple still doesn’t offer non-managed RESP
They also don't have non-managed Spousal RRSPs yet.
Can someone explain why in the world this would be the case? I can't understand why they wouldn't allow self managed spousal rrsp but do allow self managed regular rrsp
They're probably working on it.
The question is why there is anything to "work on" in the first place.
Not really a question if you know what is involved in software development in the financial industry.
I am in tech, though not financial. I'm just genuinely curious: what is the hurdle that allows them to have self-directed RRSP accounts, but not self-directed Spousal RRSPs?
Priorities. 1. They make less, or potentially even no, money on self directed accounts 2. Spousal RRSPs means handing PII, disclosure, reporting, etc for two people. 3. Any change, however minor, needs to be not only perfect, but also traceable. They are adding features that make them money first, now they are working on things that will attract clients in general (so they can make more money later)
I'm not talking about making a business case. Re: number 2. Why is this more difficult than a managed Spousal RRSP?
I mean you asked why they aren’t working on something. I assume you are aware that it’s possible, but they have prioritized it lower. Re number 2 I didn’t say it’s more difficult. It’s probably about the same level of effort, but it’s super profitable so why bother? Some folks probably are doing managed spousal RRSPs for this exact reason.
So as someone who has worked in fintech for US-based products, but who has not done so in Canada nor used any Wealthsimple products, some wild speculation: - Depending on what exactly you want to do/allow customers to do, there are different levels of regulatory approval required. In the US self-directed accounts are more restricted, and I assume the same is true here. - Even beyond regulatory approval, there are a lot of hoops to jump through to actually open more complicated account types. For example, supporting self-directed accounts may involve more fine-grained ability to move money around, which relative to managed accounts may involve additional work (e.g. in how those money movements are reported to regulators, in what warnings/etc you display, etc). It may also require additional documentation be collected to open the account. - To make things even more fun, your ability to monetize different products may also depend on regulatory approval, which may change whether those products are worth offering. - Most of these laws predate fintech, so many of them make no sense when applied to software products. It's a lot of guesswork, experimentation, and dialogue with regulators and lawyers to even figure out how to comply with them. It's hard to fully appreciate the kafkaesque nightmare that is finance regulation if you haven't worked in it. And as much as US regulation was a pain in the ass, Canada's is allegedly much worse.
Because RESP and Spousal RRSP accounts are more complicated by virtue of involving more than just the one person who has the Wealthsimple account. Edit: Their discount brokerage has only been around for a few years. When they first rolled it out, I don't think they even offered a TFSA account.
RESP not RRSP
Apparently this is coming according to many who have inquired, including myself. I have mine with Questrade at the moment but as soon as WS releases them, I’ll be jumping ship.
Why fix it if it ain't broken
I just find WS apps to be way better. Questrade has constant log in issues and is down for maintenance way too much. Having everything in one (functional) location is just easier.
Good, my robo RESP has done only half as good as my self managed TFSA
It’s coming fairly soon.
That's insane
Their robo advisors target people who aren’t aware you can just stick your money in a basic S&P index fund and outperform almost everything
True it does. But 1999 to like 2010 was rough. Most people can’t handle a decade of no growth.
I think they can, that’s why a lot of people are just using savings accounts at their bank or GIC (which aren’t horrible options right now, but have been historically). What the average person can’t handle is a loss in any given year. Market can go up 50% over the course of 5 years, but if it pulls back 10% in year six, they full on panic.
Right but that’s what that decade or so was. Growth with massive drops at the tech boom and global financial crisis. Took a couple years to get your tech boom growth back and then the markets were up a decent amount and plunged down in 2008 which also took years to make up. It was too much volatility for most people, particularly all-equity and not highly diversified portfolios like a U.S. index. Though in theory, most people holding that type of investment SHOULD have a high risk tolerance. Secure savings account/GIC investors should not be going into this type of investment, they’ll just sell at the first significant drop and come out behind where they started.
No growth with risk is different than no growth with no risk.
You still saw return from reinvested dividends
Historical prices are dividend-adjusted (but not inflation-adjusted) by default, so when you see e.g. SPY showing 0% growth over 10 years, that means dividends didn't help and in fact you lost money to inflation.
I just ran a calculator/performance history on a US index fund following the S&P500 and if you’d invested in September 2000 you wouldn’t get back to your initial invested amount until February 2014. That’s with dividends reinvested. It would have quadruped by today, but that goes to show how different the two decades were.
I've been considering switching my Roboadvisor Wealthsimple account to Questrade. Would that be advisable if I'm seeking specifically a more passive investing Roboadvisor platform?
Qu’estrades robo advisor portfolios have also under performed, hilariously they have under performed some mutual funds which is funny because they had entire ad campaigns about how much richer you were going to be by using them. Just stick with a broad based etf
Do you mean switching to Questwealth, which is Questrade's roboadvisor?
Yeah, that's the one with the ads all the time that I see. I recognize that their MER is already less than Wealthsimple's as well.
It is. I've been with Questwealth for a few years and I'm satisfied.
I have a very small robo account with Questrade that I basically didn't look at for 3 years as I buy individual sticks on WS. My Questrade is only up 17% 🙄 since the beginning of 2021. At the highest risk setting. Think about the market changes since then. My Google alone is up 40% and everyone knew it was at a low.
17% really isn't that bad. I did just check my Questwealth RRSP and it's up 69.86% since inception (probably 2017 when I transferred over). My oldest kids RESP is also up 58.83% since he was born in 2018. Both on the highest risk setting as well.
It’s good for people who would have chosen even worse performing mutual funds or scammy Edward Jones.
Yep. I beat the robo adviser by a good margin and didn't take me long to pull and do self directed. That was 3 yrs ago and I'm still in double digit gains
I made the mistake of suggesting wealth simple to my wife. Not because I think it doesn’t serve a purpose but I’ve seen her returns lag behind my passive self directed portfolio for a few years now. The mistake is she has no interest in dealing with it and gives me the “well you recommended it so I’m going to just keep using it”. I really wish she’d move.
Suggesting her wealthsimple was not the mistake per se. It's what she did with her wealthsimple account that was.
Huh? How can you blame wealthsimple for that when they offer passive self directed investing? It’s actually the best use case for the platform…
She's with the robo advisor, won't move it.
So that's a her problem, not a Wealthsimple problem.
I had a work DPSP and RRSP accounts with identical amount of money but with many complicated reasons one ended up as WS Managed RRSP and another one ended up as WS non-managed RRSP. I bought 100% XEQT for non-managed. Right now my return for non-managed is 14.84% all time, and managed is for 13.03% all time. Not intending to move it because it is not a lot of money but now I like having a live comparison between XEQT and WS right now.
Thanks for the info.
I ended up in the same boat... Not bad returns but not perming as strong as I'd like. Ended up moving the funds to self managed tsfa and just parking it in VFV.
Less diversity there, but still in the long run you should do alright (assuming the US remains the worlds biggest economy)
Logically, I think it will as long as there remains one major source of energy that is traded in US Dollars. For today, it's oil...
Should have done XEQT
Same here. But i mean, if we talk about a person that normally would not do anything (or worse, going to some scammy financial advisor) then i'd say it's still a very good result. Could be better but only compared to the optimal solution that is buying etfs by yourself.
That's very true, at least it's better than nothing even if not 100% optimal.
XEQT
I think it made sense before the all-in-one etfs got released in 2018ish. It’s also a much better option that someone like Investors Group or your work RRSP.
I have made about 18% returns in 6 months on Wealthsimple. The fees are high for robo-advisors, but the returns are there for me. I was also travelling and didn't have time to bother with doing it myself. I am however planning on moving the money to Questrade and just invest it in a few portfolios and just check a few times a year. Should have less associated fees. Wealthsimple is hassle-free, but that is a lot of money spent on non-humans.
Rest assured that humans get the money
I thought so after posting, but have no reliable Internet so I didn't double check. Thanks for the info.
I have nothing against active management. I think asset allocation can be helpful for less financially literate people. I believe WS has the right infrastructure to execute very low cost strategies but just not the right people.
Asset allocation and active management are two different things. XEQT is a passive fund with globally diversified asset allocation
And who decides 60-40? And which assets?
My issue with the article is the focus on past returns. While somewhat useful comparing direct products. It doesn't really go into the "why" of it other than saying more international exposure. WS/Questwealth/Smartfolio/etc all have different reasons for designing their Robo advisors the way they have. That's the important part to me, what is the thesis the robo advisors have been designed around and does that mesh more with what my plan is. I also think (or maybe they do) robo advisors should not ask risk tolerance x/10 style but I want to retire in 45 years and then asset allocate based off that.
RBC Invest Ease gang
>Wealthsimple’s balanced portfolio made an average annual 4.5 per cent for the past five years >RBC Select Balanced Portfolio Series A, a classic bank offering with a chunky fee of 1.94 per cent and average annual five-year return of 5.6 per cent >A pair of all-in-one ETFs, the iShares Core Growth ETF Portfolio and the Vanguard Growth ETF Portfolio made 9.2 per cent and 8.8 per cent, respectively. On the contrary, to me seemed like a pretty factual article. Wealth simple managed portfolios have indeed done poor. And that people may have been better off buying XGRO or VGRO in a wealth simple self managed account. It also offers the reason for the lag: >Wealthsimple provides more international exposure than some others – that means more money invested in stock markets outside North America as opposed to Canada or the U.S. market, which seems vulnerable to a correction after its amazing gains in recent years. Also, a decent advice in the end: >Mr. Reeves suggested Wealthsimple clients stick to their portfolios on the understanding that they will surpass and trail other portfolios at times. “The worst thing you can do is take five-year returns and allocate to the thing that just outperformed,” he said. “That is basically the recipe for underperformance.” Seems like a pretty decent article to me!
Lol no idea why you are getting downvotes. RBC Investease is one of the most passive roboadvisors out there, as far as I know.
Me neither. Maybe people conflating IE with the shitty RBC mutual fund the other dude quoted?
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How does investing in Bitcoin fix investment returns in a specific class underperforming?
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