In 2014, Michael Katchen founded Wealthsimple, a robo-advisor company with a mission to democratize financial services, making them accessible to everyone regardless of age or income level. Katchen shared that the idea for Wealthsimple emerged during his time working in Silicon Valley, where he hosted workshops on DIY investing. By 2017, the company expanded into the U.S. and U.K. markets, marking the beginning of its remarkable success. Learn more at toronto-future.com.
Headquarters, Assets, and the App
Wealthsimple’s headquarters is located in Toronto, with additional offices in New York and London. Michael Katchen plans to take the company public in the coming years, targeting $20 billion in assets under management (AUM) as the milestone for an IPO. As of Q1 2019, Wealthsimple reported $4.3 billion in AUM and approximately 150,000 clients.
Unlike pure robo-advisors, Wealthsimple combines automated systems with human financial experts who monitor investment portfolios. Higher-tier clients receive dedicated support teams and portfolio analysis. Financial planning and goal-setting are available to Wealthsimple Generation clients, while basic users get straightforward financial advice.
The company pairs its tools with a sleek, minimalist app and website design tailored to young investors. The platform prioritizes simplicity and ease of use.
Account Types Available to Investors
In Canada, Wealthsimple accounts are insured by the Canadian Investor Protection Fund (CIPF), covering up to $1 million CAD. In the U.S., the Securities Investor Protection Corporation (SIPC) insures up to $500,000 USD, while in the U.K., the Financial Services Compensation Scheme (FSCS) guarantees up to £50,000.
All accounts are subject to Wealthsimple’s management fees: 0.5% for Wealthsimple Basic and 0.4% for Black or Generation tiers. Additionally, ETFs in the portfolios charge a management expense ratio (MER) of 0.1%-0.2%, which is deducted from the fund’s value.
Canadian accounts include:
- TFSA (tax-free savings)
- RESP (education savings)
- RRIF/RRSP/Spousal RRSP (retirement savings)
- LIRA (pension rollovers)
- Non-registered and corporate investment accounts
U.S. accounts include: Traditional IRA, SEP IRA (for self-employed).
U.K. accounts include: ISA, JISA (junior ISAs), and personal investment accounts.
Wealthsimple’s Three Account Tiers
1. Basic: For balances under $100,000. Features a 0.5% management fee, socially responsible investing (SRI) options, automated portfolio rebalancing, dividend reinvestment, and financial advice.
2. Black: For balances over $100,000. Reduces the fee to 0.4% and adds tax-loss harvesting, tax-efficient funds, financial consultations, and VIP airport lounge access.
3. Generation: For balances exceeding $500,000. Includes all Black-tier perks, personalized financial planning, tailored portfolios, and a 50% discount on Medcan health plans.
Investment Portfolios
Wealthsimple builds portfolios using Nobel Prize-winning Modern Portfolio Theory, emphasizing low-cost ETFs for diversification and risk minimization. Clients complete a brief risk-tolerance questionnaire during the 10-15 minute signup, and portfolios are customized as:
1. Conservative: 75% bonds, 25% stocks (low volatility).
2. Balanced: 50% bonds, 50% stocks (moderate risk).
3. Growth: 75-90% stocks, 10-25% bonds (higher risk/reward).
Socially Responsible Investing (SRI)
Wealthsimple’s SRI option focuses on low-carbon companies, clean-tech innovators, and human rights leaders, using ETFs like:
- PZD (clean tech)
- CRBN (low-carbon)
- VIDI (international equities)
- ZFM/XEN (bonds/social index)
SRI portfolios have no extra fees but carry higher MERs (0.25%-0.40%) compared to standard portfolios (0.1%-0.2%).
