The Wealthsimple App: Is Your Money Safe? 5 Pros & 4 Cons

By Chika


Last Updated: April 7, 2023


With too many online investment platforms available, finding one that suits your needs can be challenging.

There are several factors to consider when making an appropriate decision.

Factors such as:

  • security
  • licensing
  • number of assets traded on the platform
  • payment methods
  • etc.

One investment platform that checks all these boxes is Wealthsimple.

In this article, we attempt to answer your most pressing questions about Wealthsimple so that you can make an informed choice. 



What is Wealthsimple?

Headquartered in Toronto, Canada, Wealthsimple is an online investment and financial planning service founded in 2014.

In 2020, WealthSimple acquired Canadian online broker ShareOwner. This allowed Wealthsimple brokerage services to customers. As such, customers could trade stocks and ETFs for the first time.

This was followed up with the launch of Wealthsimple Crypto, the first and only regulated crypto exchange in Canada.

Account holders get free access to thousands of stocks and ETFs listed on US and Canadian exchanges. There are also lots of cryptocurrencies on offer. Wealthsimple also supports trading in fractional shares which makes it easily accessible to retail traders that don't have a lot of capital. 

The company manages over $5 billion in assets (as of August 2020). 



Does Wealthsimple charge trading commissions?

Wealthsimple Trade was one of the first trading platforms in Canada to offer commission-free stocks and ETFs.

There are no annual account fees or account minimums for account holders.

However, there are other fees such as a 1.5% currency conversion fee in Wealthsimple Trade. To pay less in currency conversion fees, you can choose to upgrade your account to the Plus version for $10 a month.



How Does Wealthsimple Make Money?

Wealthsimple makes money through various methods. Let's have a look at them.


1. Payment for Order Flow (PFOF)

Payment for order flow (PFOF) simply means rerouting an order (to buy or sell a security) to a third party (market maker) for execution.

The order is then executed at the largest bid-ask spread. This means it's bought at the lowest price and sold to the person executing the order at the highest price while the trading platform receives a percentage of the additional spread earned.

This revenue stream is relatively new to Wealthsimple as the platform previously did not earn any money from routing orders to market-makers.


2. Management Fees

Wealthsimple generates revenues from management fees charged to its clients, which range from 0.4% to 0.5% of assets under management per year. 

The Basic package for those who invest under $100,000 has a 0.5% management fee. For anything over that amount (Black or Generation accounts), the management fee drops to 0.4%. 

Additionally, through managing exchange-traded funds (ETFs), Wealthsimple collects 0.1% of every dollar invested in maintaining the ETF itself.


3. Wealthsimple Trade Plus Subscription

Wealthsimple Trade offers a paid subscription called Plus. This allows you to trade all US stocks without commission charges for $10 per month. There are also no currency conversion charges on trades, and you also get unlimited price change alerts. 


4. Crypto Fees

Through Wealthsimple Crypto, an ‘Operations Fee’ of 1.5%-2% is charged for each transaction.

The fee is charged by applying a percentage to the bid-ask spread at which buy and sell orders are executed. The spreads are available for investors to see on the Wealthsimple app.


5. Currency Conversion Fees

Although they don’t charge trading fees directly, clients who wish to trade US equities must convert Canadian dollars to US Dollars.

For this conversion, Wealthsimple charges a 1.5% currency conversion fee. This is only charged for Wealthsimple Basic users who have not subscribed to Wealthsimple Plus. Clients using the Basic package for Trade will pay 1.5% on exchange fees for all US-listed assets on both buy and sell orders.

The fee is lumped into the total foreign exchange cost applied to each order execution. The rate for each trade will be available on the confirmation after the order has been fulfilled.



Is my money safe in Wealthsimple?

Any balance in your account(s) is held in trust for you with members of the Canada Deposit Insurance Corporation (CDIC).

The CDIC protects eligible deposits held at CDIC member institutions in case of a member institution's failure. 

All securities are beneficially held under your name, which means you could choose to keep your money with Wealthsimple Investments Inc. or transfer it to a new advisor or your bank account.

Wealthsimple is affiliated with Canadian ShareOwner Investments Inc, which acts as the custodial broker for the company. This means that through this organizational structure, securities in your account are held under them.

This means that if Wealthsimple were to go bankrupt, your assets would remain with Canadian ShareOwner Investments and you would be able to transfer your money to another financial institution.


Wealthsimple Crypto

For those using Wealthsimple Crypto, several security measures are in place to protect investors. Though cryptocurrency is not as highly regulated as other securities like stocks, investors can still feel safe knowing that there are checks and balances in place.

Wealthsimple Crypto works with Gemini Inc as a custodial company for crypto assets. This means that any crypto purchased by users is held by Gemini for additional layers of security such as cold storage. This means that assets are stored disconnected from networks in a way that prevents theft.

In addition, Gemini’s insurance policy will cover up to $200 million in aggregate losses for Wealthsimple customers that are a result of theft, security breaches, or fraudulent employee activity.

In addition, Wealthsimple also has a partnership with Coincover, a leading cryptocurrency insurance provider. They provide Secure Key Material Storage and Recovery Deposit Protection Guarantee.


How long until I can withdraw funds from Wealthsimple?

To make a withdrawal from any Wealthsimple account, the funds will have to have been in your account for a minimum of five business days.

Timelines for withdrawals will depend on the account that you're withdrawing from.

Read this next: Curious About Investing? A Few Things You Should Know Before You Get Started



5 Pros of Wealthsimple

No account minimum: There is no minimum amount you need to have before opening an account. 

Fractional shares: You can purchase fractional shares of major companies such as Microsoft, Netflix, Tesla, or Shopify.

Tax-free accounts: You can open a tax-free savings accounts (TFSAs) and registered retirement savings plans (RRSPs) on the Wealthsimple app. 

Real-time data: Traders get access to real-time, on-demand quotes and unlimited price alerts

User-friendly: The Wealthsimple Trade app is attractive, clean and intuitive; even first-time investors will find it easy to use. 



4 Cons of Wealthsimple

Limited assets

There are a limited number of assets that are available on Wealthsimple. While you can invest in stocks and ETFs, there are a select number of cryptocurrencies available on the platform. Also, you can't trade mutual funds or purchase IPOs, which are not available.


Currency conversion fees

Wealthsimple charges currency conversion fees when you trade assets that are not domiciled in Canada.

For example, if you want to buy any stock listed on the US exchange, you will be charged for currency conversion. To own US securities without worrying about currency conversion charges, you’ll need to subscribe to the Trade Plus plan, which costs $10 a month. 



Some traders and investors would like to make informed decisions before committing their money.

This entails having access to educational resources and market analysis. However, these features are not available on Wealthsimple, which can make it harder for newbie investors to make informed decisions. 


Delay in conforming deposits

Deposits over $1,500 may take up to 3 business days to process. 

Photo by Liza Summer


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