May 17, 2022
Automated investment services (also knows as robo-advisers) are all the rage. There are many benefits of using such a service, such as the “set it and forget it” approach to investing.
As you learn more about these services, you’ll come to find two things to be true:
- There is no shortage of robo-advisors to choose from
- There are both pros and cons to using this type of service
Wealthfront and Wealthsimple are two of the biggest names in the space, with both of them helping hundreds of thousands of investors reach their goals.
In this article, we’ll take a closer look at the features of both services, giving you a better idea of which one could best suit your investing needs.
Here’s what the homepage of the Wealthfront website says:
Unlike banks that let your cash sit in your accounts, we use technology to make more money on all your money, with no effort from you.
That’s a good overview of what you get when you invest with Wealthfront. Of course, there’s more that you need to know, so let’s dive into the details. Here are some of the top benefits:
For example, there’s a promotion that allows for free management of the first $5,000 you invest. Keep your eyes open and you may find a deal that’s even better than that.
This is what a robo-advisor can do for you. Thanks to technology, it’s able to rebalance your portfolio on the fly, ensuring that it meets your risk criteria and goals. When you self-manage your portfolio, you’ll make these decisions on your own.
Industry-leading customer service: You never want to have questions or concerns when it comes to your investments. And if you do, you hope to get clarification sooner rather than later. And that’s where Wealthfront comes into play. With industry-leading customer service, there’s always someone available to provide the assistance you need.
Conversely, there are a couple of things you may not like about Wealthfront:
This is becoming more and more popular with online investment platforms, but it’s not something that Wealthfront offers at the present time. Of course, if they follow the industry trends, they may look into this in the future.
$500 account minimum: If you don’t have at least $500 to invest right now, you’re unable to open a Wealthfront account. Some competitors don’t have an account minimum, so this is one of the more noticeable disadvantages.
0.25 percent management fee: It’s not the highest management fee you’ll come across, but it’s money out of your pocket nonetheless. Should you decide to manage your own investments, you can forget about paying this fee.
There’s a lot to like about Wealthfront, but make sure you think long and hard about the pros and cons above before signing up for an account.
Wealthsimple is similar to Wealthfront in many ways. Here’s what you see when you visit their homepage:
Get rich slow: Powerful financial tools to help you grow and manage your money.
As you can see, Wealthsimple positions its service as one that can help you slowly grow your account.
Just the same as Wealthfront, there are both pros and cons of opening a Wealthsimple account and investing with the service. Let’s start with the benefits once again.
Even though this is an automated investment service, you still have access to human advisors should you want more detailed guidance. This is something that many competitors don’t offer.
Do you remember above when we talked about Wealthfront’s $500 account minimum? Well, you don’t have to worry about that with Wealthsimple. You don’t need any money to open an account. That’s a good feature for investors who are just getting started or unsure if a robo-advisor is right for them.
This goes a long way in helping you understand the current state of your portfolio, which allows you to make more informed investing decisions in the future.
Now, it’s time to look at a couple of potential drawbacks associated with relying on Wealthsimple:
The more tools you can access, the better decisions you can make as an investor. Unfortunately, Wealthsimple comes up short in this area, thus forcing you to use tools on other websites.
Not only is this hire than Wealthfront, but it’s also higher than most other major players in the industry. You have to make a personal decision as to whether you’re comfortable paying this much money for a robo-advisor to manage your investments.
As you compare Wealthfront and Wealthsimple, you’ll find that they share many of the same features and benefits. And for that reason, it can be a challenge to determine which one is best for you.
Your investment strategy is critical to your future, so don’t make the mistake of signing up for any service on a whim. It takes a good level of research to ensure yourself of making a sound decision.
Here are some questions that can help you make a more informed choice when the time comes:
- How much money are you comfortable spending on a management fee?
- Are there any features that you must have?
- Have you read reviews from people who have used or are using the service?
- Have you reached out to the customer service team to ask questions?
By now, you should have a better understanding of what a robo-advisor has to offer. Furthermore, we’ve provided detailed information on both Wealthfront and Wealthsimple.
While a robo-advisor is something to consider, don’t lose sight of the fact that it’ll cost you money in management fees.
So, rather than go down this path, look into self-managing your investments with a service such as Passiv. This gives you more control over your investments and a better understanding of your finances, without the high cost.
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