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Why I'm Switching to Wealthsimple Trade

Wealthsimple Trade Promo Shot

Being the savvy FIREwalker that I am means having my ear to the wall of any new fee structure the Canadian financial institutions of all sizes decide to ruin my day with. Whether its minimum annual spending increases on credit cards (looking at you Rogers Mastercard) or multi-product rebates becoming increasingly complicated (cut the crap RBC), it's quite annoying that the Canadian banking system makes regular and consistent increases to fees and commitments needed by us, their customers.

One overriding truth remains however - regardless of the bank, the higher the cost of the financial account, typically the better service you're going to get. As an example, since 2012 I've had almost all my financial products with RBC, save for a PC Mastercard. The ecosystem RBC provides is moderately expensive, mostly issue-free, and damn did they offer fantastic customer service. PC Mastercard on the other hand offers plenty of fraud on their credit cards* and has garbage customer service. Guess which one is discount knock-off bank and guess which one is a pricier fully-fledged financial institution. 

I'm not the type of guy to defend big banks like RBC but I also don't really have a problem with them either. I've been a happy RBC customer for nearly 8 years and I'd continue to be if it weren't for one small problem. 

They cost me too much money.

Their discount brokerage (RBC Direct Investing or RBC DI) still charges $10 a trade. That is $10 to buy, another $10 to sell. No discounts unless you're trading excessively and timing the market - which we FIREwalkers do not. 

Still, making regular contributions either every week or every other week makes RBC DI an expensive choice. Most Canadians are paid bi-weekly or 26 times a year. That's $260 of commissions for the privilege to type in "VEQT" when other platforms such as Wealthsimple Trade (WST) are letting you do so for free. But in my case, my household has income coming in every week which means my regular contributions will cost $520/year! If I wait for bi-weekly or monthly contributions I'm simply sitting on the sidelines for weeks at a time, missing out on the perpetual upward gain that is long-term investing in the stock market.

RBC DI is a easy discount brokerage to use but I don't think their product is in any way superior to WST. The times are a changin' and my user experience and tastes along with it. I bet yours are too which is why you've clicked on this article to read about Wealthsimple Trade, a $0 discount brokerage. Below is my short and simple review.

** I have included a referral link to Wealthsimple in my review. Please note I am not being paid or sponsored for this post, I just really like Wealthsimple and I think you will too. Plus if you sign up and use the product we each get $10. I'd love any support for the blog and my mission, thanks! **

Wealthsimple Trade (WST) can be described in three words: simple, frugal and new.


Why it's Simple
  • WST doesn't care much about showing off multiple data or features on one page and I quite like this. As you can see above, they get you to tap your way through the app to find the different features and it's quite seamless since they've put almost everything in a methodical spot.
  • So WST opts to guide you tap by tap when placing trades or doing pretty much anything on the app. It's not so much baby stepping you as it is just simplifying the experience. Too many competitors try to cram so much onto one screen - it makes the text small and boxes to tap on difficult. Plus its all just hard to process. I'm a huge proponent of less is more (aka Minimalism) and WST has built a superb simple experience. Huge win.
Why it's Frugal
  • The main reason WST has garnered warranted attention is by launching its app with $0 commissions. There is no nickel and diming to be seen anywhere! No minimums, funding your account from your bank has no charge, no minimum trades, etc. Unless you're transferring your accounts out of WST I can't find a single fee anywhere. How do they make money!?
  • Answer: it's a Loss Leader. They make money by bringing you into their ecosystem and eventually you will sign up for other products that do cost money or make them money in some way. I've never paid for Gmail or Google Maps but I can assure you Google has made money off of me for using those apps or when I bought a Pixel 2 XL.
  • WST hasn't connected this app to their other products yet (last updated May/2020) but when they do I'll be taking a closer look at their other products and the additional features the ecosystem can provide me. I'm particularly interested to see where Wealthsimple Cash and SimpleTax go. I'd love the simplicity of having mostly everything all in one app with zero fees.
Why it's New
  • You might think this is a bonus argument for WST but that's not the case. New is almost never good - new things malfunction or don't work as expected, new things are often over-hyped and new things sometimes fail miserably.
  • WST is new but it belongs to a well-established family of financial products which reassures me that it's here for the long haul and was built properly considering the success of its robo advisor. 
  • New can also means that the product is still incomplete. For example, you can move your RRSP and TFSA over the WST but not your LIRA (a product I unfortunately have). I think there are other features still in the wings for WST to get around to implementing but for our purposes here we are mostly just buying and holding index ETFs so there's nothing more we truly need.
  • WST still doesn't support USD accounts, which is the second problem for my LIRA (which holds entirely VTI in USD).
  • There are some display bugs that make the screen really cluttered when entering a trade - the numbers you type in are way too big. It's not stopping you from trading, it just a minor issue that looks ugly and will eventually be fixed.
Conclusion

While RBC hasn't done anything wrong by me, I must admit I'm ready to simplify my banking experience and switch my products over to something that costs less for comparable value. In order to keep my banking free at RBC I need to use multiple products and pay to trade on their DI platform. I'm thinking in time Wealthsimple is going to create their own ecosystem of financial products but with more mainstream "lite" options where cost is king and value is comparable. I've yet to call their customer service line with any issue so I can't confirm or deny a decent customer service phone call... yet.

I'm guessing a lot of you guys might be in the same boat, holding onto that "Big-6" discount brokerage account for convenience rather than value. Do yourself a favour and set up low-cost alternatives such as Wealthsimple Trade and give it a shot. Since it's undoubtedly the most cost-effective platform out there the only thing you have to lose is your time and you may be gaining that time and money right back if you decide to switch over. Here's my referral link if you're interested in hopping onboard. If you're not feeling WST, you should check out Questrade as an alternative.

Thanks for reading,

Ryan Myricks

You can email me here: canadianfire1@gmail.com (I respond to everybody)

* My wife and I through the course of 13 months had to call and report fraud purchases on our PC World Elite Mastercard 3 freaking times! Each time we had to be mailed an affidavit to sign and mail back that we didn't actually purchase the $1200 Air BNB in the UK and other foreign nonsense that showed up on those transactions. The security seems to be questionable and the customer service rep sounded like she couldn't care less. Blah! Never went back.

Comments

  1. If I was still DIYing, I'd sign up for WST with you referral code and get each of us $5, ha ha.

    But $5 aside, it does sound like an okay brokerage option, if your account needs fit with what they offer.

    IMO, the lack of USD accounts is a huge turn off. But you're right, they're new, and new means things are still being developed.

    Let's hope they eventually grow big enough to seriously compete with Questrade.

    Thanks for the detailed overview!

    ReplyDelete
    Replies
    1. Thanks Chrissy. I think some of my readers who are new to investing and are following my 7 Simple Steps and/or Canadian Couch Potato Models should be using WST, it's just too good of a starting option to be ignored. $0 fees and buying an all-in-one Vanguard fund? It's a no-brainer.

      Us veteran investors will need more than WST but like you said I'm hoping there's a future where WST dominates the scene.

      Delete
  2. Hopefully, at some point the banks will lower their trading fees ($10 per trade is probly a HUGE markup).
    BTW, its cool to learn that I'm not the only FIREd person in KW.

    ReplyDelete
    Replies
    1. Hey Oscar, glad to see a KW local pop in.

      $10/trade is a total shakedown! Especially since TD in the US has $0 trades due to apps like Robinhood. I like having everything under one roof but who's got the cash for that.

      Delete

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