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Robo-advisors are great tools for investing, especially if you want something that simplifies decision making and makes money management incredibly easy.
Two popular options for Canadians are CI Direct Investing (formerly known as Wealthbar) and Wealthsimple. How do these two platforms stack up side-by-side?
In this Wealth Rocket review, we’ll take a closer look at CI Direct Investing / Wealthbar and Wealthsimple.
In this comparison, we’ll take a look at CI Direct Investing / WealthBar and Wealthsimple, and compare how each investing platforms works, the types of accounts offered, the assets available, fees, sign-up requirements, funding methods, customer support, safety, and additional services.
Both CI Direct Investing / Wealthbar and Wealthsimple work in essentially the same way.
When you open an account, you will select a risk profile based on your personal preferences and goals.
The robo-advisor then purchases Exchange Traded Funds (ETFs) on your behalf and automatically buys and sells different investments to make sure your portfolio stays balanced.
CI Direct Investing / Wealthbar and Wealthsimple use different funds to accomplish this. However, to you, the investor, the difference is negligible. Both services base their investment strategy on the same research piece, known as “modern portfolio theory.”
Winner: It’s a tie. CI Direct Investing / Wealthbar and Wealthsimple work very similarly to each other. Investors advanced enough to care about the subtle differences are probably looking for other ways to invest, anyway.
Canadians have access to different investing accounts, granting them several options to save for the future.
The most types of investing popular are Registered Retirement Savings Plans (RRSP), Tax-Free Savings Accounts (TFSA), and Registered Education Savings Plans (RESPs).
Both Wealthsimple and CI Direct Investing / Wealthbar offer all three of these accounts, as well as additional types of retirement accounts for later in life, like Registered Retirement Income Funds (RRIFs) and Locked-In Retirement Accounts (LIRAs). Both also allow you to open non-registered personal accounts, joint accounts, and business accounts.
CI Direct Investing / Wealthbar also offers a few more specialty accounts, including group plans, trust accounts, and pension plans that may be a preferable alternative to RRSPs for a very select group of people.
Winner: It’s a tie. CI Direct Investing / Wealthbar may have a slight edge for some very specific use cases. Still, an overwhelming majority of Canadians will be able to open all of the accounts they need with either of these two offers.
Both CI Direct Investing / Wealthbar and Wealthsimple build your portfolio using ETFs.
Like mutual funds, ETFs are like containers for a number of other investments.
The difference is that mutual funds are actively managed by people, and ETFs follow strict rules established from the time they’re conceived.
ETFs tend to closely follow entire markets, and are much less expensive to own than mutual funds, thanks to their far lower overhead costs.
Both services will build you a portfolio including ETFs covering corporate bonds, US equities, international equities, Canadian equities, high-yield bonds, real estate, government bonds, and other types of assets.
Note that you won’t get a choice in which specific funds/investments you choose with CI Direct Investing / Wealthbar or Wealthsimple.
If you want to pick your own investments, you’ll need to choose a portfolio management service rather than a robo-advisor.
Winner: It’s a tie. Whether you choose Wealthsimple or WealthBar, your portfolio will comprise a variety of ETFs on your behalf.
Now we get to the juicy stuff! Wealthsimple and CI Direct Investing / Wealthbar both charge a management fee based on the value of your portfolio. The more you invest, the lower your fee.
CI Direct Investing / Wealthbar investors are charged 0.60% per year for the first $150,000 invested, 0.40% per year for the next $350,000, and 0.35% per year for any additional amount.
Wealthsimple investors pay 0.50% per year if they have invested less than $100,000, and 0.40% per year if they invest $100,000 or more.
In addition, investors will pay a Management Expense Ratio (MER) on the ETFs their portfolios comprise.
Wealthsimple’s ETF selection has slightly lower MER fees, averaging about 0.20%, compared with an estimated 0.26% – 0.34% for CI Direct Investing.
Winner: Wealthsimple. Because of its simpler pricing structure and lower threshold for a price break, Wealthsimple is the less expensive option for anyone investing up to roughly $1,000,000.
Both Wealthsimple and CI Direct Investing / Wealthbar allow you to open an account with no money, but neither will start investing your money until the account contains at least $1,000.
Winner: It’s a tie. Both services will hold investments as cash until the account surpasses $1,000.
Before you can invest, you must fund (add money to) your account. Whether you use CI Direct Investing / Wealthbar or Wealthsimple, the process is similar.
Both allow you to link your chequing account and transfer money in and out using their website or mobile app. You can choose to make a one-time deposit or a recurring deposit.
Both services take a few days to post (apply) the money you deposit to your account.
Winner: It’s a tie. Both Wealthsimple and CI Direct Investing / Wealthbar make it easy to deposit and withdraw money from your account.
When you’re trusting a company with your life savings, it’s important to have solid access to help when you need it. Even better is the ability to get your questions answered by a human being.
CI Direct Investing / Wealthbar customers get automatic access to advice from a Certified Financial Planner (CFP).
You can get in touch with an advisor using the web or mobile app, e-mail, or through a 1-800 number. You can also book 30-minute appointments with a CFP, available by request and are bookable with just a few clicks on the website.
Wealthsimple customers also have access to help via e-mail or phone.
Wealthsimple also offers a portfolio review service, which is exactly what it sounds like.
Winner: It’s a tie. Both CI Direct Investing / Wealthbar and Wealthsimple offer support by phone and e-mail, and give you the option to connect with an expert for detailed advice.
Keeping your investments safe is a top priority for CI Direct Investing / Wealthbar and Wealthsimple, alike.
Both services use third-party custodians (companies that actually hold your investments), covered by the Canadian Investor Protection Fund (CIPF) insurance. Your investments (but not their value) are protected up to $1-million in the unlikely event one of these custodians becomes insolvent.
Additionally, CI Direct Investing / Wealthbar and Wealthsimple both offer security measures on their apps, including encryption and two-factor authentication (2FA).
An important note is that your investments themselves carry a risk that isn’t covered by anyone.There is the potential for your investments to lose value, and neither CI Direct Investing / Wealthbar nor Wealthsimple make any guarantees about how your investments will perform.
Winner: It’s a tie. CI Direct Investing / Wealthbar and Wealthsimple both use third-party custodians with equal insurance coverage and use of industry-standard security features on their own products.
In addition to being a robo-advisor, Wealthsimple also offers several other services to help you invest.
Its cash app is poised to become Canada’s answer to Venmo, combined with a high-interest savings account. It offers commission-free stock and ETF trading (although with limited functionality) and cryptocurrency investing, as well.
CI Direct Investing’s parent company, CI Financial, has several other wealth and asset management subsidiaries but doesn’t offer any other services directly to CI Direct Investing / Wealthbar customers besides its robo-advisor platform.
Winner: Wealthsimple. Clearly on a path toward being a complete money management service for Canadians, Wealthsimple has more to offer for the long-term and for your complete financial picture.
Across all of these categories, there is only a clear winner in two categories: fees and other services.
For average investors, meaning people with less than $1-million invested, Wealthsimple is the less expensive option by a small margin. Choosing Wealthsimple over CI Direct Investing / Wealthbar will save you about $100 per year for a $100,000 portfolio or about $200 per year on a $200,000 portfolio.
For those who want to combine their automated investing with other services like a savings account and stock trading, Wealthsimple also has more to offer. Though its additional services are rudimentary for now, Wealthsimple customers are on pace to get more value in the long-term than CI Direct Investing / Wealthbar customers.
In all the other categories, account types, asset types, minimum deposits, support, and safety, Wealthsimple and CI Direct Investing / Wealthbar are essentially equal.
Wealthsimple and CI Direct Investing / Wealthbar are equally easy to use. Both let you sign up and manage your account online. Both make it really easy to maintain a diversified portfolio that’s suited to your goals. And both allow you to deposit and withdraw your money whenever you need to.
Yes. CI Direct Investing / Wealthbar and Wealthsimple both charge a management fee, expressed as a percentage of the value of your portfolio per year.
These fees are calculated daily and charged monthly, the same way interest is paid on your savings account (except the money goes to them, not you).
No! I won’t do it! Personal finance is personal, and there’s not a right answer for everybody. Your choice is yours and yours alone.
In case it helps you make your (YOUR) decision, if I were choosing between these two, personally, for me (and not you), I would choose Wealthsimple.
Its fees are lower, including the MER fees on the ETFs that make up its portfolios. It has a wider range of services available, and more are on the way.
