If you’ve decided to try out online investing and have narrowed down your choices to Wealthsimple and Questrade—congratulations! Both are solid Canadian options that can help you grow your money and achieve your investment goals.
But choosing between the two can be tricky. While the two financial services providers have very similar options, they aren’t identical. The best choice will depend on your situation and preferences—particularly whether you want to pick your own self-directed investments or let a robo-advisor pick a portfolio of investments for you.
Comparison of brokerage services
Questrade* started making its name as a low-cost provider of brokerage services in 1999, long before the term “fintech” entered the lexicon. Today, it offers almost every type of investment—including stocks, bonds, ETFs, mutual funds, GICs, options, initial public offerings, and other equities such as precious metals—with much lower trading fees than traditional brokerages, banks or other financial institutions. (Read our review of Questrade* for more information.)
Wealthsimple*, on the other hand, entered the brokerage market only in 2019 with a mobile app service called Wealthsimple Trade. So far, the only investments available through the service are ETFs or stocks listed on the NYSE, NASDAQ, TSX or TSX-V exchanges. And, even then, there are further restrictions. For example, stocks must be priced at a minimum of $0.50 per share and trade an average of at least 50,000 shares daily. Furthermore, if an asset is listed on both a US exchange and a Canadian exchange (i.e., it is a dual-listed security), only the Canadian-listed asset is available. (You can find additional details in our Wealthsimple* review.)
In terms of account types, Wealthsimple Trade offers personal (non-registered) accounts, TFSAs* or RRSPs—that’s it. In comparison, Questrade’s clients can hold investments in many different tax-sheltered registered accounts (e.g., RRSP, TFSA, RESP, LIRA, RIF, LIF) and taxable non-registered accounts (e.g., margin and foreign exchange market accounts).
Another significant limitation to Wealthsimple Trade: the platform doesn’t support RRSP* transfers from other financial institutions, RRSP withdrawals, or even transfers to or from other Wealthsimple investment accounts.
The big plus for Wealthsimple Trade is its fees, which are literally impossible to beat: $0 commission on all purchases, sales and trades. The service currently primarily makes money from a 1.5% currency conversion fee charged on Canadian-to-U.S. dollar conversions (and vice-versa) that are required to trade U.S.-listed securities, and it plans to add premium services in the future that will come at extra cost.
Here’s a detailed breakdown on how the two brokerage services compare:
|Online broker||QUESTRADE||WEALTHSIMPLE TRADE|
|Account types||TFSA, RRSP, RESP, LIRA, RIF, LIF, personal (non-registered), margin||TFSA, RRSP, personal (non-registered)|
|Minimum balance to invest||$1,000||$0|
|Platform(s)||Website, iOS, Android||iOS, Android|
|ETFs||Purchases: $0/trades: $4.95 to $9.95||Purchases/trades: $0|
|Stocks||Purchases/trades: $4.95 to $9.95||Purchases/trades: $0|
|Bonds/GICs||Min. purchase $5,000; fees may apply if withdrawn early||Not offered|
|International equities||1% of the trade value; $195 minimum||Not offered|
|Precious metals||US$19.95 per trade||Not offered|
|Inactivity fee||$24.95 per quarter, if balance is less than $5,000||None|
|Currency (US/CDN) conversion||N/A||1.5%|
Bottom line: Should DIY investors choose Questrade or Wealthsimple Trade?
For some, the draw of commission-free purchases and trades (and no inactivity fee under any circumstances) will be reason enough to choose Wealthsimple Trade, particularly those not interested in specialized investments or account types.
Questrade, however, will be the better option for many other self-directed investors, including those who:
- Want to trade U.S. stocks and ETFs. Wealthsimple Trade’s 1.5% currency conversion fee makes investing in U.S. stocks and ETFs very costly. While, technically, Questrade also charges a currency conversion fee, it doesn’t apply so long as you keep those investments in U.S.-dollar assets indefinitely. Wealthsimple Trade, on the other hand, requires all assets to be held in Canadian dollars, which means you incur the currency conversion fee with every applicable trade.
- Are retired or have young children/grandchildren. These investors may want to open retirement income funds (RIFs/LIFs) or registered education savings plans (RESPs), which are not yet offered through Wealthsimple Trade.
- Want a wider choice of investments. As previously mentioned, Wealthsimple Trade’s stock and ETF offerings are limited, and it doesn’t offer bonds, international equities, precious metals or other assets that Questrade does.
- Prefer a desktop platform. Since Wealthsimple Trade is currently only available as a mobile app, it won’t be the go-to service for investors who like to make financial decisions while seated in front of their computers. Questrade’s robust investment and account offerings make it the broker of choice for investors who want a full slate of options available to them.
Comparison of robo-advisor services
Wealthsimple launched as a robo-advisor in 2014, the same year that Questrade added its own offering of “pre-fab” portfolios for investors, called Questwealth Portfolios. The two robo-advisor services work in much the same way.
Clients spend a few minutes answering questions online about their age, comfort level with risk and investment goals. Based on the answers provided, an algorithm recommends a diversified portfolio of low-fee ETFs.
The difference between each portfolio is the ratio between higher-risk investments, such as Canadian, U.S. and international equity ETFs, and lower-risk fixed-income ETFs, such as bonds and GICs. An aggressive portfolio would be weighted toward riskier investments (which also offer the possibility of greater returns), while a conservative one will include more low-risk investments. To help you maintain that preferred asset allocation, both services periodically rebalance the portfolios for you.
Both services also offer socially responsible investment (SRI) versions of each portfolio, which support companies that prioritize environmental and social concerns and have a positive record on human rights and corruption. (In addition, Wealthsimple has Halal portfolios, for those who adhere to Islamic law.)
Both offer the gamut of account types for their robo-advisor services.
So far, it’s same-same, right? There are, however, two major differences between Wealthsimple and Questwealth Portfolios:
- Questwealth Portfolios is not a true robo-advisor. Unlike Wealthsimple, which relies 100% on algorithms and automation to monitor and rebalance your portfolio when necessary, Questwealth has actual human experts who manage your portfolio for you, without the high fees that most portfolio managers charge for this service. This can be considered a good or a bad thing, depending on your point of view. While some may appreciate the human touch, research shows that actively managed portfolios do not fare as well as those that are automated. (Having said that, the past performance of Questwealth Portfolios has been at least as good or better than benchmark targets or other robo-advisors.)
- Fees. To understand how much each service costs, you must look at both the overall management fee, which is a percentage of the total amount of money you have invested, as well as management expense ratios (MERs), which are charged on each individual ETF.
Here’s how the fees break down, along with a few other similarities/differences:
|Online broker||WEALTHSIMPLE||QUESTWEALTH PORTFOLIOS|
|Minimum balance to invest||$0||$1,000|
|Portfolio options||Growth, balanced, conservative, SRI, Halal||Aggressive, growth, balanced income, conservative, SRI|
|Account types||TFSA, RRSP, RESP, LIRA, RIF, LIF, personal, corporate||TFSA, RRSP, RESP, LIRA, RIF, LIF, personal, corporate|
|Platform(s)||Website, iOS, Android||Website, iOS, Android|
|Management fee||0.5% for balances < $100,000
0.4% for balances $100,000+
|0.25% for balances < $100,000
0.2% for balances $100,000+
|MERs||0.2% (average); 0.25% to 0.4% for socially responsible investments||0.2% (average); 0.21% to 0.35% for socially responsible investments|
annual fee for a
|$350 (or $375 to $450 for an SRI portfolio)||$225 (or $230 to $300 for an SRI portfolio)|
|Approx. total annual fee for a $100K portfolio||$600 ($650 to $800 for an SRI portfolio)||$400 ($410 to $550 for an SRI portfolio)|
Bottom line: which robo-advisor is right for you?
Both robo-advisors are good options for Canadians who want a hands-off, low-fee investing option that minimizes risks and maximizes returns.
If you have at least $1,000 to invest, and you don’t mind that the process is not entirely automated, Questwealth Portfolios wins out as the more cost-effective robo-advisor of the two.
For those who want to get started with their investments right away and don’t have $1,000 on hand, or who feel more secure with the full automation of a true robo-advisor service, Wealthsimple has you covered. Same goes for investors who want a Halal portfolio provided by a robo-advisor.
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