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Why Wealthsimple is the standout robo

Why Wealthsimple is the standout robo

The Financial Conduct Authority criticised automated advice and online discretionary managers last month over suitability failings and charges. Selin Bucak, who has invested money with five robo advisers, Nutmeg, Moola, Wealthify, Moneyfarm and Wealthsimple, has decided to review the companies from the perspective of an individual investor, with one question on her mind: was the FCA right? 

Robo-adviser Wealthsimple stands out in a number of ways for me. Although it is quite young in the UK, it has had operations in the US and Canada for far longer.

I invested straight after it launched here in September 2017 but I could immediately tell that there was significant experience behind it: no glitches, no beta testing, no constant updates. The service has stayed the same for me since then.

The company itself has launched SRI portfolios and raised £37 million in a new funding round since then, but these are things that have not directly impacted my experience.

What was interesting was speaking to the firm’s Europe CEO Toby Triebel, I found out that the team at Wealthsimple had been expecting the Financial Conduct Authority’s (FCA) review.

He said: ‘The report’s been no surprise to use and we continue to be supportive of the FCAs review. We think the report is very fair, it asks for greater transparency that will provide better experience for clients.

‘We exist to make smart investing available to everyone. It ensures an even playing field. Consumers should be treated fairly, regardless of what they are.’

It has not yet been a year since I started investing with Wealthsimple, but Triebel says that when I do hit the 12-month mark, they will be re-running the suitability questionnaire to make sure that I still have the right portfolio.

Speaking of which, Wealthsimple, which has a cautious, balanced and growth portfolio, placed me in the latter. This means that the £1,050 that I invested is allocated roughly 67% in equities, 1.2% in cash and the rest in bonds. 

My risk assessment says:

Your financial and personal circumstances are such that if there was a market fall, in our assessment it would have a medium impact on your investment position. You have a medium level of investment experience. You are comfortable with a medium level of investment risk.

 

What should companies do?

Triebel is confident that the firm is on the right track, and attributes some of that to the advantages of being such a young company, which I agree with.

He said: ‘We offer restricted investment advice. We have done from the very beginning. We were only regulated in 2017, so we’ve been speaking to the regulator as it was thinking about all these issues. We launched with many of those in mind.

‘I think the new robos are probably more agile and quicker to respond to the changes. We are very close to the FCA, we work with them to help save the industry we really care for.’

Fees

Wealthsimple charges 0.7% for the service, including VAT. There is also a management fee for the passive funds in the portfolio, which is expected to be around 0.2% annually. In cases where the firm needs to buy or sell different currencies there is also another 0.2% that can be charged for currency conversion.

So how does Wealthsimple keep fees low?

Triebel said: ‘It’s a combination of things, mainly driven by technology. We use technology, not in the sense of a robot doing things behind the scenes, but we have 170 people globally. We use technology to automate systems and processes, not just the front end.’   

Verdict

Since the start I have always said I like Wealthsimple. I like the presentation, the information, the fact that it has the ability to buy a normal fund (the Pimco Global High Yield Bond fund) when the team thinks it is necessary are all very attractive for an investor like me: someone who knows the markets, has financial knowledge, but does not want to deal with making any investment decisions. After I build up my investments, I can also move to a socially responsible portfolio, which is what I want to do, so I’m happy to have the option already there. In terms of the suitability of my portfolio, growth is definitely where I should be!

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