Wealthsimple vs. Nest Wealth 2022
What images come to mind when you think of investing? If you believe it’s only the domain of Wall Street wolves, think again. Thanks to the emergence of digital tools, investing is now more common and accessible than ever. You might already be investing without even realizing it.
In this article, we’ll take a look at two of Canada’s most famous wealth management tools to help you determine where you should stash your hard-earned cash. We present you with the battle of Wealthsimple vs. Nest Wealth, two of the best robo-advisors in Canada.
Table of Contents
Wealthsimple vs. Nest Wealth: Overview
Wealthsimple is a Canadian fintech company established in 2014. It may not have been the first service of its kind, but it’s grown to be the most popular in Canada, with more than 2 million users as of 2021.
Wealthsimple uses app-based software to help customers save up for purchases or to build nest eggs by using a Nobel peace prize-winning algorithm that replicates the market.
The online investing service offers both registered accounts, such as the Tax-Free Savings Account (TFSA) and the Registered Retirement Savings Account (RRSP), and non-registered accounts, such as personal accounts, savings accounts, and business accounts.
Upon sign-up, customers start by filling out a basic questionnaire that will assign them a level of risk tolerance. Wealthsimple then creates an investment portfolio that is made up of various stocks and bonds.
Additional portfolio options include Halal, which allows investors to invest in investments that align with the Islamic faith, or Socially Responsible Investing (SRI) portfolios, which builds portfolios containing ethical investments.
Nest Wealth: Overview
Nest Wealth entered Canada's financial scene in 2014. At the time, Nest Wealth was Canada’s very first Software as a Service (SaaS) digital wealth management service.
Today, Nest Wealth offers individual investor solutions as well as solutions for financial advisors, financial institutions, and employers. That’s a lot of different buckets that they have their hands in. So what exactly do they all mean?Nest Wealth works with institutions on a B2B basis, providing access to their intuitive technology, while also helping employers provide benefits to their employees and providing independent financial advisors with tools that they can use to manage the financial assets of their clients. Most importantly (at least for this article’s sake), Nest Wealth serves as an automated investment tool for individuals. It builds customized ETF portfolios for its customers. These are technologically empowered to track the market and make money. Their portfolios are on the simple side, but this isn’t a bad thing—it’s an efficient, no-nonsense approach to digital wealth management.
Unlike Wealthsimple, Nest Wealth does not offer Socially Responsible Investing (SRI) or Halal investing.
We can see both sides here. It’s hard to shake a stick in the general direction of Nest Wealth’s services, especially if you are looking at it from a business-to-business perspective.
However, Wealthsimple is designed more with the individual in mind who is just starting, making it a platform that is incredibly accessible for everyone.
For those reasons, we're calling this one a tie.
Wealthsimple vs. Nest Wealth: Features and Products
Wealthsimple and Nest Wealth offer a myriad of products that are suitable for novice and experienced Canadian investors alike. Learn more about these features and products below.
Wealthsimple: Features & Products
Wealthsimple offers five main products:
- Wealthsimple Invest, its robo-advisor,
- Wealthsimple Trade, its online brokerage,
- Wealthsimple Cash, its money-transfer service,
- Wealthsimple Crypto, its cryptocurrency exchange, and
- Wealthsimple Tax, its donation-based tax filing service.
Wealthsimple Invest offers customers cost-efficient portfolios that feature a mix of stocks and bonds, depending on their goals and risk comfort. These portfolios are managed by robo-advisors, though the management is not entirely passive. Wealthsimple is constantly examining the value of your portfolio to determine whether or not it needs rebalancing.
Wealthsimple Trade allows the buying and selling of stocks. Customers have the choice of either buying shares for a portfolio or buying stand-alone shares of companies.
Wealthsimple Cash launched its cash sending service in 2019. Like other money-sending services, such as Venmo or Cashapp, Wealthsimple Cash is an alternative to e-Transfers, which remain popular in Canada.
Wealthsimple Crypto is a platform that facilitates the buying and selling of cryptocurrencies (Bitcoin, Ethereum, Doge, etc.).
Wealthsimple Tax is simply a pay-what-you-can tax software known for its simplicity.
Nest Wealth: Features & Products
Nest Wealth offers a range of services. However, for the sake of this article, we will focus on their personal financial planning services.
Like Wealthsimple, Nest Wealth investment customers can choose to keep their money in various account types, including the TFSA and the RRSP accounts. The money is then managed by a robo-advisor, though Nest Wealth customers also have access to human advisors.
Nest Wealth offers dedicated portfolio managers for accounts of any size. There is no official minimum balance.
While we can’t deny that having the option of a human advisor is a great thing for a fintech company, Wealthsimple wins this round. Its services seem much more accessible to the average investor.
Additionally, for those seeking different banking and investing products, Wealthsimple offers more when it comes to features and products.
Wealthsimple vs. Nest Wealth: Fees
There's no way around it: wealth management comes with fees. Fortunately, robo-advisors provide a means to affordable wealth management, and both Wealthsimple and Nest Wealth offer affordable investing. Learn more about their pricing and fees below.
Wealthsimple offers three investment packages: Basic, Black, and Generation.
Basic accounts are under $100,000 and come with an annual fee of 0.5%*.
Black packages are for accounts with a balance of $100,000 and above and come with a fee of 0.5%*. Black tier customers also get additional financial planning sessions, tax-loss harvesting, and tax-efficient funds.
Generation packages are available with portfolios that have more than $500,000* in the portfolio qualify tier, which comes with a fee of 0.4%* and have access to a dedicated team of advisors, among other perks.
Wealthsimple’s ETF trading costs are either $0* or $3* per month, depending on whether you engage in basic or premium trading.*Rates current as of August 2021
Nest Wealth: Fees
Nest Wealth takes a different approach to pricing by using a subscription model.
The system is three-tiered, with the lowest subscription price available on the platform set at $20* per month for clients with less than $75,000 in investments.
Clients between $75,000 to $150,000 are charged $40* per month, while clients with more than $150,000 are charged $80*.
Nest Wealth also charges custodian fees which are either $7.99* per trade or $9.99* per trade, depending on the custodian used.
Annual account fees range from $36* to $100*. However, Nest Wealth will cover any trade fees beyond $100* and will waive the annual account fee for any customer’s first account.*Rates current as of August 2021
Wealthsimple and Nest Wealth have very different approaches to pricing, which makes the two hard to compare.
Let’s put it this way: if you are managing a smaller portfolio (<$100,000), it’s more economical to use Wealthsimple. However, large account holders will come out ahead with Nest Wealth’s pricing model.
On that note, we'll have to award this section to both robo-advising platforms.
Wealthsimple: Pros and Cons
Pros: The Good Stuff
Quick sign-up time
Investing questionnaire is easy to answer and helps build a relevant portfolio
An excellent opportunity for anyone new to investing to invest in ETFs that may otherwise seem out of reach
The app is easy to use and doesn’t often experience technical issues
No minimum amount is required for investing
Roundup features make it easy to save
SRI and Halal investing options
Cons: The Not So Good Stuff
No specific human advice from professional investors for the majority of portfolios (and only the Generation plan offers substantial financial planning options)
Customer service is not immediate
Nest Wealth: Pros and Cons
Pros: The Good Stuff
Monthly fee plans are advantageous for high-wealth investors
No minimum requirement
Ample low-risk options for investing
Portfolios are highly-customizable
Ideal for traditional investors
Simple portfolios are easy to understand
Nest Wealth will keep your portfolio balanced without your involvement
Cons: The Not So Good Stuff
No options for Socially Responsible Investing
Monthly fee plans are expensive for anyone with a low to moderate investment amount
Additional custodian charges to consider
No mobile app
Our Final Thoughts
It’s an excellent time for investing money in Canada, and the fact that it is so hard to declare an overall winner between the battle of Wealthsimple vs. Nest Wealth proves this to be true.
It may seem that, on the surface, these two services are in direct competition with one another. However, upon further analysis, it’s more clear that they are serving different audiences.
If you’re a fan of traditional investing and want to take advantage of how complicated technical algorithms can help grow your savings, then Nest Wealth is designed for you.
This is especially true if you manage a higher-than-average portfolio and stand to save money through the monthly fee structure that Nest Wealth provides.
However, if you are new to the world of investment and would instead take a hands-free approach, Wealthsimple may work a lot better for you. It’s also cheaper if you are managing a smaller portfolio.
In conclusion, you can’t go wrong with either company—it just depends on your needs. Isn’t that just the way it seems to go in the world of finance?
Frequently Asked Questions
Both Wealthsimple and Nest Wealth use state-of-the-art security features to keep their customers safe from data breaches.
This means that all of your sensitive information, such as account log-in and portfolio details, are kept secure at all times.
Both services use encryption when processing data and use secure servers to store data. This is equal or beyond what banks use to protect their customers, which means that, yes, just like online banking, robo-advisors like Wealthsimple and Nest Wealth are safe to use.
In addition to these security features, Wealthsimple and Nest Wealth are also both CIPF and IIROC insured.
Passive investing is a way of acquiring wealth that requires little to no human involvement.
It is focused on the gradual acquisition of wealth, as opposed to quick returns. This “buy and hold” strategy involves purchasing an asset and holding on to it for an extended period.
It usually consists of buying an index fund, typically tied to the stock market, and letting the algorithms do the work. This allows customers to buy at a lower, more accessible price point and circumvent the fees associated with frequent trading.
The main difference between mutual funds and ETFs (Exchange-Traded Funds) is that ETFs are usually passively managed, and professionals actively manage mutual funds.
Mutual funds are seen as less risky than ETFs. For this reason, the cost of a mutual fund tends to be higher than that of an ETF. Mutual funds will also usually require a higher deposit than an ETF. ETFs can be traded at any time during the day, while mutual funds can only be traded at the end of the day.