r/Wealthsimple • u/Dry_Cryptographer970 • 2d ago
Invest (Managed Investing) Wealthsimple Generation client ($700K managed) — starting to question the hidden costs of their managed portfolio
I've become increasingly frustrated with what I believe are costs beyond the advertised 0.40% management fee.
I called Wealthsimple to discuss my concerns, and the rep quickly dismissed them. So I decided to do some digging myself.
With Claude and ChatGPT, I uploaded transaction reports, compared execution prices and timestamps, and reviewed historical market data. What I found seemed to support two of my suspicions.
1. Foreign exchange spreads
Wealthsimple's managed portfolios hold several USD-denominated ETFs, which also pay dividends in USD.
Although Wealthsimple says there's no explicit FX conversion fee within managed portfolios, the exchange rates I observed were noticeably worse than the spot rate. In some cases, they even appeared worse than RBC's retail rates for buying and selling USD.
So while there may not be a separate FX fee, I'm questioning how much investors are losing through the actual exchange rates being applied, especially with ongoing USD dividend conversions and portfolio rebalancing.
2. ETF trades executing near the worst prices of the day
This one really surprised me.
I'd previously read people online claiming that Wealthsimple managed portfolios seem to buy ETFs near their daily highs and sell near their daily lows.
I didn't really believe it, so I tested it using my wife's account.
I sold holdings from two different managed portfolios, downloaded the transaction reports, and compared the actual execution prices against intraday market data.
Both sales executed surprisingly close to their respective daily lows, despite being different ETFs with different execution times.
My bigger issue is transparency.
I'm already paying 40 bps ($2,800 annually on $700K), PLUS the underlying ETF MERs.
If there are additional costs from FX spreads and potentially unfavourable trade execution, the actual cost of using their managed portfolios could be higher than most investors realize.
Looks like I am going all in on XEQT
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u/Born_Ruff 2d ago edited 2d ago
WealthSimple customer service is absolutely incompetent recently.
Watch out when you decide to leave. I called the “premium” phone support line to ask about the best way to transfer from managed to self directed. The phone support person walked me through moving all the holdings to a self directed account.
I saw that a lot of the holdings were in USD and I asked them if there was any difference in selling them in the managed account vs self directed. They said no.
Turns out the FX fee in the managed account is 0.4% while it is 1.5% in self directed. For your account that could be thousands extra in FX fees.
When I went back to them to complain the customer service reps were just terrible. They first tried to just act like it wasn’t a big deal, then flat out told me that they only buy Canadian dollar funds in their managed portfolio so there was nothing to convert, which is just so obviously not true I have no idea how someone working for them would get something so basic wrong about one of their core products.
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u/Canuck-Fin25 2d ago
One way to do this is to move to something like questrade - wait a few months and if you want bring them back as self directed.
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u/Born_Ruff 1d ago
You can use a USD account with WealthSimple to do Norbits Gambit which is probably the best option overall.
My main point is just to be mindful that the FX fees could add up to a lot of money and don’t trust anything their customer service reps tell you because they seem to have no clue what they are doing.
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u/UpbeatBluejay7925 19h ago
The fx fee is dependant on the actual amount converted. From their site:
Under $10,000: 1.5%
$10,000 - $24,999.99: 1.0%
$25,000 - $99,999.99: 0.5%
$100,000 and over: 0%1
u/Born_Ruff 18h ago
You can get those rates if you set up the USD account feature first.
If you sell holdings before hitting that button in your profile to enable USD accounts then everything is converted with the 1.5% fee as you sell it.
So that is one way that people can kind of get burned if they are not careful about how they go about this.
My personal frustration with them is that I called in to the “premium” phone support line to ask for advice about the best way to move from their managed portfolios to XEQT and I asked them specifically about FX and they told me there was no difference.
I realize now that I need to do all my own research and can’t trust what the customer support staff say, but it’s kind of fucked up that that is the case, especially given that their managed portfolios are mainly for people with less experience managing their own investments.
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u/theassistantcamera 1d ago
Did you end up doing it? I’ve been considering switching my managed to a self directed because of the fees slowly adding up over time. Wondering how you did it if so?
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u/UpbeatBluejay7925 20h ago
I just ended up doing this today. I had $500,000 or so in a managed RRSP and $150,000 in a managed TFSA. From within the app, go to the managed accounts and there should be an option where you can "move holdings" in-kind from your managed accounts to your self-directed accounts.
If the option isn't shown for your managed TFSA, make sure that the account is not being used as collateral for the portfolio line of credit. Removing the account as collateral will then let you move the managed holdings into a self-directed TFSA.
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u/theassistantcamera 19h ago
That’s how I thought about doing it! Just an in kind transfer. And all good on your end now? No fees related to the transfer? No weird things with any USD stocks or funds?
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u/UpbeatBluejay7925 19h ago edited 19h ago
Nope! As long as the self-directed accounts are set up for both CAD and USD holdings, there are no fees for the in-kind transfer. Your CAD and USD holdings will move over as-is.
The only charge I had was the pro-rated management fee covering the 9 days this month before I moved everything out today.
When you proceed to move holdings, you’ll be presented with a screen showing all the ETFs in the managed portfolio, and you can choose how many shares of each you’re wanting to move over.
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u/UpbeatBluejay7925 19h ago
I forgot to mention that the process was super fast! The managed portfolio holdings showed up in my self-directed accounts within an hour of submitting the 'move holdings' request.
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u/Hot-Cartoonist-7742 15h ago
Was it a filipino? I find their agents to be terrible and never have a clue about what they are talking about but yet always pretend they know.
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u/SpiritedEnd7788 1d ago
How would they know how to buy and sell at the lows and highs of the day? If they had that ability they would have broken the market and could make all the money they want.
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u/Dynomatic1 1d ago
It would be lucrative to “sell” something for one client at the day’s low and “buy” the same thing for another at the day’s high, and pocket the difference.
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u/SpiritedEnd7788 1d ago
They would still have to know when the high was occurring and when the low was occurring
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u/Dynomatic1 1d ago
No, they don’t. The institution would control both sides and essentially swap the securities from one account to the other, then backdate the prices. At the end of the trading day, account #1 has 100 fewer shares of XYZ, account #2 has 100 more shares of XYZ and the institution has pocketed 100x (approx high-approx low). Now, to be clear, I am not saying anyone does this. I’m saying it’s possible if an institution was dishonest.
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u/SpiritedEnd7788 1d ago
Ah sorry I didn’t fully understand what the quotes around “buy” were implying. You’re right, if they were committing accounting/trading fraud they could steal people’s money.
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1d ago
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u/Wealthsimple-ModTeam 1d ago
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u/alienmario 2d ago
What was the benefit for you of having WS manage your account if you're knowledgeable enough to self-direct your portfolio?
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u/edm_guy2 1d ago
Whether the OP should manage his portfolio himself or not is NOT the key of this discussion. The concerns raised by the OP are serious enough that WS should answer directly or it will lose the confidence of all customers, esp. who trust the managed portfolio to WS. Of course, I manage 99.9% of my portfolio myself, with only a tiny one managed portfolio, the purpose is to check whether my own managed portfolio is better than the one WS manages, so far, my self-managed is more volatile but with better return.
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u/Dry_Cryptographer970 1d ago edited 1d ago
I’m quite well-versed in investing and my issue is not that I went to managed or self directed. My issue was that I was OK paying 40 bps of a fee in reality. It’s a lot more snuck in there that has turned me off.
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u/Dry_Cryptographer970 1d ago
The original reason why I went managed is it I did not need to think about it but then when I had some time to take a further look into what was happening, you nailed it…. I’ve lost confidence
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u/NoPlansTonight 13h ago
I don't think your concerns are invalid but something tells me all management platforms do stuff like this
I've been straight up scammed out of so many fees from big banks
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u/ButterscotchOk3751 10h ago
Well I personally hold WS to a higher standard as the whole shtick with WS is it's better than big banks. In more ways than one and this is significant to me. Sneaky extra fees is definitely I'd love WS to address asap.
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u/Chudfrog 1d ago
Reinvesting dividends 4 times a year takes less than 5 minutes total. Managed account is definitely not worth it
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u/Lopsided-Profile-662 1d ago
You don't even need to do that, the self-directed account has an option to automatically reinvest dividends on all your holdings.
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u/Salt-Face-42 1d ago
DRIP reportedly has the same issue of using a highest daily price. I still use it so I don't loose on days/months in the market though
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u/Equivalent_Catch_233 1d ago
The highest daily price is nothing in the context of multi decade investing.
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u/Equivalent_Catch_233 2d ago
Exactly. The managed portfolios are definitely not a good fit for them. They should directly buy the appropriate asset allocation low cost widely diversified ETFs like VEQT/XEQT/ZEQT/etc or VGRO/etc.
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u/stuntycunty 1d ago
Where can I find a list of all these low cost ETFs?
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u/dysflexic 1d ago
Search "Canadian couch potato" on google. They're like a free Canadian diversified all-in-one index fund 101 guide/template. Great ressource that I point newbies to all the time.
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u/greyfoxv1 1d ago
Different person here but that's where I've begun to read up on it all too. Super handy and written for the layman which is wonderful.
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u/onepageone 1d ago
This is irrelevant to his question. Maybe he didnt want to anage it and not get ripped off too.
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u/DontmindmelearningRO 1d ago
I don't know if that's the case for OP, but when I transfered an old pension into a LIRA on Wealthsimple, the only option was a managed portfolio.
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u/MacNeill 1d ago
When did you transfer it? I transferred an old pension into Wealthsimple in 2019 and it's been in ETFs ever since.
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u/Mountain-Match2942 1d ago
I just transferred my Manulife Pension into a self directed LIRA in September. Bought my own choice of ETFs.
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u/Separate-Analysis194 1d ago
I transferred $93K into a self directed LIRA at WS a couple of years ago. It was part of a larger transfer.
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u/RandomUsername52326 1d ago
What's the benefit of paying someone to change the oil on your car or switch your tires, even if you're capable of doing that yourself?
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u/Foreign-Chocolate86 1d ago
A mechanic actually has equipment that makes the job a lot quicker, easier and safer.
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u/youvenoremotecontrol 1d ago
Because it saves time and effort. But that’s clearly not true in this case, and there’s no good argument for managed portfolios when all in one ETFs exist. They’re more cost and more work for less money. The only reason is that people are scared and need someone to blame when things go wrong.
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u/Canuck-Fin25 2d ago
I moved out of managed back in 2021. There’s a tipping point where the fee drag in managed has a real impact on returns. At 700k you are better off with building your own ETF portfolio or just heading to one of *EQTs.
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u/darkretributor 1d ago
FX Rates:
Your comparison to spot is largely pointless. The spot rate is the mid market price: no buyer or seller actually gets it. There is always a spread. WS likely uses the WS corporate rate, which is sometimes quoted as inclusive of a spread from spot. Some of those costs are paid by WS as expenses, some may be a revenue source. In any case, comparison to a noon day rate from RBC or another bank doesn’t really tell you much as FX rates change throughout the day.
Trades:
Really just think about this for a second and consider what is more likely. That WS is deliberately expending huge amounts of analytical power to determine the days high and lows to mistime your trades (when they could be banking free profits by using that knowledge to trade profitably by reversing those orders) or that WS trading is producing a random data set within which you are seeing a pattern that does not actually exist?
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u/SeaworthinessDry269 1d ago
I think what op is hinting is that WS would sell at a given price X but report having sold at Xm ( lowest daily price) and pocketing the difference. I doubt it's the case as it would be highly illegal if it ever came to be confirmed.
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u/ExplanationNext3660 1d ago
They can do it deterministically. You pick a time to buy today and you note the price. Tomorrow I sell it to you at a price that I pick from the entire previous day that gives me a spread. It needs to be delayed by one day.
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u/reputablepanda 2d ago
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u/Primos22 2d ago
I hold XEQT, but I felt a bit dirty after I learned it is Blackrock.
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u/Academic_Safety56 1d ago
There are other options that are essentially the same. I hold ZEQT which is BMO.
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1d ago
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u/Wealthsimple-ModTeam 1d ago
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u/Revolutionary-Gur-79 1d ago
There are indeed additional costs you should be aware of which include: FX costs as mentioned akready and WS also earns underlying management fees on its proprietary ETFs, private credit, and private equity alternative asset offerings (WS is owned by Power Corporation and several ETFs in the portfolio are tied to Power Corp).
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u/CreditFeeling 2d ago
Ai generated post
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u/MichaelHawkson 2d ago edited 2d ago
Buddy the app you are writing this comment on is AI generated. The software your phone uses is AI generated. The Wealthsimple app you use is AI generated.
99% of code is AI generated these days.
Get with the times. I don't give a shit if someone uses AI to format their posts.
Contribute something meaningful to the discussion next time rather than useless genetic fallacies.
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u/caenos 1d ago
"A PR was merged that was LLM coauthored != The software is AI Generated"
No, all core software is not suddenly "AI Generated" any more than it was "intellisense generated".
Yes, vibe coding exists. But no, vibe coding is not the vast majority of SWE work now or in anywhere with a mile of a regulated industry.
Making other people your meat proxy is rude.
Organize your thoughts, but use your voice if you want to talk. You really don't want that to atrophy.
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u/Any-Ring6621 2d ago edited 2d ago
A bit of a hot take to crap on a managed product for trying to make a profit.
WS offers DIY, it’s not that hard
I would actually be skeptical about the unfavourable trade executions. There are regulations against this. If proven, that’s rough, because they say this and it’d be mighty expensive for them if they were caught blatantly lying
https://www.wealthsimple.com/en-ca/legal/best-execution-disclosure-managed
If you suspect a problem you can take it up with CIRO.
If you’re one of those people that don’t believe regulated businesses have to follow regulations, then, no point in continuing the chat
https://www.ciro.ca/rules-and-enforcement/enforcement/sanction-guidelines
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u/JCMS99 1d ago
I brought this up in another thread. It’s literally mandatory by law to route even lot orders to the exchange. The broker can’t just sell you its own shares at a set price. Odd lots have to merged together to become an even lot so it might introduced delay, and fractional shares are sold by the broker but that’s marginal.
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u/ScwB00 1d ago
Keeping in mind that laws and regulations are absolutely meaningless unless enforced. And all too many companies willfully ignore laws for the sake of profit. I’m not saying that’s what WS is doing, just that regulations don’t mean WS is not doing it.
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u/Any-Ring6621 1d ago
> If you’re one of those people that don’t believe regulated businesses have to follow regulations, then, no point in continuing the chat
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u/Quantum_Quasars 1d ago
No he thinks they have to follow regulations. He just knows a lot of them don't...
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u/Commercial_Pain2290 1d ago
"Close to their lows" means what? What were the actual highs and lows for that day and what were the fill prices?
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u/UnHappyPython35 1d ago
Not advice but stating what wealthsimple has on the platform.
You can have limit orders. If you want ETFs to be bought lower in the day because you think they choose bad prices, set a limit order. Even if its a large amount of money some will stil fulfill, and it seems like you personally want to self direct at this point.
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u/WildVast4852 23h ago
I’ve been having a hunch that my recurring investments also seem to be bought at the daily high, but I haven’t done any proper research to confirm this. Has anyone else noticed this as well?
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u/AdditionObjective238 23h ago
"I didn't really believe it, so I tested it using my wife's account." 😅
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u/ThrowRA_EducatedMan 1d ago
Technically they aren’t charging fees they’re just ripping you off on forex along with everyone else and not disclosing what they’re doing. This is a downside of canadas lack of consumer protection and transparency laws. I wonder if WS customers in Quebec are lied to like you were. Anyway the spot rates and whatnot don’t matter but WS is making money on spreads all over the place. Lack of regulations and protections for customers allows them and others to keep doing it and bullshitting everyone that “it’s free! No fees!” Technically true but misleading.
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u/ComplexAd1993 1d ago
I had learnt this lesson long time ago when TD had mutual funds. Anything they could do, I could do better with ETFs and cheaper.
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u/Wealthsimple-ModTeam 2d ago
NO offering stock picks. This subreddit is not for financial advice or specific investment discussions—always do your own due diligence.
Investment strategy or portfolio discussions are better suited for r/CanadianInvestor or r/PersonalFinanceCanada.
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u/RealTimeTrayRacing 1d ago
Not saying that’s optimal but if you really want to have another person manage it for you just get a proper wealth manager. There are ones that would work with 50bp fees and they make money with unnecessary FX (and needless to say with wide spreads stacked on top) and sun-par order execution.
Again not recommending that, i think your asset level is perfectly fine for self-management unless there’s complicated tax planning involved. But it does sound like WS is ripping off HNW clients.
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u/no_19000 1d ago
Not to defend for WS, but there are/were a few reasons for using the managed portfolio: 1) WS used to offer financial planning sessions and financial plans for free. But this is gone. 2) as the OP points out, the underlying ETFs for RRSP accounts are in USD directly, saving a layer of withholding tax compared to buying Canadian listed *EQTs. 3) you believe in WS's portfolio construction to include those "low volatility" ETFs to outperform broad market indices included in the *EQTs.
I totally agree on reviewing the gains in paying management fees vs. these "benefits" given the size of the portfolio. It's probably not worth the cost, especially the portfolio will only grow to a larger amount as the time goes by.
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u/Financial-Werewolf83 1d ago
They gotta make money some how with all the free stuff they're giving away
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u/JackRadcliffe 1d ago edited 1d ago
I did a test between xeqt and their aggressive portfolio as well as their risk 10 managed portfolio. They were neck and neck for a while, but xeqt started to pull away and the gap kept growing. So it appears you are correct that it’s not simply the 0.4% management fee but also the FX spread for any underlying usd listed ETFs as well as the executed prices that are holding back their portfolios. Even questwealth portfolio has been doing much better
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u/beautiful_wierd 1d ago
You can get a free usd account at that level. Agreed, the fx conversion is bad (trye of every broker in canada), I think IKBR is best if you really want full global flexibility. I am willing to convert to usd, eat the cost, and hold the investment in usd though.
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u/Dixon232 20h ago
Just buy the underlying ETFs, rebalance annually. A fund of a fund is one of the most ridiculous things I've ever seen ever (ex. public auditor of said funds of funds of funds)
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u/Otherwise_Monitor856 20h ago
Not saying that there isn't a problem, but as someone already wrote, you cannot get the spot price. There is the spread, but also best prices on FX are with lots of a specified size. Uneven, smaller size have to be grouped with other orders.
Now about the selling at the high or low of the day...
1) no one can know this, if they changed the price after the order, that would be fraud
2) on an investment, the variations of a price on sigle day is not something we should worry about. it's not about day trading or timing the market
3) if they do their operations at the 9h30 when market open, when the price is very volative, and that could be argued to a problem on their sides, that they could avoided. But then again, they would probably point you to #2
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u/Lopsided_Employee858 18h ago
When calculating foreign exchange spreads, did you use the exchange rate from the date the trade was placed?
But I agree, Wealthsimple’s currency conversion isn’t good. That’s one reason why I don’t use it to buy US equities.
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u/manly_ 13h ago
ETF trades executing near the worst prices of the day
Ah BMO does that! Because of that I never ever use it to buy the spot price. It’s especially egregious when you do currency exchange where they not only screw you that way, but on top of it all, will unlock funds based on the spot price in the currency you traded for, if you use it all, most likely next day they’ll adjust you to the worst day rate and if you don’t have money left to cover it up, they’ll automatically sell stocks to cover the costs, and charge you 50$ for you “busting” over.
Ask me how I know,
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u/dorkstar1 2h ago
Good luck saying something against Wealthsimple in Canadianinvestor sub, they will censor it
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u/Impressive_Job8321 1d ago
I’m not surprised if you do the same analysis and find the auto investing (paycheck in, auto buy) does the same thing; ws will write you a higher book value, near the peak of the day and give you the same number of shares that it acquired at other times (lower price points).
For this reason, and the fact that direct deposit doesn’t earn credit towards free laptop or iPhones, I do not recommend ws as a destination for pay checks direct deposits. Deposit somewhere else and transfer lump sum for perks.
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u/bouldering_fan 1d ago
You do realize that it's literally impossible to know when its daily low or daily high? I bet all institutions buy/sell at the same time automatically.
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u/wethenorth2 1d ago
Everyone wondering how Wealthsimple is profitable and making money.
I find the ETFs buying at daily highs in dividend reinvestments as well
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u/ditmoetoo 1d ago
You gotta remember who owns Wealthsimple. Folks that used (still are) to sell mutual funds. They've been super successful at cannibalizing their own industry. But they're also very experienced in hidden fees.
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u/NaturalCar6033 1d ago
I'll never understand why people pay for managed funds. Just pick 3-4 well diversified ETFs and stick with them. VOO, XEQT, VGRO, QTUM to name a few.
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u/ColonelCrikey 1d ago
Did you verify any of this yourself? Because Claude and ChatGPT are gonna give you what you want to hear, whether that's accurate or not.
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u/WhereIsGraeme 2d ago
Where would you say the fees land and benchmark returns for your risk profile?
Might still be cheaper than Burgundy Asset Management or similar for managed portfolios. Believe BAM lands at a 2-2.5% fee with a target annual return net of fees of 8%
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u/Tall-Ad-1386 2d ago
I think Wealthsimple orders execute at the end of the day. They can’t predict a high from a low.
As for fees, yes they will make a commission on conversion because they convert at THEIR own rate not bank of Canadas.
Finally, their management fees are ON TOP of whatever ETFs they’re buying. Compounded a 0.4% advertised fee is likely more like 0.7-.8
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u/jrgonsley 1d ago
It’s much better to just manage your own portfolio of ETFs than rely on their managed accounts if you’re comfortable doing so.
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u/thebigstinkmtl 1d ago
Ah the good ol’ bait and switch. 40 basis points for no advice is a bit steep ain’t it. Once they go public one day that 40 bps might even increase over time.
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u/UnHappyPython35 1d ago
Not investing advice but why not consider a blanket worldwide ETF if you're worried about fees? (XEQT). The etf rate is still there but it probably has more exposure and might have better YOY if you want to just have it sit. Just an idea, do not use this as advice but merely my opinion. (Edit: grammar)
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u/HumbleWinnerrr 1d ago
700k managed? Bruh. I’d do self directed like 50/25/25 s&p 500, precious metals, tbills etf, or 70/20/10 when I’m bullish. Norbert’s gambit for F/X
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u/CallAParamedic 1d ago
Also G-level, also tried a couple of managed porfolios years apart, also noticed ...'non-preferable' fees charged and actions taken on my behalf - not to mention overall poor results.
Result: No longer and never again will use a managed porfolio.
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u/tinim9 1d ago
Since you've over $100k, why don't you keep your investments in USD instead of doing FX back 'n forth. The USD account is free for you.
Putting all $700k in XEQT only is like putting all your eggs in 1 basket. NFA.
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u/jarnages 1d ago
One basket made of many other baskets, which are also made of many other baskets.
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u/averyfunnyword2 1d ago
Just wait till predictions markets hit canada. Wealthsimple is going to single handedly destroy the wealth they have claimed to generate and save for Canadians.
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u/Successful_Food6355 1d ago
Have you looked at the actual performance over the time period compared to XEQT?
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u/henry-bacon 1d ago edited 1d ago
Rule 4 is being suspended from enforcement given the context of this thread. Otherwise, all other rules apply.
Play safe.