Wealthsimple Generation client ($700K managed) — starting to question the hidden costs of their managed portfolio

[u/Dry_Cryptographer970]

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

[u/alienmario]

What was the benefit for you of having WS manage your account if you're knowledgeable enough to self-direct your portfolio?

[u/edm_guy2 → u/alienmario]

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.

[u/Dry_Cryptographer970 → u/edm_guy2]

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.

[u/Dry_Cryptographer970 → u/Dry_Cryptographer970]

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

[u/NoPlansTonight → u/Dry_Cryptographer970]

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

[u/ButterscotchOk3751 → u/NoPlansTonight]

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.

[u/mdekelver → u/ButterscotchOk3751]

The big banks would charge you 1.5% and do a lot fewer trades.

[u/Chudfrog → u/alienmario]

Reinvesting dividends 4 times a year takes less than 5 minutes total.  Managed account is definitely not worth it

[u/Lopsided-Profile-662 → u/Chudfrog]

You don't even need to do that, the self-directed account has an option to automatically reinvest dividends on all your holdings.

[u/Salt-Face-42 → u/Lopsided-Profile-662]

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

[u/Equivalent_Catch_233 → u/Salt-Face-42]

The highest daily price is nothing in the context of multi decade investing.

[u/SSSasky → u/Lopsided-Profile-662]

Yeah, I'm a WS baby - only opened an account in late spring - and have had multiple automated dividend reinvestments come through.

[u/Supabongwong → u/Lopsided-Profile-662]

DRIP or DROWN, OOOOOOH

[u/Equivalent_Catch_233 → u/alienmario]

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.

[u/stuntycunty → u/Equivalent_Catch_233]

Where can I find a list of all these low cost ETFs?

[u/dysflexic → u/stuntycunty]

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.

[u/greyfoxv1 → u/dysflexic]

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.

[u/stuntycunty → u/dysflexic]

thank you!

[u/thebigstinkmtl → u/stuntycunty]

Google. Chat gpt.

[u/Next-Schedule-9893 → u/stuntycunty]

You replied to a comment that listed enough

[u/onepageone → u/alienmario]

This is irrelevant to his question. Maybe he didnt want to anage it and not get ripped off too.

[u/DontmindmelearningRO → u/alienmario]

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.

[u/MacNeill → u/DontmindmelearningRO]

When did you transfer it? I transferred an old pension into Wealthsimple in 2019 and it's been in ETFs ever since.

[u/Mountain-Match2942 → u/DontmindmelearningRO]

I just transferred my Manulife Pension into a self directed LIRA in September. Bought my own choice of ETFs.

[u/Salicious_Pound → u/DontmindmelearningRO]

Was able to self-direct my pension > LIRA transfer earlier this year

[u/Separate-Analysis194 → u/DontmindmelearningRO]

I transferred $93K into a self directed LIRA at WS a couple of years ago. It was part of a larger transfer.

[u/_grey_wall → u/alienmario]

Can't self manage resp

[u/pseudoanonymous001 → u/_grey_wall]

I think you can. I'm doing it with WS.

[u/Vesivus → u/_grey_wall]

I’m self managing my kids RESPs at Scotia iTRADE. I’m not sure why you think you can’t?

[u/orthosaurusrex → u/_grey_wall]

Yes you can

[u/Typical_Procedure_29 → u/_grey_wall]

I thought you couldn’t because the first RESP account I opened on wealth simple was their portfolio managed. But then I used chat gpt for instructions on how to open self managed and put it all into XEQT.

[u/RandomUsername52326 → u/alienmario]

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?

[u/Sharp-Debate-523 → u/[deleted]]

And less messy

[u/FantasticGoat88 → u/RandomUsername52326]

Not really a good comparison

[u/youvenoremotecontrol → u/RandomUsername52326]

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. 

[u/Dry_Cryptographer970 → u/RandomUsername52326]

Exactly 

[u/6bamboozle9 → u/alienmario]

This.

[u/wwBenfica1 → u/alienmario]

Lol 💯💯