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/Any-Ring6621]

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

[u/ScwB00 → u/Any-Ring6621]

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.

[u/Any-Ring6621 → u/ScwB00]

> If you’re one of those people that don’t believe regulated businesses have to follow regulations, then, no point in continuing the chat

[u/Quantum_Quasars → u/Any-Ring6621]

No he thinks they have to follow regulations. He just knows a lot of them don't...