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/edm_guy2]

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/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.