Wealthsimple or "robo-advisors"?

[RichTT]

Since I'm avoiding the threads on crypto currencies (so I don't succumb to insane jealousy of missing out) I'm exploring some other interesting options.

Wealthsimple have recently branched out to the UK and I've stuck a bit of money into a regular account on a low/medium risk setting to see how it performs.

Was wondering if anyone else has money with them? I've still got my ISA allowance to use up for this financial year and might end up putting it with them. Seeing as returns from my bank ISA is less than pathetic.

[BanzaiMan]

RichTT said:

Since I'm avoiding the threads on crypto currencies (so I don't succumb to insane jealousy of missing out) I'm exploring some other interesting options.

Wealthsimple have recently branched out to the UK and I've stuck a bit of money into a regular account on a low/medium risk setting to see how it performs.

Was wondering if anyone else has money with them? I've still got my ISA allowance to use up for this financial year and might end up putting it with them. Seeing as returns from my bank ISA is less than pathetic.

What additional value do you think they will give you rather than you investing directly on a platform? One of the major benefits of paying for advice (I'm purely focusing on the investment aspect) is hand holding when things go wrong - a typical investor may sell at the wrong time. Do you think they would help with this? If not, could you find cheaper elsewhere?

Seem to have a large UK bias in their example portfolios

https://www.wealthsimple.com/en-gb/details

[RichTT]

BanzaiMan said:

What additional value do you think they will give you rather than you investing directly on a platform? One of the major benefits of paying for advice (I'm purely focusing on the investment aspect) is hand holding when things go wrong - a typical investor may sell at the wrong time. Do you think they would help with this? If not, could you find cheaper elsewhere?

Seem to have a large UK bias in their example portfolios

https://www.wealthsimple.com/en-gb/details

It's a long term investment strategy I'm looking for. I'm not micro managing the investment that I have with them. I certainly don't have the interest to do share trading myself. I felt that with the low management fees, 0.5%, and how they are spreading the risk. The way instead it is that in removing the human bias they should in theory be better investments than a fund managed by a person. The fact that they automatically rebalance the portfolio seemed a big plus for me as someone who just wants to park some extra money that is doing practically zero in the bank.

Its also a bit of an experiment to be honest. I have 6 grand with them and putting in £500 a month is not that much. Was just interested if anyone else was using a similar product for passive investment.

[BanzaiMan]

RichTT said:

BanzaiMan said:

What additional value do you think they will give you rather than you investing directly on a platform? One of the major benefits of paying for advice (I'm purely focusing on the investment aspect) is hand holding when things go wrong - a typical investor may sell at the wrong time. Do you think they would help with this? If not, could you find cheaper elsewhere?

Seem to have a large UK bias in their example portfolios

https://www.wealthsimple.com/en-gb/details

It's a long term investment strategy I'm looking for. I'm not micro managing the investment that I have with them. I certainly don't have the interest to do share trading myself. I felt that with the low management fees, 0.5%, and how they are spreading the risk. The way instead it is that in removing the human bias they should in theory be better investments than a fund managed by a person. The fact that they automatically rebalance the portfolio seemed a big plus for me as someone who just wants to park some extra money that is doing practically zero in the bank.

Its also a bit of an experiment to be honest. I have 6 grand with them and putting in £500 a month is not that much. Was just interested if anyone else was using a similar product for passive investment.

What do you think they offer over and above the Vanguard LifeStrategy alternative (for example)?

https://www.vanguardinvestor.co.uk/investing-expla...

[RichTT]

BanzaiMan said:

What do you think they offer over and above the Vanguard LifeStrategy alternative (for example)?

https://www.vanguardinvestor.co.uk/investing-expla...

Ok vanguard have 0.22% ongoing charge, which sounds great. But you are also paying transaction costs and broker commission. I'd be curious to know what that all adds up to in the end. With WS it's a flat fee. Nothing else on top. That kind of transparency appeals to me.

[xeny]

Vanguard do a % fee based ISA for .15%, so you're looking at .37% for all fees. Once you're past 20-30K, a fixed fee broker might well be cheaper than that though.

While we're talking abut fees, you say Wealthsimple charge .5% - I'm looking at

https://www.wealthsimple.com/en-gb/details

and see "£0-£100K ∙ 0.7% Fees" ?

[BanzaiMan]

RichTT said:

BanzaiMan said:

What do you think they offer over and above the Vanguard LifeStrategy alternative (for example)?

https://www.vanguardinvestor.co.uk/investing-expla...

Ok vanguard have 0.22% ongoing charge, which sounds great. But you are also paying transaction costs and broker commission. I'd be curious to know what that all adds up to in the end. With WS it's a flat fee. Nothing else on top. That kind of transparency appeals to me.

The flat fee (0.7%) you are quoting is for the WealthSimple management of the portfolio, and excludes the equivalent 0.22% OCF (and the dealing coots for the actual managers of the funds to trade I would guess). From their literature

"Another fee to consider is the management fee of the passive funds in the portfolio."
"These fund management fees are expected to be about around 0.2% annually"

So I'd guess you are looking at >1% all in.

[BanzaiMan]

xeny said:

Vanguard do a % fee based ISA for .15%, so you're looking at .37% for all fees. Once you're past 20-30K, a fixed fee broker might well be cheaper than that though.

Would be interested how you can get a cheaper platform than Vanguard @£30k (unless I'm missing something)??

https://www.langcatfinancial.co.uk/2017/05/thats-n...

[xeny]

Investing every other month with iWeb would do it. Looks as if the break even for a single fund is at the £40,000 mark if you want to invest monthly.

[BanzaiMan]

xeny said:

Investing every other month with iWeb would do it. Looks as if the break even for a single fund is at the £40,000 mark if you want to invest monthly.

Thanks

[RichTT]

BanzaiMan said:

The flat fee (0.7%) you are quoting is for the WealthSimple management of the portfolio, and excludes the equivalent 0.22% OCF (and the dealing coots for the actual managers of the funds to trade I would guess). From their literature

"Another fee to consider is the management fee of the passive funds in the portfolio."
"These fund management fees are expected to be about around 0.2% annually"

So I'd guess you are looking at >1% all in.

From their info it says.


Another fee to consider is the management fee of the passive funds in the portfolio. These are charged by the fund providers for the work they do to maintain the asset balance within the funds, their legal reporting requirements and so on.

It isn't charged by Wealthsimple and won't be deducted directly from your Wealthsimple account, it is factored into the price of the fund. These fund management fees are expected to be about around 0.2% annually. Because these funds are "passive" investments (they do not have expensive fund managers to support - "active" managers picking stocks) they can keep fees low. By keeping fees low this helps strengthen long term returns.

The only fee we charge on top of our management fee is a 0.2% fee on currency conversion in cases where we need to buy or sell different currencies in your account.

And just to be clear our fees include VAT already so you won't be charged that on top.

So you're probably right on it being close to 0.9% or 1% but you don't see the fund management fees as they are hidden in the share prices And yes I misquoted when I said 0.5%.