Is WealthSimple Safe?

WealthSimple is a Toronto-based, low-cost, robo investment advisor that has proved popular among the millennial crowd. Their auto-investing platform creates customized allocations for your portfolio based on your risk-appetite and investment goals, and then it implements and manages your unique portfolio using ETFs and other low-cost investment vehicles. This sounds great, but you may be wondering how safe of an advisor they are. This article will cover all of these concerns.


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WealthSimple’s Better Business Bureau Rating

The Better Business Bureau (BBB) gives WealthSimple a rating of A, however we wouldn’t assign too much weight to this since their BBB profile doesn’t show any customer reviews yet. We would like to see several customer reviews on their profile before giving much credit to their A rating to know that they had sufficient information to evaluate the company with.


Is WealthSimple SIPC Insured?

When you open an account with WealthSimple, the assets in your portfolio are actually held by the Apex Clearing Corporation, which is a member of the Securities Investor Protection Corp (SIPC). The SIPC is a non-profit organization that protects investors’ assets in the case where their broker goes bankrupt and fails. Because Apex is a member of the SIPC, your WealthSimple account is protected for up to $500,000 worth of securities (and $250,000 in cash) in the event that WealthSimple fails.


Are Balances Above $500,000 Protected?

In addition to the standard SIPC loss protection, WealthSimple also pays for additional coverage from SIPC above the $500,000 limit up to a total amount of $150million across all WealthSimple accounts. It’s less clear how valuable this extra protection is though since it is an aggregate amount across the firm’s AUM and not on a per account basis. As of February 2019, WealthSimple had roughly 65,000 customers, so if we were to assume that roughly a fifth of these accounts had balances exceeding the standard SIPC protection of $500,000, the extra $150million in coverage would only equate to roughly an extra $11,500 per account.


Is WealthSimple FDIC Insured?

The Federal Deposit Insurance Corporation (FDIC) is a federal agency in the U.S. that protects consumer deposits at FDIC-insured banks in the event that there is a run on the bank or it fails. WealthSimple is not a bank and therefore it is not FDIC insured.


Is WealthSimple Regulated by FINRA and the SEC?

The Financial Industry Regulatory Authority (FINRA) is a non-profit organization that protects investors and the integrity of the financial markets through enacting broker regulations. The Securities and Exchange Commission (SEC) is a U.S. federal agency that enforces these securities laws. While WealthSimple is a Canadian company, they are still registered with FINRA (CRD#284471) and the SEC as an investment advisor since they do business in the U.S.


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WealthSimple’s Founder and CEO

WealthSimple was founded in Toronto by Michael Katchen in 2014. Prior to launching the company, Michael worked for 1000Memories, a Silicon Valley startup that was acquired by Ancestry.com.


Is WealthSimple Scam Summary

None of the research we have done suggests that WealthSimple is not a safe place to invest your hard-earned money. The attributes and reviews of their algorithmic approach to portfolio construction and optimization are beyond the scope of this article, but we feel that WealthSimple has the necessary and expected insurance coverage in place to protect your assets in the unexpected event where the firm has to cease operations.

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WealthSimple Safety reviewed by TopRatedFirms.com Rating: 4.5