Wealthsimple is a broker who holds some of my retirement assets¹. They had a “For Nerds Only” (recording here) event on October 22 where they announced a bunch of new features. The most exciting development for me was the pending availability of Norbert’s Gambit. Here’s my take.

$0 Options

Of no personal interest to me as I don’t trade them. There are an increasing number of ETF products that use “Covered Call” strategies in an effort to eke some (or more) yield out of held equities, but I don’t bother with products like that². I like my investments simple.

Trade Gold; Crypto trading fees reduced

I lump these two together since I have the same amount of interest in both of these developments: none. Although people have made huge profits on gold and crypto, I’d rather make money off of companies that make things or provide services.

Direct Indexing

An interesting product that allows you to buy into the entire index³ (TSX all-cap⁴ or S&P 500⁵) and hold individual stocks. The main benefit of this is automated tax-loss harvesting which should reduce your tax bill in a non-registered account. The idea is logical, but it will come down to how well it is executed — how closely will Direct Indexing actually track the underlying index, and how much tax savings can be realized? The benefit will have to be more than the 0.5% MER being charged for investing in the index this way. Of possible interest in a non-registered account, but not otherwise. I’m not actively adding to my non-registered investments, so I don’t think this is for me either, although I’ve often wondered about how many stocks you actually have to hold in order to get “close enough” to the performance of the TSX 60 / S&P 500.

Dedicated Wealth Management

Sounds like an offer ripped from the pages of CIBC, BMO, or RBC. Dedicated advisors, tailored advice. Wealthsimple’s differentiator appears to be in the fee structure. From https://www.wealthsimple.com/en-ca/advice:

Our fees start at 0.75% and drop to 0.4% for clients who have $10M or more with us.

https://www.wealthsimple.com/en-ca/advice FAQ

I am not a fan of percentage-of-net-worth-based wealth management. It implies that larger portfolios are more complex. Anyway, this might be the kind of offer future, less-capable-me might be interested in, but at the moment, no thanks.

“Coming Soon”

The other features announced on the event are not available yet. But here’s a view all the same:

• Summit Portfolio: sounds like a robo-advisor that also includes private equity. Since I like my investments to be liquid, this is another development that doesn’t really interest me.
• Retirement Accelerator: cheap loans to help you with RRSP contributions. Leveraged investing doesn’t fit my risk profile, and, oh, by the way, I’m already retired 🙂
• Norbert’s Gambit: This is something I use all the time given that i have a large amount of USD holdings in my retirement portfolio. The best thing about the Wealthsimple webinar is that they actually trotted out Norbert⁶ himself to talk about it! This is one feature missing from the Wealthsimple portfolio that was a “must have” for me given my current holdings.
• AI Trading Features, Advanced Options Strategies: Yawn.

Wealthsimple continues to be a broker I like to watch as they keep the new features rolling out. They are still not a serious contender to be my #1 broker until they support self-directed spousal RRIFs, something they inexplicably still lack.

1. Mostly because of the DPSP debacle and the fact I needed a new Macbook. ↩︎
2. You can read a bit more here: https://www.proshares.com/browse-all-insights/insights/covered-call-etfs-the-myth-of-downside-protection ↩︎
3. On the webcast, it sounded more like they held “a representative sample” of these indices, which makes sense to me; you couldn’t hold ALL the members of the index AND do tax-loss harvesting at the same time. Their FAQ at https://www.wealthsimple.com/en-ca/portfolios/direct-indexing confirms this. ↩︎
4. VCN is an ETF that holds the same index, as far as I can tell. ↩︎
5. VFV is an ETF that holds the same index priced in CAD. IVV is the same index priced in USD. I presume the Wealthsimple product is traded in USD, but they don’t explicitly say. ↩︎
6.  Norbert Schlenker, to be precise. ↩︎