Wealthfront vs. Robinhood vs. Wealthsimple

Daniel Penzing
Written by
Last update:

A Few Words on Each

To help you determine if a roboadvisor is a good fit for you, here’s a little bit about each of these versions.

About Weathfront

Com

An online portfolio manager which combines personalized advice to keep more of your money with the best tools to manage it.

About Robinhood

Robinhood is an American stock brokerage, founded in 2013, that allows users to trade stocks and other investment instruments for no commission. Robinhood is one of the most popular stock brokerage brokers, as it is simple to use and free.

About Wealthsimple

Wealthsimple, as its website advertises, is "A simple and smart way to invest your money."

For those who are interested in long-term investing, and are willing to automate the process, Wealthsimple is a great tool. The company requires no minimum deposit, and charges only a 0.5% annual fee. There are no trading fees, no account minimum, and no balance requirements. And if that's not enough, the company does its trading in-house, eliminating the need to pay middlemen to complete your investment. Wealthsimple's stated goal is to make investing as easy as possible. To that end, the company offers advice, planning, and investment management in addition to its online brokerage services.

Wealthsimple's investment offerings exist in conjunction with other financial services, such as mortgage planning, that are provided by third-party financial companies. The company also provides advice on its website as to how you can tailor these services to your personal needs, which can be invaluable if you're just starting out as an investor. If you go with Wealthsimple, you will have one main point of contact; that's the Wealthsimple financial planner. The planner will be your single point of contact for your wealth management and investment strategy. In addition to just taking your deposit and you telling them what to do with it, they will be there to guide you towards what you should do to grow your assets, both in the immediate and long-term.

How Are They the Same?

“All these companies are the same, right?”

Not exactly.

All three of the companies we’ve looked at today are great ways to get started with your investing. And while they all have some of the same advantages (like automatic rebalancing and low account minimums), each one has a unique business model and a set of pros and cons.

It’s important to evaluate these companies by their features and find the one that gets you the most. There’s no point in being the most qualified candidate for every job; it’s just going to be boring!

Okay, so let’s break it down.

Robinhood:

Robinhood is a no-load brokerage firm geared towards Millennials & Generation Z. They support most of the investment vehicles you’ll need (like IRAs and 401(k)s). They also have FeeX, which analyzes your portfolio for free.

Wealthfront:

How Are They Different?

When choosing between investment firms, there are a lot of things to consider. Not only do you have to look at the investments that are offered, but you also have to consider the fees that you will be charged for having an account. These vary significantly from one investment to another.

Though there are a number of differences between the different investment services, here are the three primary differences between Wealthfront, Robinhood and Wealthsimple:

Management Strategy

Rather than investing in mutual funds, robo-advisers use algorithms to create an optimal portfolio for the investor. The three programs that we’re going to be looking at (Wealthfront, Robinhood and WealthSimple) all have different strategy. Wealthfront uses Modern Portfolio Theory (MPT) to determine the risk that the investor is willing to take. They also look at the level of risk that the investor is already taking and the current age and location of the investor. Additionally, they’ll look at the investments that the individual already has (such as retirement plans and student loans) in their portfolio. If an investor already has a retirement account, for example, they’ll suggest a more conservative portfolio.

Unique Features

What Wealthfront does best is manage stock portfolio. It offers a feature-rich (and free) stock trading app.

Wealthfront lets you pick from 14 ultra-diversified ETF portfolios. This level of customization is on par with other robo-advisors. But the ETFs are entirely commission-free.

You can create and manage an account in as little as 5 minutes.

Unlike most other financial advisors, Wealthfront does not charge any account/trading fees. According to them, the average investor makes 8.24% with Wealthfront. You can even use a 401K to deposit your funds.

Wealthfront has an online learning center. We’d recommend using their glossary or other resources to learn more about investing.

Wealthfront

Who are the top online financial advisors and robo-advisors? The matchup:

  • Robinhood
  • Wealthfront
  • Wealthsimple

Our secure wallet and trusted online investment manager give you the power to invest your way.

Robinhood

Wealthfront, and Wealthsimple.

You may have noticed some new players in the brokerage business. Some are better known for their apps, some for their low fees, and some for their expertly guided investment advice. Two of these new players are Robinhood and Wealthfront.

The third is Wealthsimple, which is not new so much as an improvement on the research-based model of traditional financial advisors.

Which company is best for you? It depends on your needs. Here’s a quick look.

Robinhood Robinhood is an online brokerage for the mobile age, noteworthy for its price structure and user interface. While the company was founded in 2013, the stock-trading app only rolled out in 2015. It is completely free, with no fee to open an account, no transaction fees, no account minimum, and no hidden fees.

On the other hand, Robinhood’s platform and research tools have come under some scrutiny and are less extensive than those of its competitors. This means that if you trade a lot or trade complicated portfolios, you’ll want to stick with a larger, more professional organization.

Wealthfront Wealthfront is another hot startup in the digital-advice space. It was founded in 2011, with current CEO Adam Nash joining the super-smart founding team the following year.

Wealthsimple

Wealthsimple utilizes a robo-advisor style of investing. In an effort to mimic human intelligence, the service employs 20+ years of financial expertise to determine the best portfolio for the user.

To determine the most advantageous investments, the Wealthsimple system uses computer algorithms to study millions of different factors like market performance, earnings statements and the customer’s risk-tolerance.

Each customer is then assigned an investment portfolio that is tailored to their needs. Although the portfolio pool is an even mix of stocks and bonds, the percentages can vary depending on a customer’s risk-tolerance.

The Wealthsimple system offers the following services:

  • Portfolio management
  • Growth
  • Balanced
  • Conservative
  • Save

As a benefit only available to premium users, Wealthsimple offers financial advice for savings accounts, loans and mortgages. The feature provides clients with financial guidance regarding these finances through a personalized online financial dashboard.

Although Wealthsimple is based overseas, the company is a registered Wealth Manager in Canada and is overseen by the Canadian Securities Administrators.

Here’s what customers said about the Wealthsimple service:

Great Profits

Wealthsimple is a great choice for those who want to invest their savings, but don’t have the expertise to successfully navigate the investment market.

Minimum Investment

Looking to get started with online trading? We've highlighted the major differences and similarities between all three of the major players, including trading platform, investing philosophy, and minimum investment.

Fees

Low-fee financial advisors appeal to people who are already paying low fees on their investments. This works for people who are getting into the market late, where there is little difference between paying 1% or less on index funds or various ETFs.

Fees aside, though, all three platforms have solid features in the form of automatic rebalance and tax-loss harvesting. The difference between what you pay for those tools, and whether you think they're worth it, will ultimately be part of your investing decision.

Standout Features

Each robo-advisor comes with an app that handles both specific portfolio services, as well as monetary transactions. While there are significant similarities with all of these types of financial institutions, I want to focus on three main differences that exist between these leading competitors.

With my previous institutions, I was able to choose between a taxable individual account and tax sheltered retirement account. Here, I can choose between a taxable individual retirement account, Roth IRA, SEP IRA, and SIMPLE IRA.

Another advantage is their ability to act as a type of brokerage account or an advisory service. At other institutions, their services are limited to retirement accounts only. For the others, they can only manage existing accounts. The Wealthfront service can manage existing brokerage accounts as well as retirement accounts. The other two competitors can offer only brokerage services.

The final advantage is that unlike other institutions, all three can also recommend investment strategies. For them, this means planning for a variety of different allocations.

Wealthfront

The perks of this service include automatic rebalancing, tax-loss harvesting, low costs, and automatic dividend reinvestment.

Customer Service

If you want to talk to somebody and there is a problem with your account or have a question about your account, then this is the place to start. Customer service is with you through the whole process. If you have questions about the markets and where to invest, there are registered investment advisors (RIA) that can help. They also have real-time support with various applications including webinars and videos.

Robinhood does not have many offices or a telephone number you can call. However, there are online chat agents. If you are still unable to resolve the issue, you can send a fax or email. One great thing Robinhood does is through their mobile app. You can get help on investing in your mobile app. They were also one of the first brokerages to offer telephone transfers for clients.

Security

Overall, the security of the three investing platforms is very comparable, all three use high-end data centers and anti-hacking software to prevent theft or unauthorized transactions.

If you want the utmost in security, however, Wealthfront is your best bet as it uses a SEC-endorsed process called Zebrapay that does not store client information on laptops or hard drives.

If security is of the utmost importance to you, choose Wealthfront.

Who Are They Best For?

"Are you a stockbroker?"

Well, not exactly.

Is this an investment product or a financial product?

A bit of both.

Robinhood offers two main products: traditional brokerage and a 401(k) platform.

Wealthfront offers more products, including mortgage and student loan refinancing, tax-loss harvesting, and a savings management app.

Wealthsimple doesn't offer a traditional brokerage account, but it does offer individual retirement accounts (IRAs).

Which Is the Best?

For Investors of All Levels?

In this post, we’re going to look at the three most popular robo-advisors in the world: Wealthfront, Robinhood, and Wealthsimple.

Robo-advisors are online investment management tools that use an algorithm to put you on an investment plan that fits your risk tolerance. By answering a few questions about your personal finances, the robo-advisor analyzes your unique financial situation and determines an investment strategy that will help you reach your financial goals.

Although some brokers offer robo-advisor type services through their business, the three most prominent robo-advisors have become so popular due to their flexibility. Some brokers, like E*TRADE and Fidelity Investments, are great online trading experiences, but you can only trade what they have – typically mutual funds or stock. A lot of people want more control over the investments we make, and that’s what makes robo-advisors so appealing. Rather than being restricted to specific investment vehicles, the robo- advisor gives you flexibility to invest in just about anything: stocks, bonds, ETFs, mutual funds, etc.

Wealthsimple offers low fees and a simple interface. With no account minimum, you can start investing in a portfolio that reflects your goals and risk tolerance with just a dollar.