Wealthsimple and Questwealth are two leading robo-advisors in the Canadian fintech space. They both offer low-fee automatic investing options for people who want to access the stock market but don’t want the headache of managing their own portfolio.
How Wealthsimple and Questwealth compare
Here’s a summary of how the Wealthsimple invest portfolios stack up against Questwealth:
|Management Fee||0.40% to 0.50%||0.20% to 0.25%|
|Tax Loss Harvesting||Yes||Yes|
|Socially Responsible Investing||Yes||Yes|
|Tax Loss Harvesting||Yes||Yes|
Who is Wealthsimple?
Wealthsimple is a Canadian robo-advisor that will invest your money in the stock market for you. You’ll take a quiz to assess your risk tolerance and timeline, and then Wealthsimple will select a portfolio that matches your financial goals.
Wealthsimple is a clear leader in the robo-advisor space because they provide such a beautiful, easy to use platform. They offer TFSAs, RRSPs, RESPs, and unregistered accounts, so you can invest in whatever tax-optimized way you need. All you need to do is open an account, add some funds, and they’ll take care of the rest!
What is Questwealth?
Questwealth is the robo-advisor arm of the discount brokerage, Questrade. Questrade is Canada’s leading discount broker, offering low-commission trading for self-directed investors. They’ve been a leader in Canada for providing a robust trading platform at the fraction of the costs charged by brokerages associated with big banks.
The Questwealth portfolios were introduced in late 2014 to provide an option for investors who don’t want the headache of choosing their own stocks. Questwealth offers five different pre-built portfolios that you can choose from depending on your risk tolerance.
You can read our full Questrade Review here!
What’s similar between Questwealth and Wealthsimple
Both Questwealth and Wealthsimple are robo-advisors, so they provide a similar service to Canadians. Here’s what these two brands have in common:
Low-fee automatic investing
Both Wealthsimple and Questwealth offer a blissfully hands-off investing experience at a fraction of the cost of traditional mutual funds. Where a bank might place you in a mutual fund that charges you 1% to 3% in fees (or more!), both Wealthsimple and Questwealth come in at a fraction of that.
Broad market stock market exposure through ETFs
Both Wealthsimple and Questwealth provide investors with stock and bond ETFs portfolios. These are simple, straight-forward actively managed investment portfolios that invest in the global stock and bond markets.
What are the differences between Wealthsimple and Questwealth
Despite both being excellent robo-advisors in the Canadian fintech space, there are some key differences between the Wealthsimple and Questwealth portfolios you should be aware of. Here’s the difference below:
Wealthsimple provides socially responsible and Halal investing options
One of the most important areas that Questwealth is lagging behind Wealthsimple is providing various ethically responsible investing options. Younger investors are especially cognizant of how their choices affect human labor and environmental impact in the global supply chain, and they want to do their part to do good in the world.
Wealthsimple offers two ethical investing options: Socially Responsible Investing portfolios (in Conservative, Balanced, or Growth based on your risk tolerance) and a Halal portfolio. Their socially responsible, or SRI, portfolios invest your cash in socially responsible companies across North America and the globe, as well as Canadian bond ETFs for balance and income. The Halal portfolio consists of 50 common stocks in companies that comply with Islamic law and do not profit from gambling, firearms, tobacco, or other restricted industries.
Questwealth has recently added socially responsible investing portfolios to their offering. You can now choose from Conservative to Aggressive portfolios invested in socially responsible and clean technology ETFs. Questwealth does not currently offer a Halal investing option.
Wealthsimple charges higher fees than Questwealth
At 0.40% to 0.50% of your portfolio’s value charged as fees every year, it’s almost double the costs to invest with Wealthsimple than Questwealth.
Minimizing fees when you invest is extremely important because they eat into your profits and can diminish your portfolio performance by tens or even hundreds of thousands of dollars over time. However, it’s important to consider fees in the context of returns as well. It is definitely worth it to pay higher fees for higher returns!
Wealthsimple vs Questwealth portfolios holdings breakdown
If you want to compare the holdings of the Wealthsimple vs Questwealth portfolios directly, here is how they stack up. Note that both Wealthsimple and Questwealth are actively managed portfolios, so these holdings do change over time. Questwealth did a massive portfolio overhaul since this post was first written less than 2 years ago, changing both the holdings and allocations.
Questwealth Conservative vs Wealthsimple Conservative Portfolio
The Questwealth Conservative portfolio has a greater fixed income allocation, but they also choose short term bonds over long-term bonds. The Questwealth Conservative Portfolio has an overall MER of 0.14% which is comparable to Wealthsimple’s 0.15%.
Questwealth Balanced vs Wealthsimple Balanced Portfolio
The Questwealth Balanced portfolio has the same fixed income and equities breakdown as the Wealthsimple portfolio. However, the Questwealth portfolio focuses more on short-term bonds, and has a larger allocation to the Canadian and US stock markets. Wealthsimple takes a greater position in emerging markets. The Questwealth Balanced Portfolio has an overall MER of 0.11% which is slightly lower than Wealthsimple’s 0.14%.
Questwealth Growth vs Wealthsimple Growth Portfolio
The Questwealth Growth portfolio has the same fixed income and equities breakdown as the Wealthsimple Growth portfolio. However, it takes a more aggressive position in the Canadian and US stock markets, and a conservative allocation to emerging markets than the Wealthsimple portfolio does. The Questwealth Growth Portfolio has an overall MER of 0.12% which is comparable to Wealthsimple’s 0.11%.
Both the Wealthsimple and Questwealth portfolios pay dividends, but you’re likely to earn more from the Questwealth portfolios. Questwealth invests more heavily in bonds and REITs, securities that tend to pay out solid dividends on a frequent basis. Wealthsimple doesn’t hold any REITs, which is a huge oversight in my opinion!
Should you invest your money with Wealthsimple or Questwealth?
Short answer: it’s up to you! Neither robo-advisor is a bad choice, but one might have portfolios that better fit your risk tolerance and financial goals. Furthermore, their returns are very close, which means either is a solid choice.
Wealthsimple vs Questwealth portfolio performance
If you want to split hairs, the Questwealth portfolios have slightly outperformed the Wealthsimple portfolios. However, that depends on what portfolio you chose, and even then the difference is negligible.
Here are Wealthsimple’s cumulative portfolio returns for the past year and 3-years annualized:
And here are Questwealth’s cumulative portfolio returns for the past year and 3-years annualized:
You can see the Wealthsimple Growth Portfolio has the highest 3-year annualized return, but just barely. If you were invested in the Questwealth Aggressive portfolio you wouldn’t have noticed any difference!
Prior to the past year, Wealthsimple was the outright leader when compared to Questwealth. However, Questwealth changed up all their portfolio allocations and holdings, and the rebalancing paid off: they’ve seen massive gains in the past 12 months which made them on par with Wealthsimple!
But who will be the leader from now on? Only time will tell, but I think Questwealth’s new portfolio allocation is better and will outperform Wealthsimple in the long term.
Can’t I just make my own portfolio by copying the holdings in these robo-advisors?
The transparency of all the holdings in each robo-advisor portfolio is awesome, especially if you want to take matters into your own hands. There’s nothing stopping you from choosing your favorite Wealthsimple or Questwealth portfolio and assembling it yourself in your brokerage account.
Self-directed investing will spare you paying any fees to someone else to manage your investments, but you’ll miss out on the other services and benefits a robo-advisor provides. Don’t forget behind every robo-advisor is a team of financial analysts managing and rebalancing your portfolio for you.
They’re watching the market and making trades as needed to ensure your investments never drift from your risk tolerance. They’re also going to the trouble of re-investing your dividends and minimizing your taxes, two tasks that can take a lot of work if you decide to DIY.
Still want to DIY?
If you still want a self-directed portfolio, the order switches: Questrade is better than Wealthsimple!
Questrade is Canada’s leading discount brokerage and offers low-commission trades and it’s free to buy ETFs. This makes assembling your own portfolio extremely affordable! Options to invest in a TFSA, RRSP, RESP, and trade on a margin also make Questrade the best choice for a brokerage account. You can get $50 in free trades by signing up here.
Wealthsimple also has a discount brokerage offering $0 commission trading called Wealthsimple Trade. However, it’s not as robust in functionality and does not have as many securities available as Questrade.
For an in-depth comparison of their trading platforms, check out our post Wealthsimple Trade vs Questrade.