Are you wondering which between Wealthsimple vs. Tangerine Bank would be better to meet your needs?
Canadians have several financial institutions they can use for banking and investment purposes. Several big names have been around for centuries, such as TD Bank or RBC.
However, alternative financial institutions, like Wealthsimple and Tangerine Bank, offer similar services at lower costs and have also become popular in recent years. Wealthsimple has recently been valued at over a hefty $5 billion. So what makes these new players so special?
My Wealthsimple vs. Tangerine Bank comparison will discuss everything you need to know about the two financial institutions to help you make a well-informed decision.
Wealthsimple vs. Tangerine Bank: An Overview
Let’s start this Wealthsimple vs. Tangerine Bank comparison by taking a quick look at both financial institutions and introducing you to them.
About Wealthsimple
Wealthsimple is a Canadian financial services company focusing on making investing simple, as its name suggests. The company began with the introduction of Wealthsimple Invest, a robo-advisor product, as its core offering in 2014, providing investors with the opportunity to pursue low-cost and hands-off investing to achieve its goal of making investing more straightforward.
The Power Corporation of Canada is the majority owner of Wealthsimple, and it is a massive company that owns several financial assets throughout the country.
Wealthsimple is the ideal pick among Canadian robo-advisors because it offers access to human financial advisors, broad investment selection, automatic tax-loss harvesting for premium clients, and a sleek and user-friendly platform.
Headquartered in Toronto, it has become one of the leading robo-advisors worldwide. As of May 7, 2021, it boasts $9.7 billion in Assets Under Management (AUM) from over 1.5 million users. It has also been named the Best Financial Services Website by The Webby Awards.
The company has since added several other products, offering high-interest savings accounts, online tax filing services, self-directed stock market trading, and cryptocurrency trading.
Pros
- Offers a broad product line
- Provides completely commission-free trading
- Has high-interest savings accounts
- Has an easy application process
- Offers several service options
Cons
- Provides limited personal finance tools
- Portfolio fees are a little too high
About Tangerine Bank
Tangerine Bank is an online banking subsidiary for the Bank of Nova Scotia. Tangerine Bank was established as ING Direct by the Netherlands-based ING Group in Canada in 1997, introducing Canada’s first high-interest, no-fee savings account.
The lack of fees continues to be one of its biggest selling points, with several banking services available to its customers for free.
The Bank of Nova Scotia acquired ING Direct in 2012 for $3.1 billion. In 2014, it rebranded ING Direct Canada as Tangerine Bank.
Since then, Tangerine Bank has become an online bank with no brick-and-mortar branches, except for its five cafes in major urban centers in Canada. All its operations are conducted online through its banking app and website.
Tangerine Bank offers several products and services to its clients, including high-interest savings accounts, credit cards, mortgages, mutual fund portfolios, and exchange-traded fund (ETF) portfolios comparable to robo-advisor products.
Pros
- Is owned and operated by a reputable financial institution
- Charges no monthly or annual fees for its high-interest savings accounts
- Offers debit cards with unlimited free transactions
- Offers low-cost mutual funds
- Offers first 50 checks for free
Cons
- Additional chequebooks after the free chequebook cost $50 each
- Doesn’t offer hands-off investing solutions
Wealthsimple vs. Tangerine Bank – Features and Benefits
Wealthsimple and Tangerine Bank are two financial services companies with several differences that set them apart.
This section of my Wealthsimple vs. Tangerine Bank comparison will discuss the different features and benefits that both financial institutions offer to give you a detailed overview of what you can expect while working with each of them.
Detailed Overview of Wealthsimple
Let’s take a closer look at the different aspects of Wealthsimple that make the financial services company a formidable presence in the Canadian online banking and investing industry.
Accounts Offered by Wealthsimple
- Registered Retirement Savings Plan (RRSP)
- Tax-Free Savings Account (TFSA)
- Registered Education Savings Plan (RESP)
- Non-registered Accounts
- Registered Retirement Income Fund (RRIF)
- Locked-In Retirement Account (LIRA)
- Joint Accounts
- Corporate Accounts
- Trust accounts
Wealthsimple offers a substantial number of account types that you can open with the online financial services company, depending on your financial goals.
Although it primarily began as a robo-advisor company, Wealthsimple has since expanded its services and introduced Wealthsimple Cash (its high-interest savings accounts subsidiary), Wealthsimple Tax (its online tax filing service), and Wealthsimple Trade (its self-directed stock market and cryptocurrency trading subsidiary).
I will discuss what each of them has to offer to Canadians who are new to personal finance and investing.
1.Wealthsimple Invest
Wealthsimple Invest is the company’s most popular product. One of the first Canadian robo-advisors, Wealthsimple Invest is an excellent tool that allows Canadian investors the opportunity to pursue different passive investing strategies, depending on their financial goals and risk tolerance.
Wealthsimple Invest’s investment portfolios try to emulate market returns instead of trying to beat the market to provide investors with long-term returns. It charges an annual fee of 0.5% management fee, which is a fraction compared to the average 2% annual charges for mutual fund products.
You can use Wealthsimple Invest as an ideal investment vehicle in various accounts, depending on your financial goals. This makes it ideal for many Canadians seeking hands-off passive investing solutions.
2.Wealthsimple Trade
If you are a Canadian investor who prefers to take a more hands-on approach with your investment decisions, Wealthsimple Trade is another product that you can consider. The financial service does not come with any management fees because you are in control of your investments.
Wealthsimple Trade comes with zero-commission trades for ETFs and stocks, allowing you to create an investment portfolio at a much lower cost than with traditional financial institutions. Wealthsimple only allows you to trade and invest in securities offered in Canada- and US-based stock exchanges.
They even allow you to trade fractional shares, and is the first financial institution in Canada to offer this feature.
As with Wealthsimple Invest, you can use Wealthsimple Trade as an investment vehicle in various account types, depending on your investment goals. One thing to remember about Wealthsimple Trade is that it charges fees for trades made on US exchanges and cryptocurrency trades.
3.Wealthsimple Cash
The financial services company launched Wealthsimple Cash as its high-interest savings account product that offers a decent interest rate. The account does not come with any fees, and there are no limits on monthly withdrawals with the account either. However, you cannot use the account for spending right now.
Wealthsimple is planning on introducing a feature that enables you to use it as a spending account, alongside other features like direct deposits, pre-authorized debits, bill payments, zero foreign-exchange fees on purchases, Google Pay, and Apple Pay.
Once implemented, these additional features for Wealthsimple Cash will make it a more formidable product for Wealthsimple customers to consider.
4.Wealthsimple Tax
Wealthsimple Tax is a simple online tool that helps Canadians file their tax returns. The tool is completely free, certified by the Canada Revenue Agency and Revenu Quebec, and makes your life easier during tax season.
5.Wealthsimple Crypto
Wealthsimple Crypto is a tool that makes it possible for Canadian investors to trade cryptocurrencies.
Currently, it only allows you to trade Ethereum and Bitcoin, the two most popular cryptocurrencies worldwide. However, the financial services company plans to introduce more cryptocurrencies in the future. You can also use the Wealthsimple Trade app to trade cryptocurrencies.
Detailed Overview of Tangerine Bank
Now, let’s discuss different aspects of Tangerine Bank that make Scotiabank’s online banking an excellent option to consider.
Accounts Offered by Tangerine Bank
- Retirement Savings Plan (RSP)
- Tax-Free Savings Account (TFSA)
- Non-registered Accounts
- Retirement Income Fund (RRIF)
Tangerine Bank has limited options in terms of bank account types that you can open, but it offers the most popular account types that Canadians use.
Tangerine Bank initially began as a high-interest savings account that charges no fees for its services. However, since its acquisition by Scotiabank, the financial institution has started offering several products, including mortgages, checking accounts, credit cards, and mutual funds. This makes Tangerine Bank significantly different than Wealthsimple in many ways.
I will discuss the products and services it offers to help you get a better idea of what to expect while working with Tangerine Bank.
Tangerine Bank Investment Options
Tangerine offers several investment options that you can consider if you want to invest in the stock market.
While I do not prefer or recommend investing in mutual funds, it is a feature worth mentioning.
Tangerine offers five core mutual fund portfolios: balanced income, balanced growth, balanced, equity growth, and dividend portfolios. The mutual funds offered by Tangerine Bank come with an annual 1.06% fee, which is much lower than the industry average.
Here is a video that tells you why I think mutual funds in Canada are awful if you want to know why I don’t recommend mutual fund investing.
Tangerine Bank has also launched global ETF portfolios. These new portfolios include balanced, balanced growth, and equity growth ETF portfolios. They also come with a much lower 0.77% MER, making them comparable to many robo-advisor products for the cost.
Tangerine also offers Home Equity Lines of Credit (HELOCs), mortgages, guaranteed investment certificates (GICs), and RSP loans.
Tangerine Bank Credit Cards
Tangerine also offers two types of credit cards that you can consider: the Money-Back Credit Card and the Tangerine World Mastercard.
The Money-Back Credit Card is convenient for customers because there are no fees involved, and using it for your transactions lets you earn up to 2% cashback in two spending categories of your choice. You can also use the credit card to earn 0.5% money-back rewards on your other purchases. If you earn at least $12,000 per year, this could be a convenient credit card for you.
On the other hand, the Tangerine World Mastercard comes without fees and the same cashback offer, but it offers more advantages over the Money-Back Credit Card. You can take advantage of features like mobile device insurance, rental car collision/loss damage insurance, and a free membership to Mastercard Airport Experiences.
Provided you earn $60,000 or more per year, have an annual household income of over $100,000, or have a total balance of at least $250,000 in a Tangerine Savings or Investment Fund account, you can apply for the Tangerine World Mastercard.
Tangerine Bank Checking and Savings Accounts
Tangerine Bank offers checking and savings accounts that you can open with the online bank.
The Tangerine Savings Account does not have a minimum balance requirement, and it does not charge you any monthly fee. You can make unlimited free withdrawals and enjoy a 0.1% interest rate. You can also open US dollar savings accounts and various registered savings accounts.
The Tangerine No-Fee Daily Checking Account comes with no transaction fees or minimum balance requirements. You can use the account as a spending account for various purposes, including Interac e-Transfers, debit purchases, pre-authorized payments, and bill payments.
Wealthsimple vs. Tangerine Bank – The Verdict
I prefer to work with Wealthsimple because it is more than a simple online bank. It offers a robust robo-advisor product, allows me to take on self-directed investing with commission-free trades, and genuinely simplifies investing.
Here is a quick look at both financial services companies and when it would be ideal to use them.
Use Wealthsimple If:
- You seek an extremely low-fee structure while you start out investing.
- You seek expert financial advice
- You seek simpler options and need some guidance when choosing your preferred ETF portfolios.
- You’re looking for an excellent commission-free trading platform.
You can check out Wealthsimple by clicking here.
Use Tangerine Bank If:
- You want to get a mortgage.
- You prefer investing in mutual funds (something I don’t recommend).
- You want to work with an online bank backed by a major Canadian bank.
- You need more of a traditional banking experience
- If you need chequing accounts.
- You need an excellent no-fee credit card
You can check out Tangerine Bank by clicking here.
Conclusion
Tangerine Bank was an innovative financial services company when it was first established. However, Wealthsimple has been offering much better advantages to its customers through its robust robo-advisor product and has expanded its products to offer greater convenience to Canadians seeking simpler and lower-cost investing alternatives to traditional banks.
The two financial institutions differ a lot from each other, and the final choice between Wealthsimple vs. Tangerine Bank boils down to what you prefer and your financial needs.
If you want a mortgage or a chequing account, Tangerine Bank could be a better fit for you.
However, Wealthsimple is much better for trading stocks and investing through a robo-advisor. I also feel that the company has been much more innovative in giving Canadians what they are looking for and will add more features in the future to become more like a traditional bank. I’m going with Wealthsimple here all the way.
Get $50 when you open and fund a Wealthsimple Invest account here.
