For Canadian investors looking to enter the world of online trading or seeking to switch platforms, two popular options often come into consideration:

Wealthsimple and Interactive Brokers.

While both platforms offer low-cost investment options, they cater to different types of investors and have distinct features. This comprehensive comparison will help you understand the strengths and weaknesses of each platform, guiding you to make an informed decision based on your investment goals and experience level.

Meta Description: Discover the key differences between Wealthsimple and Interactive Brokers. Learn about their features, fees, and target audiences to choose the best investment platform for your needs.

Quick Comparison: Wealthsimple vs Interactive Brokers

Feature	Wealthsimple	Interactive Brokers
Founded	2014	1978
Target Audience	Beginners, passive investors	Experienced traders, active investors
Account Types	TFSA, RRSP, Personal	TFSA, RRSP, Personal, Margin
Trading Commissions (Stocks/ETFs)	$0	Tiered pricing, starting at $0.008 CAD per share
Currency Conversion Fee	1.5%	0.20%
Fractional Shares	Yes	No
User Interface	User-friendly, mobile-first	Complex, professional-grade
Available Securities	Stocks, ETFs	Stocks, ETFs, Options, Forex, Bonds

Wealthsimple: The Robo-Advisor Pioneer

Wealthsimple, founded in 2014, has quickly become a household name in Canadian fintech. It started as a robo-advisor service and later expanded to offer a commission-free trading platform, Wealthsimple Trade.

Key Features of Wealthsimple:

1. Commission-Free Trading: Wealthsimple Trade offers zero-commission trades on stocks and ETFs listed on North American exchanges.
2. User-Friendly Interface: The platform is known for its intuitive, mobile-first design, making it accessible for beginners.
3. Fractional Shares: Investors can purchase portions of shares, allowing for diversification with smaller amounts of capital.
4. Automatic Portfolio Rebalancing: For users of Wealthsimple Invest (the robo-advisor service), portfolios are automatically rebalanced to maintain target asset allocations.
5. Socially Responsible Investing Options: Wealthsimple offers portfolios that focus on socially responsible investments.

For a deeper dive into Wealthsimple’s offerings, visit their official website.

How Wealthsimple Makes Money

Despite offering commission-free trades, Wealthsimple has several revenue streams:

1. Currency Conversion Fees: A 1.5% fee is charged on CAD to USD conversions (and vice versa).
2. Premium Services: Wealthsimple offers paid services like Wealthsimple Black and Generation for higher net worth clients.
3. Management Fees: For their robo-advisor service, Wealthsimple charges a management fee based on the account balance.

It’s worth noting that Wealthsimple does not engage in payment for order flow, a practice that has been controversial in the U.S. with platforms like Robinhood.

Interactive Brokers: The Professional’s Choice

Interactive Brokers, founded in 1978, is a veteran in the online brokerage industry. It’s known for its powerful trading tools and competitive pricing, making it a favorite among experienced traders and institutional investors.

Key Features of Interactive Brokers:

1. Advanced Trading Platform: The Trader Workstation (TWS) offers professional-grade charting, real-time data, and advanced order types.
2. Wide Range of Securities: Users can trade stocks, ETFs, options, futures, forex, and bonds from a single account.
3. Global Market Access: Interactive Brokers provides access to markets in over 135 countries.
4. Low Currency Conversion Fees: A competitive 0.20% fee for currency conversions.
5. Margin Trading: Offers the ability to trade on margin with competitive interest rates.

For more details on Interactive Brokers’ offerings, check their Canadian website.

Interactive Brokers’ Fee Structure

While not commission-free like Wealthsimple, Interactive Brokers offers competitive pricing:

1. Stock Trades: Tiered pricing starts at $0.008 CAD per share with a $1 CAD minimum per order.
2. Options: Fees range from $1 to $1.25 CAD per contract.
3. Currency Conversion: 0.20% fee, significantly lower than Wealthsimple’s 1.5%.

Choosing Between Wealthsimple and Interactive Brokers

The choice between Wealthsimple and Interactive Brokers largely depends on your investing experience, goals, and preferences:

Consider Wealthsimple if:

1. You’re new to investing and value a simple, user-friendly interface.
2. You primarily trade Canadian stocks and ETFs.
3. You want to start investing with a small amount of capital (fractional shares).
4. You prefer a mobile-first platform.
5. You’re interested in a hands-off, robo-advisor approach (Wealthsimple Invest).

Consider Interactive Brokers if:

1. You’re an experienced investor looking for advanced trading tools.
2. You frequently trade U.S. stocks or want access to international markets.
3. You’re interested in trading a wide range of securities (options, futures, forex).
4. You want to minimize currency conversion fees for USD transactions.
5. You’re comfortable with a more complex platform in exchange for greater capabilities.

For a detailed comparison of various Canadian brokers, including these two, check out this broker comparison guide from the Canadian Securities Administrators.

FAQs

1. Q: Is Wealthsimple Trade available for U.S. residents? A: No, Wealthsimple Trade is only available to Canadian residents at this time.
2. Q: Does Interactive Brokers offer commission-free trading? A: Interactive Brokers offers IBKR Lite for commission-free trading on U.S. stocks and ETFs, but this is only available to U.S. residents. Canadian residents have access to their competitive tiered pricing structure.
3. Q: Can I open a USD account with Wealthsimple Trade? A: Yes, Wealthsimple now offers USD accounts through their Wealthsimple Plus subscription, which costs $10/month.
4. Q: Does Interactive Brokers offer robo-advisor services? A: While Interactive Brokers doesn’t offer a traditional robo-advisor service, they do provide a tool called “Interactive Advisors” which offers managed portfolios. However, this service may not be available to Canadian residents.
5. Q: Which platform is better for day trading? A: Interactive Brokers is generally better suited for day trading due to its advanced tools, faster execution, and lower fees for high-volume traders. Wealthsimple Trade is not designed for day trading and may have limitations for this purpose.

Conclusion

Both Wealthsimple and Interactive Brokers offer valuable services to Canadian investors, but they cater to different needs and experience levels.

Wealthsimple shines in its simplicity and user-friendliness, making it an excellent choice for beginners or those who prefer a hands-off approach to investing. Its commission-free structure and fractional shares feature make it accessible to investors starting with smaller amounts of capital.

Interactive Brokers, on the other hand, offers a more comprehensive suite of tools and services that can benefit experienced investors and active traders. Its low currency conversion fees and access to global markets make it particularly attractive for those looking to diversify internationally.

Ultimately, the best choice depends on your individual investment goals, experience level, and the types of securities you plan to trade. Consider starting with Wealthsimple if you’re new to investing, and potentially transitioning to Interactive Brokers as you gain experience and require more advanced features.

For more insights on choosing the right investment platform, check out this guide from GetSmarterAboutMoney.ca, an investor education website run by the Ontario Securities Commission.

Call to Action: Ready to start investing? Consider opening an account with either Wealthsimple or Interactive Brokers based on your needs. Remember to thoroughly research and understand the platform’s features and fee structure before investing. Always consider consulting with a financial advisor to ensure your investment strategy aligns with your personal financial goals.