Wealthsimple is rolling out a new subscription offering that could shake up the market for retail trading in Canada. For $10 a month, Wealthsimple Plus users will get real-time price data, a higher limit for instant deposits and access to a U.S.-dollar account to save on foreign-exchange fees.
The bottom line: The premium subscription could help active traders save money on fees, the Toronto-based fintech said. Wealthsimple has long billed itself as a no-fee trading app, but that only applies to buying and selling Canadian stocks. For U.S.-listed stocks, including many of the biggest retail favourites, customers pay a 1.5 per cent foreign exchange fee on each trade.
Until now, Wealthsimple didn’t let customers hold U.S. dollars in their accounts, meaning users had no choice but to pay a conversion fee on trades involving foreign stocks. And those fees can add up, especially given that some of Wealthsimple’s competitors, including discount brokerages like Questrade and Interactive Brokers, offer U.S.-dollar accounts. (Those platforms make money by charging fees that range from a few cents to roughly $10 per order.)
“For our basic tier, we leverage technology to keep costs really low, charging reasonable FX fees that are in line with or below industry averages and offer premium features and subscriptions,” Wealthsimple CEO Michael Katchen said in an email to The Logic.
Why now: Wealthsimple’s latest move comes as the surge in retail trading shows signs of slowing down. It also could be a way to keep its most active users from seeking cheaper trading services on rival platforms. In another alternative to Wealthsimple, CIBC and Neo Exchange recently launched Canadian depositary receipts: shares in major U.S. companies that trade on the Neo and can be bought through any broker using Canadian dollars. The CDRs are also priced low, typically around $20 per share, in a bid to attract retail interest.
Trading-as-a-Service: In rolling out a paid subscription, Wealthsimple is taking inspiration from companies like Coinbase and Robinhood that have begun introducing similar models. Robinhood’s paid tier gives users access to better market data, higher instant deposits and margin trading, while Coinbase offers customers zero-fee trading in exchange for a flat monthly rate. The strategy could help smooth out revenue during the inevitable peaks and troughs in traders’ interest.