Automated Investing Disclosure
Wealthsimple Investments Inc. (“WSII”) is a registered investment dealer and member of the Canadian Investment Regulatory Organization (“CIRO”). This disclosure is supplementary to your WSII Client Account Agreement and outlines some considerations you should be aware of when using Automated Investing in your self-directed accounts.
Nature of the Account
WSII facilitates Automated Investing technology that calculates and executes trades to keep your account aligned to your stated targets or standing instructions. Your Automated Investing account is a self-directed, order-execution-only account. This means:
You make all investment decisions, including the selection of securities and the target allocation to each security and or portfolio template.
WSII does not provide investment advice, portfolio recommendations, suitability assessments, or financial planning in connection with this account.
Trades are executed mechanically in accordance with your authorizations, standing instructions and the parameters you have configured.
Automated Investing does not:
Constitute discretionary portfolio or investment management.
Provide ongoing supervision of your portfolio construction, security selection, or overall investment suitability.
Alert you if your portfolio is underperforming, if your allocations appear unsuitable for your circumstances, or if market conditions suggest a change to your strategy may be appropriate.
Instructions and Authorizations
By opening and maintaining an Automated Investing account, you provide WSII with standing instructions to automatically execute trades in your account in the following circumstances:
On deposit: to deploy available cash in the account toward securities that are underweight relative to your target allocations.
On withdrawal request: to sell the necessary holdings to generate the cash needed to fund the withdrawal, while maintaining an asset allocation in line with the target allocation defined by you. If there are holdings that are overweight relative to your target allocations, those holdings will be sold first in order to generate the cash needed to fund the withdrawal.
On client-initiated rebalance: to execute buy and sell orders to bring your self-directed portfolio back to your target allocations.
On corporate action: to handle dividends, stock splits, mergers, and other corporate events in accordance with the procedures described further in this disclosure.
These standing instructions remain in effect until you close your account or modify your target allocations. You may update your target allocations or securities at any time through the Wealthsimple mobile or web apps, and updates will be reflected in subsequent automated activity. All automated trades are executed pursuant to your instructions as configured.
Account Mechanics
Portfolio Configuration
Before any trading occurs, you must:
Select the securities or portfolio templates you wish to hold; and
Assign a target percentage allocation to each security or portfolio template, totalling 100%.
You may update your securities and target allocations at any time through our mobile or web apps. You may optionally create groups to better organize your holdings.
You are responsible for monitoring your overall exposure to any individual security or company across all positions you hold, including directly-held positions and look-through exposure via ETFs or other pooled investments. We do not calculate your concentration in a single security, sector, market, or geography and do not consider other accounts held by you.
Deposits
Upon your initial cash deposit, funds will be deployed to purchase the securities in your target portfolio according to your allocations. Cash is typically deployed by the next available trading day (excluding weekends and holidays). For subsequent deposits, the cash will be invested to purchase securities according to your allocations, assuming your account is currently in line with your target allocations. WSII’s technology automatically calculates which securities in your portfolio are underweight relative to your targets and directs available cash toward purchasing those securities. Securities are purchased at market prices during regular trading hours on the relevant exchange. Fractional shares are supported for eligible securities.
A small cash buffer is maintained in your account to cover account fees and fractional share rounding. Beyond this buffer, the account is designed to remain fully invested at all times. The Automated Investing functionality is not designed to support accounts holding large balances of uninvested cash.
Uninvested cash held in your account (including the cash buffer maintained for fees and fractional share rounding) does not earn interest.
Withdrawals
When you initiate a withdrawal, WSII sells holdings that are overweight relative to your target allocations to generate the required cash. WSII sells the most overweight positions first and then proportionally sells assets from the rest of your portfolio as needed, preserving your target allocation as closely as possible while generating the requested amount of cash. Assets are typically sold the next available trading day after the withdrawal is initiated. Transactions typically take 1 business day to settle. After settlement is completed, funds may be withdrawn and transferred to the destination account.
Rebalancing
Your held positions may drift from your target percentages due to market fluctuations, rounding, and fractional share constraints. We do not guarantee that your portfolio will perfectly match your target allocations at all times. We do not monitor or rebalance your account for drift. You must initiate all rebalances.
We will display a message when your portfolio has drifted from its target allocations. Target drift notifications and any subsequent rebalancing do not constitute investment advice. We do not assess the suitability of your rebalance decision.
You may initiate a rebalance at any time using one of two methods:
Cash-funded rebalance: You deposit additional funds, which are automatically directed toward the underweight position(s); or
Buy-sell rebalance: You initiate a rebalance that sells overweight holdings and uses the proceeds to purchase underweight ones, restoring the portfolio to target allocations. No additional cash deposit is required.
Rebalance trades are typically placed on the next available trading day following your instructions. For buy-sell rebalances, sell and buy orders are typically executed the same trading day. In certain circumstances, proceeds from sell orders may need to settle before buy orders are fully funded, which may affect timing. Trade execution is subject to normal market hours and liquidity conditions.
Buy-sell rebalances may generate capital gains or losses in non-registered accounts. You are responsible for any tax consequences arising from trades executed in your Automated Investing account. You should consult a qualified tax advisor before initiating rebalances in taxable accounts.
Corporate Actions
Corporate actions are events initiated by the issuer of a security you hold. Common corporate actions are handled as follows:
Administrative Updates
Event: Name changes, symbol changes, same-country exchange changes, and ISIN changes.
Impact on Holdings: These are identifier updates only; the economic position, share quantity, price, and book value remain unchanged.
Impact on Target Portfolio: The relevant identifier will update automatically; your allocations and target weights require no changes.
Dividends & Distributions
Event: Cash dividends, stock dividends, and distributions.
Impact on Holdings: Cash dividends are deposited into your account. Stock dividends and distributions increase share quantity and adjust book value per share (though total market value remains unchanged).
Impact on Target Portfolio: Cash is swept into allocations for the next rebalance. Stock payouts require no immediate change based portfolio allocations are based on total value, not share quantity.
Splits & Consolidations
Event: Stock splits/subdivisions and reverse splits/consolidations.
Impact on Holdings: Share quantity and price per share adjust proportionally and inversely to one another, maintaining the exact total market value.
Impact on Target Portfolio: No changes are required because portfolio allocations are based on total value, not share quantity.
Mergers, Acquisitions & Spin-offs
Event: Mergers/Acquisitions and Spin-offs/Demergers.
Impact on Holdings: Original M&A shares are removed and replaced with acquirer shares or a mix of assets/cash at the exchange ratio. For spin-offs, a new independent position is created alongside the original, and the original security's price drops to reflect the transferred value.
Impact on Target Portfolio: For M&A, the original security is removed and the acquirer security is added at the original target weight, redistributing any cash components pro rata. For spin-offs, the original security's weight is reduced proportionally and the new security is assigned a weight based on relative market value so the target portfolio sums to 100%.
Suspensions & Delistings
Event: Suspended/Halted trading and Delistings (Taxable or Non-Taxable).
Impact on Holdings: Holdings remain on record but cannot be traded on an exchange. Suspended positions may have stale values, while delisted positions become illiquid, may become worthless, and trigger capital gains/losses if taxable.
Impact on Target Portfolio: For suspensions, target weights remain unchanged but trades are deferred while the security is suspended, causing temporary drift. For delistings, the security is automatically removed from the target portfolio and its allocation is redistributed pro rata across the remaining assets.
Wealthsimple will notify you of material corporate actions affecting your holdings through the platform and/or by email. You are responsible for reviewing such notices and updating your target allocations if the corporate action results in a change to your desired portfolio composition.
Transfers-In and In-Kind Assets
Assets transferred into your Automated Investing account from other WSII accounts, or other financial institutions may, without notice, be automatically liquidated if they are not reflected in your target portfolio or if they do not match the eligible securities supported by the platform. You are responsible for any tax consequences arising from the sale of transferred assets.
Account Minimums
Automated Investing requires a minimum deposit of $1,000 per direct index added to your account, plus an additional $10 per additional security added outside of any direct indexing sleeve.
Fractional Shares
Your account trades in fractional shares to maintain precise target allocations. Fractional shares cannot be transferred in-kind to another financial institution. Fractional positions will be liquidated to cash upon account closure or outgoing transfer. Fractional shares do not carry voting rights.
Direct Indexing
In non-registered accounts, direct indexing performs active tax loss harvesting. Our technology automatically scans for securities that have declined in value relative to your average cost basis, sells those securities to realize tax losses, and reinvests the proceeds into previously unheld index securities to maintain appropriate market exposure. A direct index in a non-registered account will hold a representative sample of index securities designed to track the benchmark with minimal tracking error.
Tax loss harvesting is executed by our technology pursuant to your standing instructions. This activity is not tailored to your individual tax situation and does not constitute tax advice. To avoid unintended tax consequences, you should consult a qualified tax advisor regarding the tax implications of tax loss harvesting for your specific circumstances.
In registered accounts, tax loss harvesting does not apply. A direct index in a registered account will typically hold all of the underlying individual securities of the benchmark index.
In any account, you may exclude individual securities from a direct index if you do not wish to hold specific companies.
Model Portfolio Templates and Collections
We may offer model portfolio templates within Automated Investing accounts. Model portfolios do not constitute an endorsement, recommendation, investment advice, a suitability assessment, nor a guarantee that any template will achieve a specific financial objective.
We may organize ETFs into thematic groups or "collections" based on algorithmic parameters and market sector data. Collections may be constructed based on (but not limited to) target asset allocations, exposure to particular sectors or industries, investment themes, or geographic focus. Available collections, the securities within them, and the allocations to each security may change over time. Collections are provided as a self-help and filtering tool to assist in assessing available investment options. These are not endorsed by WSII, nor do they constitute personalized investment advice or a recommendation to purchase any particular security. WSII does not actively monitor or manage collections for your individual performance.
If a security within a collection or model portfolio is removed from the model portfolio template or its allocation within the model portfolio template is modified, your account will not be automatically updated to reflect the update. Trades will continue to be executed mechanically in accordance with your original standing instructions unless and until you update your target portfolio.
Monitoring & Performance
WSII’s algorithms and technology are designed to implement your standing instructions efficiently but do not guarantee investment performance, index tracking accuracy, or tax benefit.
WSII monitors the technical performance of our trade generation, direct indexing, and rebalancing algorithms to verify they are operating to a sufficient standard. This includes, but is not limited to:
Verifying that cash deposits are deployed toward underweight positions in accordance with your target allocation
Verifying that withdrawal requests result in the sale of overweight positions in the appropriate amounts
Verifying that direct indexes are tracking their benchmark within reasonable tolerance ranges
Monitoring for system errors, failed trades, and settlement exceptions