CDIC protection for WS Cash accounts increased to 500K | Wealthsimple | Discussion forum

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CDIC protection for WS Cash accounts increased to 500K
April 5, 2024
7:25 am
Briguy
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April 5, 2024
7:31 am
cgouimet
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I scanned thru their FAQ's but still wonder what would happen if I were at the CDIC limit at some FI that also happened to one of the five undisclosed Wealthsimple use and it went up in smoke. Do get covered for all deposits?

CGO
April 5, 2024
7:44 am
InterestThis
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cgouimet said
I scanned thru their FAQ's but still wonder what would happen if I were at the CDIC limit at some FI that also happened to one of the five undisclosed Wealthsimple use and it went up in smoke. Do get covered for all deposits?  

I recall then addressing that question in a FAQ, but now can't seem to find that. It would seem to be a question for the CDIC, as an account in your name, and another held in Trust are treated seperately. Also other some other Fintech are using the same method as WS, so that question probably won't be answered until one of those Fintech companies fails.
https://www.cdic.ca/your-coverage/how-deposit-insurance-works/

April 5, 2024
7:53 am
cgouimet
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InterestThis said

I recall then addressing that question in a FAQ, but now can't seem to find that. It would seem to be a question for the CDIC, as an account in your name, and another held in Trust are treated seperately. Also other some other Fintech are using the same method as WS, so that question probably won't be answered until one of those Fintech companies fails.
https://www.cdic.ca/your-coverage/how-deposit-insurance-works/  

Kinda sounds like "TBD after claim filed" which kinda sounds like "Feels good until it doesn't" ... sf-wink

CGO
April 5, 2024
8:05 am
InterestThis
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It sounds like a question a person would ask a lawyer or a doctor. But since its a legal question, and it does not look like it has ever happened yet in Canada, is there a real answer?
Someone should ask this question in a formal way of Wealthsimple and also CDIC, as when you have all this money being pooled as Trusts from fintech and dumped into banks that people already use, its more complex than just a standard account in your own name.

April 5, 2024
8:12 am
Alexandre
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cgouimet said
I scanned thru their FAQ's but still wonder what would happen if I were at the CDIC limit at some FI that also happened to one of the five undisclosed Wealthsimple use and it went up in smoke. Do get covered for all deposits?  

Even better question is what happens with your money if Wealthsimple goes out of business?
This is the last question in their FAQ, I recommend to read carefully through the answer.

April 5, 2024
8:17 am
cgouimet
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Alexandre said

Even better question is what happens with your money if Wealthsimple goes out of business?
This is the last question in their FAQ, I recommend to read carefully through the answer.  

Kinda sounds like "if our deposit FI's fail, CDIC may cover you. If we fail, what CDIC?

CGO
April 5, 2024
8:19 am
InterestThis
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Actually I found their little blurb in that FAQ
------QUOTE-----------
How are my funds split between the partner banks that you are using?

The funds are split to maximize your eligible CDIC coverage.

Note: We work with several tier-1, CDIC-member, regulated Canadian financial institutions to hold your deposits in trust. CDIC’s coverage limit applies separately to each deposit category at each member institution, so even if you bank with our bank partners, you’ll have CDIC coverage in both places. We provide our banking partners with the relevant reporting information concerning beneficiaries in line with our CDIC reporting obligations. Beneficiary information is based on account holder information so please make sure your information is up to date. You can learn more about how CDIC coverage works on their website.

April 5, 2024
8:21 am
InterestThis
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Turns out, Wealthisnotsimple.

April 5, 2024
8:34 am
InterestThis
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FAFO
Fintech Around, Find Out

April 5, 2024
8:47 am
cgouimet
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InterestThis said
Actually I found their little blurb in that FAQ
------QUOTE-----------
How are my funds split between the partner banks that you are using?

The funds are split to maximize your eligible CDIC coverage.

Note: We work with several tier-1, CDIC-member, regulated Canadian financial institutions to hold your deposits in trust. CDIC’s coverage limit applies separately to each deposit category at each member institution, so even if you bank with our bank partners, you’ll have CDIC coverage in both places. We provide our banking partners with the relevant reporting information concerning beneficiaries in line with our CDIC reporting obligations. Beneficiary information is based on account holder information so please make sure your information is up to date. You can learn more about how CDIC coverage works on their website.  

Very good catch. Make WS much more interesting ... Thanks ...

CGO
April 5, 2024
8:54 am
Alexandre
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cgouimet said

Kinda sounds like "if our deposit FI's fail, CDIC may cover you. If we fail, what CDIC?  

Yes, it sounds like that. For me it sounds as they'll pay their obligations first with funds they have amassed from their clients, what's left (if anything) will be returned to clients.

I may be wrong, but there is no reassurance of 100% deposit refunds to clients in case of Wealthsimple bankruptcy.

In the event that Wealthsimple goes out of business, client funds are to be recovered in accordance with Canadian bankruptcy laws and proceedings.

April 5, 2024
8:58 am
InterestThis
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cgouimet said

Very good catch. Make WS much more interesting ... Thanks ...  

Been using WS Cash, it also gives you the daily interest total, which is a nice feature. Wealthsimple does keep improving, using it everyday.
Also is easy to transfer in/out using many methods. They don't try pull a DUCA limit or charge you fees to move your money.

April 5, 2024
9:14 am
The Rock
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Alexandre said

"In the event that Wealthsimple goes out of business, client funds are to be recovered in accordance with Canadian bankruptcy laws and proceedings."

  

This scares me.

April 5, 2024
9:16 am
phrank
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Alexandre said

Yes, it sounds like that. For me it sounds as they'll pay their obligations first with funds they have amassed from their clients, what's left (if anything) will be returned to clients.

I may be wrong, but there is no reassurance of 100% deposit refunds to clients in case of Wealthsimple bankruptcy.

In the event that Wealthsimple goes out of business, client funds are to be recovered in accordance with Canadian bankruptcy laws and proceedings.

  

You keep putting out a lot of good info!

To me that's a bit of smoke and mirrors to suggest they are CDIC covered when they are not.

I wonder how many people realize that?

I could see using them as a way to pay for things overseas, but I would never store my savings with a financial organization which isn't covered by a federal or provincial deposit insurance.

April 5, 2024
9:37 am
InterestThis
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Wealthsimple is controlled by Power Corp 54%.
The Cash account is held in trust as explained above, if you send Interac from WS Cash it comes from Peoples Trust, its not held by WS, its in those other banks.
So I fail to see how the risk is that much different.
Have any other Canadian fintechs like this gone bankrupt recently, so we can see what happened?

April 5, 2024
10:01 am
InterestThis
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Also WS seems to keep making improvements, more stocks, longer trading hours etc. Its really good, so far.
Its worth putting a little into the Cash acct, and try using it, it has far more functionality than others. And they do offer some perks when you go Premium.
But yes it would be useful to look at any legal financial precedents of a Canadian fintech that went bankrupt, and what happened to the Cash holdings held in trust at CDIC banks. I see nothing out there.
WS will get bought out at some point by a biggie one assumes.

April 5, 2024
12:05 pm
savemoresaveoften
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cgouimet said

Kinda sounds like "if our deposit FI's fail, CDIC may cover you. If we fail, what CDIC?  

in order for that money to be in insured by cdic, i dont think WS has access to it so as to blow it/lose it via investment/gambling etc. WS fraud is a different animal tho

April 5, 2024
12:11 pm
mordko
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phrank said

You keep putting out a lot of good info!

To me that's a bit of smoke and mirrors to suggest they are CDIC covered when they are not.

I wonder how many people realize that?

I could see using them as a way to pay for things overseas, but I would never store my savings with a financial organization which isn't covered by a federal or provincial deposit insurance.  

I realize this and am ok with it. Brokerage companies rarely go insolvent. If they do, they are just custodians; the assets sitting with third parties still belong to you. Then there is CIPF for up to $1M to cover bankruptcy costs.

Not saying there is zero risk, but its very small and routine and no different from the risk of a broker who holds my stocks going bankrupt. Not quite as good as having under 100K with a top 6 bank but pretty close and good enough in my book.

April 5, 2024
12:38 pm
Loonie
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It's 3a.m. do you know where your money is?

Maybe I missed something, but I don't see where WS tells you this in real time. Is this info available when you log in?

Even if you do have access to this info, it could change at any time, at WS's discretion. This makes it very hard to plan if you have any other funds you want to have fully insured by CDIC. it seems WS would work best if you gave them essentially ALL your cash. It's not for me.

I didn't know they were controlled by Power Corp. Thanks for the info. Either Power Corp is thinking of opening a bank or a bank will buy them out, but that could be quite a ways down the road.

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