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CDIC protection for WS Cash accounts increased to 500K
April 5, 2024
12:57 pm
cgouimet
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Loonie said
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.  

And I thought you knew everything ... sf-wink

Did you know WS and IG are adopted siblings?

CGO
April 5, 2024
1:10 pm
InterestThis
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WS does not say exactly which banks your Cash is deposited, as that would be proprietary, and probably changes as they have hundreds of millions sloshing around. But I assume if someone dug into it, you could get the list.
But if you send an e-transfer, that is Peoples Trust, you get an email from them.
I do not see it conflicting with CDIC as its a trust account which is treated separately.
I don't see the risk as different from any other major online broker, which are seperate from the main bank anyway.
Some of us have done thousands of WS transactions, with no issues at all to this point.
The main risk with WS would be if they started bring in fees for everything, which they would do if losing money.

April 5, 2024
1:16 pm
phrank
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mordko said

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.  

I can understand your point, nothing is zero risk. For me personally, I don't see enough upside to take the risk of using them for substantial amounts of funds in the the 100's of thousands in their cash account. Before I had done that I would have researched them and found this out, but I think it's great people bring points like this up as a way of informing people who are paying attention so you don' t always have to discover everything on your own.

April 5, 2024
1:22 pm
InterestThis
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Yep each person needs to decide what to do, or not to do, with their own money, and live with the consequences, risks and rewards.
From everything I have read, I see WS cash as being CDIC ok up to the 500K in the Cash acct.
Someone should contact the CDIC and see if they have anything to say on it.

April 5, 2024
6:49 pm
suburbs4life
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I think these are great questions to ask about WS’s cash account but at the end of the day I can’t see these limits really applying to very many people. Maybe applies the top O.01% of the population.

As I understand it, which I could be wrong…there is no coverage for funds with insurance up to 1 million of assets at WS like at questrade?

I would not keep 500k in cash here but maybe a 100k or something near that. This account sounds like it would be great for small sums under 100k like an emergency fund to get some decent interest thats not on a temporary promo. Who really has 500k sitting around in cash these days anyway? Unless you just sold a house or it’s a business account. I just can’t see this applying to many folks and I suspect they would keep their large sums at the big 5 for safety. That’s what I would do if I were fortunate enough to be in that situation anyway.

Just my 2 cents.

April 5, 2024
6:56 pm
mordko
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suburbs4life said

As I understand it, which I could be wrong…there is no coverage for funds with insurance up to 1 million of assets at WS like at questrade?

Who really has 500k sitting around in cash these days anyway?

Just my 2 cents.  

WS trading accounts have the exact same $1M CIPF protection as Questrade and big bank platforms.

Suspect that lots of older people are sitting on a lot of cash right now. Bonds haven’t exactly performed lately and the risk of inflation is still there.

WS started off as a platform for millennials but is now making a major push to attract older, wealthier clients. I like them over big banks but obviously its a personal choice. Based on the numbers they are reporting, I am not the only one.

April 5, 2024
7:11 pm
everhopeful
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InterestThis said
Someone should contact the CDIC and see if they have anything to say on it.  

Exactly! I would have a lot more trust in this setup if an official from CDIC explained how they would process funds in case of failure of WS or any of their banking partners.

April 5, 2024
7:16 pm
InterestThis
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Been using WS for a few years making many transactions, they keep making improvements, and so far so good.
As mentioned they have the exact same Investor protections as the others.
A concern was that they were going to pull a Robinhood, but they seem to have avoided that. They do Crypto, but don't know if that is separate.
It allows you to link debit cards etc and has a lot of flexibility.
I don't see any evidence yet that there is any more risk up to the 500K in Cash.
https://www.theglobeandmail.com/investing/personal-finance/article-wealthsimple-ceo-michael-katchen-big-bank/

April 5, 2024
7:17 pm
InterestThis
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everhopeful said

Exactly! I would have a lot more trust in this setup if an official from CDIC explained how they would process funds in case of failure of WS or any of their banking partners.  

Some licensed financial experts must have investigated this and posted their analysis.

April 6, 2024
5:04 am
savemoresaveoften
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everhopeful said

Exactly! I would have a lot more trust in this setup if an official from CDIC explained how they would process funds in case of failure of WS or any of their banking partners.  

I would not trust what a CDIC phone person would say either.
Chances are they wont say one way or the other, and ask you to read whats on their web site regarding coverage.

April 6, 2024
5:05 am
savemoresaveoften
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InterestThis said

Some licensed financial experts must have investigated this and posted their analysis.  

you mean a newapaper or blog journalist 🙂
either way, WS is best to be used as a no commission stock trading account, instead of parking $$$$$$ cash in their cash account for 4.5%, my 2 cents.

April 6, 2024
7:13 am
mordko
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savemoresaveoften said
you mean a newapaper or blog journalist 🙂
either way, WS is best to be used as a no commission stock trading account, instead of parking $$$$$$ cash in their cash account for 4.5%, my 2 cents.  

Of course it could be 5%, if you have $500K in assets with them. Or $100K in assets and pay your salary in.

I think its the most promising development for Canadian consumers of financial services. Still a couple of shortcomings, eg lack of joint margin accounts or self-managed SRRSPs and corp accounts as well as a ban on journaling but their offerings are developing and they are testing out joint cash accounts now.

I particularly like that moving money in and out seems to be faster than with the other FIs - and the set up is easier too. And their “Generation” perks are a nice touch. 0.5% bribe on transfer is nice too.

If one is using their investment platform anyway, then getting 5% on cash in their pseudo-chequing account is convenient. Thats my experience. Right now I am using DUCA’s 6% promo for the bulk of my cash but a 100K balance is sitting with WS, waiting for CRA to get its paws on it by the end of the month.

I’ll be reviewing situation in 12 months when RBC will likely try to charge me for their “VIP” account. WS looks like a good option even for everyday banking.

April 6, 2024
7:35 am
InterestThis
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Not one to shill for products, but I do agree WS is a great option for daily use. And with some money in Cash, its easy to buy various ETF's or things like CASH.TO, and to transfer in and out.
For sure the Cash interest rate will follow the market, so it will decrease.
The WS App is good too, shows various totals, gains etc, these are great tools.
I remember standing in line to cash your paycheck at the grocery store on Friday to make sure you had cash for the weekend.
Now you can buy the market for a long hold instantly, and so far so good.

April 6, 2024
10:58 am
everhopeful
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For small amounts of savings (the little bit from each paycheque) I am using the Cash account, but when the balance exceeds $10k I have been moving them to GICs at CDIC member banks.

Two things are holding me back from doing large balances:
- A thorough explanation of exactly how the multi CDIC coverage would work in a claim, preferably having a CDIC official explain so publicly (probably will never happen)
- Not having the debit Mastercard directly link to the account. EQ has a really awesome setup for their debit card, it's a separate account for the card itself, so you can set your own credit limit by transferring funds to and from it.

April 6, 2024
11:06 am
kesa
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I have a small 5 figure cash portfolio, I wouldn’t leave a dime with this outfit.

also,

I have a small 7 figure cash portfolio, I wouldn’t leave a dime with this outfit.

are they offering 6.25+% on cash? why bother?

April 6, 2024
11:18 am
mordko
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everhopeful said
Two things are holding me back… Not having the debit Mastercard directly link to the account.  

Not quite sure what you mean. WS debit card IS linked to the WS cash account. I only used it a couple of times for drawing cash abroad. It’s convenient because WS does not charge exchange fees. On withdrawal, money is debited from the WS cash account. Obviously one can control how much he spends up to the limit ($1000 per day for ATM withdrawals).

April 6, 2024
11:48 am
everhopeful
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WS card is linked to the Cash account and has access to the full balance (subject to daily limits). Which I wouldn't feel comfortable with with a huge balance.

With EQ, the card is a separate account from the savings account (both earn their paltry 2.5% rate) and by transferring money between them through their app/web, you can limit how much of your savings is available to the card. In my opinion it is more secure, because even if the card gets skimmed/compromised/hacked/etc. any losses would be limited to the card account balance, not the entire savings account.

I attached an image to show it - I just keep a small balance on the card for emergency use and nothing in the savings account right now because of the poor interest rate.eq.jpg

April 6, 2024
12:23 pm
mordko
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I see.

If the WS card is “skimmed”, you are protected by Mastercard’s “zero liability insurance”. If I remember rightly, you get email notifications, so presumably the thieves won’t be able to spend more than $1000 limit before you close the card.

I am more concerned about unauthorized etransfers if the account is broken into. That happened to us with Meridian’s savings account. Would be more concerned with Credit Unions underinvesting in security.

April 6, 2024
12:37 pm
Norman1
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everhopeful said

Two things are holding me back from doing large balances:
- A thorough explanation of exactly how the multi CDIC coverage would work in a claim, preferably having a CDIC official explain so publicly (probably will never happen)

That won't happen because there is no CDIC coverage on the Wealthsimple Cash account balances.

According to the Wealthsimple Cash User Agreement, the balances are owed to the account holders by Wealthsimple Payments Inc. and not by any of the Banking Partners.

Wealthsimple Payments Inc. is not a CDIC member. It is also not a CIPF member.

All that smoke-and-mirrors is about Wealthsimple Payments Inc. multiplying the CDIC coverage on its in-trust accounts with the Banking Partners by disclosing beneficiaries for those in-trust accounts. The multiplied CDIC coverage is for the trustee, Wealthsimple Payments Inc., and not for the beneficiaries.

CDIC won't get involved should Wealthsimple Payments fail because Wealthsimple Payments is not a CDIC member. CDIC won't cover any shortfall in the in-trust accounts that isn't the result of a CDIC member failing.

Works the same way with lawyer trust accounts. Lawyer can multiply CDIC coverage by disclosing beneficiaries to the CDIC member and splitting the trust account deposits across multiple CDIC members.

Similarly, CDIC will not get involved should the lawyer become insolvent. CDIC will also not cover any shortfall in those lawyer trust accounts that isn't the result of a CDIC member failing.

April 6, 2024
12:47 pm
savemoresaveoften
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Norman1 said

everhopeful said

Two things are holding me back from doing large balances:
- A thorough explanation of exactly how the multi CDIC coverage would work in a claim, preferably having a CDIC official explain so publicly (probably will never happen)

That won't happen because there is no CDIC coverage on the Wealthsimple Cash account balances.

According to the Wealthsimple Cash User Agreement, the balances are owed to the account holders by Wealthsimple Payments Inc. and not by any of the Banking Partners.

Wealthsimple Payments Inc. is not a CDIC member. It is also not a CIPF member.

All that smoke-and-mirrors is about Wealthsimple Payments Inc. multiplying the CDIC coverage on its in-trust accounts with the Banking Partners by disclosing beneficiaries for those in-trust accounts. The multiplied CDIC coverage is for the trustee, Wealthsimple Payments Inc., and not for the beneficiaries.

CDIC won't get involved should Wealthsimple Payments fail because Wealthsimple Payments is not a CDIC member. CDIC won't cover any shortfall in the in-trust accounts that isn't the result of a CDIC member failing.

Works the same way with lawyer trust accounts. Lawyer can multiply CDIC coverage by disclosing beneficiaries to the CDIC member and splitting the trust account deposits across multiple CDIC members.

Similarly, CDIC will not get involved should the lawyer become insolvent. CDIC will also not cover any shortfall in those lawyer trust accounts that isn't the result of a CDIC member failing.  

hmmm so WS is mis interpreting the coverage, or that its a grey idea of what WS said re CDIC coverage.
Unless the WS payment account balance are completely segregated and can not be used by WS at all, its 100% not safe in a sense...

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