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CDIC protection for WS Cash accounts increased to 500K
April 10, 2024
5:16 am
mordko
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davidgeorge said
I don't understand why people want to put funds on WS savings if you don't use WS as a stock trading platform. There are much higher interest savings account around such as DUCA (6%), Tangerine (5.5%, 5.25%), ManuLife 5.75%.  

I do have money with DUCA. Have had for under a month. It has behaved in an erratic manner. For example they reduced the amount one can transfer out and banned adding money to the account. Both actions were completed without notice. And, in the case of bans on adding funds, they never provided any information anywhere. They are covered by dodgy provincial insurance. They are very hard to deal with. None of it gives me comfort.

I do have investments with WS. Also WS cash is user friendly and predictable. Very responsive. Certain things they do better than anyone. Money comes in and out faster than with competitors. Well designed interface makes it easy and gives lots of options. Good encryption, best possible. Moving money between members is better than using etransfers. It’s instantaneous and just easier. We use this feature among family members. Etransfers can make you wait for up to 30 minutes, depending on the weather and how the bank feels today.

I also play tangerine lottery and will make use of the latest promo up to 100K, until the promo expires. Its not an “either or”.

Will take a pass on Manulife. DUCA’s experience taught me that life is too short and that I need to limit proliferation of accounts.

Also, I need to pay CRA. Its an unusual year, I need to pay $100K. I like the idea of earning interest while “owing” money to CRA and paying no interest to CRA. Duca is not on the CRA list to debit from. Wealthsimple is and money in Wealthsimple cash is earning 5% interest while its waiting to be debited at the end of the month. Its convenient and unique that debits are coming out of the account with a 5% savings rate.

And when I travelled to St Kitts a couple of weeks ago, I used WS Cash to get local currency. WS didn’t charge for the exchange. Local bank charged a couple of dollars for using their ATM. But you need to have cash in the account to take the benefit of WS Debit Mastercard.

Just an overall good, innovative product.

April 10, 2024
10:55 am
Loonie
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I think mordko has given a detailed explanation of why he doesn't accept Norman1's statements. They don't have the "convenience" of dealing with WS.
Mordko can do as mordko wishes, of course, for whatever reasons, but readers who are undecided should take note of this issue before following suit.

One can certainly pay one's CRA bill through DUCA. Maybe slightly less convenient, but I wouldn't deposit my money primarily for convenience.

April 10, 2024
12:21 pm
AltaRed
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davidgeorge said
I don't understand why people want to put funds on WS savings if you don't use WS as a stock trading platform. There are much higher interest savings account around such as DUCA (6%), Tangerine (5.5%, 5.25%), ManuLife 5.75%.  

There are other benefits to WS than just their savings vehicle, such as their debit card and cost effective foreign exchange, but those benefits are of value only to those that can make good use of those benefits. It is good for consumers that WS is doing what it is doing as a disruptor, innovator and competitor to cause other FIs to motivate themselves to compete, but I wouldn't touch WS myself. It strikes me as as a fashionista flitting about like a butterfly looking for what might stick versus my desire for boring stability. I am happy to let others be the guinea pigs for their offerings and the platforms for promoting them.

I also do not like the intermediary involved with respect to increasing CDIC protection to $500k. If you look at their FAQ, the last point is pertinent. If the uninsured intermediary goes bankrupt, then recovery of the deposits appears to be through bankruptcy courts. No thank you regardless of the remoteness of the possibility. DYN 6004 and 6005 ISAs do what I need them to do at highly competitive rates.

April 10, 2024
12:31 pm
kesa
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never said so myself but did think about being a guinea pig if I were to leave my money with WS

April 10, 2024
7:23 pm
Doug
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RetirEd said
Doug: What's the source of your continued doubt about Coast Capital? I took a position on their temporary 6% promo this year.  

Can you refresh my memory on the context? No issues with you taking advantage of their temporary HISA promotion, since you already deal with them. I just don't like their business strategy combined with the limitations on accessing one's funds and facilitating seamless money movement, and until they change course, I'm not recommending it to new clients. In short, in equivalency to stock recommendations, it's a "hold" (rather than a "buy" or "sell"). sf-cool

April 10, 2024
7:33 pm
Doug
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Norman1 said
No, Wealthsimple Investments does not. As I said before, one's Wealtsimple Cash Account balance is with Wealthsimple Payments and not with Wealthsimple Investments. There's no CDIC coverage or CIPF coverage.

Not true. The account itself is held within Wealthsimple Investments, Inc., which is a CIPF member and thus covered. It's linked to, and managed by, Wealthsimple Payments, Inc., which, in turn, holds the funds in pooled trust accounts for named beneficiaries. It and the CDIC issuer members are required to file additional recordkeeping forms annually with CDIC to ensure compliance.

Wealthsimple's public disclosures and legal terms on their website are incredibly confusingly worded and light on both clarity and transparency. For that, I give them relatively low marks and it's a concern, but if their deposits were not CDIC insured, CDIC would've been well aware of this by now and issued a rare public notice to consumers to be aware, and even a stop sell or stop marketing order, as they have done in the past with Hubert Financial's product marketing practices in its early days (circa 2010-2011, for those that remember).

Do you have active accounts with Wealthsimple where you can post anonymized account screenshots proving your assertions? Until you can do this, due to what I have described above, your claims are just that, unproven assertions and users would be wise to take them with a pinch of salt, just as they would be wise to consider Wealthsimple's lack of disclosure and transparency with caution.

Cheers,
Doug

April 10, 2024
7:37 pm
Doug
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Norman1 said
Former CDIC member Principal Savings & Trust that failed around 1987 is one example. It was a member of a group of companies, the Principal Group of Companies, that failed as the result of fraudulent accounting and related company transactions which synthesized accounting earnings when there were no actual earnings.  

Very different story. Also, Bank of British Columbia was a provincial Crown corporation, akin to ATB Financial, albeit on a smaller scale, or the provincial Crown corporation in Ontario, that became the largest bank failure in Canadian history. Perhaps one should be skeptical of provincial government-owned financial institutions. sf-cool

Cheers,
Doug

April 10, 2024
7:41 pm
Doug
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Norman1 said

Doug said

Actually, no. This is incorrect, Norman. I can see how you see that, as you like to refer only to legal documents on the company's website, and Wealthsimple Cash involves multiple entities and isn't all that transparent. However, what I've been able to determine is the Cash account is offered by Wealthsimple Investments, …

Are you going explain how you determined that when both the Wealthsimple Cash user agreement and the Wealthsimple Cardholder agreement clearly say that the Wealthsimple Cash Account is with Wealthsimple Payment Inc., a money services business registered with FINTRAC?  

As I said, the legal disclosure is poorly written and convoluted. I think you're probably a lawyer, so I assume you might agree? From what I've read, neither you nor I have Wealthsimple Cash accounts. Perhaps it would be helpful to have someone post anonymized screenshots from their Wealthsimple accounts. Or, we could simply reach out to CDIC and CIPF for comment. However, I would note given it's amassed tens of billions in deposits, CDIC is well aware of it and their use of pooled trust accounts with five Canadian CDIC member financial institutions, receives the required filing and records from those firms and Wealthsimple, and has no concerns; otherwise, they would have surely issued a public warning and even a stop marketing order.

Cheers,
Doug

April 10, 2024
9:16 pm
mordko
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This is kinda neat. “Pull” initiated around 10pm on April 9th for over 100K. WS sends request within 1hr. Next morning, by 10am WS confirms that funds have been received. You see these transfer speeds in Europe but I have not come across this with the Canadian banking system.

Takes hours for DUCA to actually update the balance on their end, does not happen until 2pm. Are they doing it manually?

https://i.ibb.co/p08N5Pz/IMG-4480.jpg

When you set up debit from CRA’s MyAccount and money is withdrawn, WS sends you an email. Nice touch. RBC doesn’t. All the transfers are much slower. Interface is less informative and not well designed. I am not even talking about DUCA which is in the wrong century.

Just a couple of examples… Shows attention to detail. I like that in a financial institution.

April 10, 2024
9:20 pm
mordko
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Loonie said

One can certainly pay one's CRA bill through DUCA. Maybe slightly less convenient, but I wouldn't deposit my money primarily for convenience.  

If someone knows how to transfer 100K from DUCA’s savings account to CRA, please let me know. I’d be curious. Obviously I am not opening DUCA’s chequing account.

April 11, 2024
4:42 am
RetirEd
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When I saw this:

Cheers,
Doug

Disclosure: I own Great-West Lifeco, Inc. which has an equity investment in Wealthsimple alongside other Power Corporation-related entities, in my RRSP, and am a thoroughly pleased as punch common stockholder. I am also a disgruntled Coast Capital Savings Federal Credit Union member who plans to close his remaining accounts soon, and also a happy TD Bank shareholder but who would never be a TD customer.

I couldn't find the context myself, so I asked you. But in the absence of any promising offerings from Coast Capital for the last few years, you don't really need any red flags or grimaces to dump them. I can agree with your "hold" advisory.

RetirEd

April 11, 2024
5:08 am
savemoresaveoften
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Doug said

Norman1 said
No, Wealthsimple Investments does not. As I said before, one's Wealtsimple Cash Account balance is with Wealthsimple Payments and not with Wealthsimple Investments. There's no CDIC coverage or CIPF coverage.

Not true. The account itself is held within Wealthsimple Investments, Inc., which is a CIPF member and thus covered. It's linked to, and managed by, Wealthsimple Payments, Inc., which, in turn, holds the funds in pooled trust accounts for named beneficiaries. It and the CDIC issuer members are required to file additional recordkeeping forms annually with CDIC to ensure compliance.

Wealthsimple's public disclosures and legal terms on their website are incredibly confusingly worded and light on both clarity and transparency. For that, I give them relatively low marks and it's a concern, but if their deposits were not CDIC insured, CDIC would've been well aware of this by now and issued a rare public notice to consumers to be aware, and even a stop sell or stop marketing order, as they have done in the past with Hubert Financial's product marketing practices in its early days (circa 2010-2011, for those that remember).

Do you have active accounts with Wealthsimple where you can post anonymized account screenshots proving your assertions? Until you can do this, due to what I have described above, your claims are just that, unproven assertions and users would be wise to take them with a pinch of salt, just as they would be wise to consider Wealthsimple's lack of disclosure and transparency with caution.

Cheers,
Doug  

If one has both WS cash and investment account, one will receive 2 separate statements monthly.

This is on the last page of the WS monthly cash account statement:

Our Cash product is offered by Wealthsimple Investments Inc. (“WSII”), a member of the Canadian Investment Regulatory Organization, and Wealthsimple
Payments Inc., a Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) registered money services business. The funds you add to a Cash
account (the “Funds”) are ultimately held securely in trust with a single or multiple members of the Canada Deposit Insurance Corporation (“CDIC”). CDIC
protects eligible deposits held at CDIC member institutions in case of a member institution’s failure. Wealthsimple Payments Inc. and WSII are not CDIC
member institutions. Under the trust framework, CDIC insures eligible cash balances up to $100,000 per beneficiary, per member institution, provided certain
disclosure rules are met. Coverage is free and automatic. Funds must be spread across at least 3 CDIC member institutions in order for up to $300,000 in
deposits to benefit from applicable CDIC coverage. The advertised interest rate for the Cash Account is derived from interest earned by Wealthsimple on the
funds. The Funds are settled with any CDIC member(s) one business day following the date that Funds are reflected in the Account.

This is part of the statement on the bottom of the WS monthly equity account:

STATEMENT NOTES
Client accounts for Wealthsimple Trade and Wealthsimple Invest held at Wealthsimple Investments Inc. are
protected by CIPF within specified limits in the event Wealthsimple Investments Inc. becomes insolvent. A
brochure describing the nature and limits of coverage is available upon request. http://www.cipf.ca.
Free credit balances in non-registered accounts represent funds payable on demand which, although properly
recorded in our books, are not segregated and may be used in the conduct of our business. Cash balances in
registered accounts are held in trust by Canadian Western Trust. Occasional failed deliveries from executing
brokers can cause shares to be desegregated based on approved segregation logic.
A statement of financial condition and a current list of directors and officers for Wealthsimple Investments Inc. will
be furnished upon request. Clients in British Columbia are entitled to certain additional information about
Wealthsimple Investments Inc., including information about commissions and fees that we charge, and about any
administrative proceedings that may relate to the firm or its staff.

April 11, 2024
2:05 pm
Curry-Head
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kesa said
never said so myself but did think about being a guinea pig if I were to leave my money with WS  

I'm more than happy with WS for my new life as a Canadian Citizen building up my (limited headroom) RRSP and TFSA.

But to your point - I was bitten on the arse by their aborted entry into the UK market, maybe 5 or 6 years ago. Not enough to cut my nose off to spite my face, but I am certainly still wary of any of their products that are still bleeding edge.

April 11, 2024
2:50 pm
mordko
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Curry-Head said

I'm more than happy with WS for my new life as a Canadian Citizen building up my (limited headroom) RRSP and TFSA.

But to your point - I was bitten on the arse by their aborted entry into the UK market, maybe 5 or 6 years ago. Not enough to cut my nose off to spite my face, but I am certainly still wary of any of their products that are still bleeding edge.  

Yes, I do find some of their product placement within apps a bit irritating.

April 11, 2024
3:35 pm
Curry-Head
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Hello, Mordko.

I'm probably being a little slow here, but can you explain the connection to product placement?

I was bitten because of how they entered the UK market (which is where the majority of my self-invested pension is based), and then left it abruptly - giving me something like 30 days to find another UK company for my money.

It was incredibly hard to find a UK provider who would take the pension when the primary address was a resident/citizen in Canada.

April 11, 2024
8:57 pm
Loonie
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mordko said

Phone for instruction;
go to branch;
get a chequing account.

I'm sure you know all this; you just don't want to do it.

April 11, 2024
9:17 pm
mordko
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Loonie said

mordko said

Phone for instruction;
go to branch;
get a chequing account.

I'm sure you know all this; you just don't want to do it.

  

Right. No way I would have opened an account for a single transaction. Completely useless, not to mention they charge for it. And thats apart from having to go to branch yet again. Nice to have WS Cash do the job for you.

April 11, 2024
9:23 pm
mordko
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Curry-Head said
Hello, Mordko.

I'm probably being a little slow here, but can you explain the connection to product placement?

I was bitten because of how they entered the UK market (which is where the majority of my self-invested pension is based), and then left it abruptly - giving me something like 30 days to find another UK company for my money.

It was incredibly hard to find a UK provider who would take the pension when the primary address was a resident/citizen in Canada.  

I see. Yes, finding a SIPP provider from Canada was a pain for me too.

So, WS didn’t just sell their British business, they literally walked away? Weird.

Sorry: I misunderstood and referred to a completely different issue. WS app sports a little “present” icon in the top right corner, which keeps pushing their robo services and crypto. There is no way to get rid of it…

April 14, 2024
7:03 am
mordko
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WS is considering a move into mortgages.

A lot of good points in the interview and Canada’s mortgage industry desperately needs a new entry after HSBC’s exit but this would make WS a riskier business than just being a broker/intermediary.

https://www.thestar.com/business/no-it-s-not-a-bank-but-wealthsimple-says-it-feels-the-pain-of-younger/article_531d2cee-f115-11ee-845c-07f2a610f931.html

April 14, 2024
8:26 am
Doug
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mordko said
WS is considering a move into mortgages.

A lot of good points in the interview and Canada’s mortgage industry desperately needs a new entry after HSBC’s exit but this would make WS a riskier business than just being a broker/intermediary.

https://www.thestar.com/business/no-it-s-not-a-bank-but-wealthsimple-says-it-feels-the-pain-of-younger/article_531d2cee-f115-11ee-845c-07f2a610f931.html  

It doesn't make them riskier, no. But we don't yet know what this would look like. They might take an approach similar to EQ Bank and Neo Financial whereby they originate mortgages for lenders and earn a commission for doing so, but don't actually hold them. They may even get into the mortgage servicing business by managing the funding, payouts, regular payments, etc., on behalf of lenders, but again, not actually hold them. They could also originate mortgages through existing platforms like Nesto. In fact, Canada Life was a large non-bank mortgage lender until recently, when it decided not to fund new mortgages and simply become a mortgage originator and partnered with Nesto.

Cheers,
Doug

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