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Wealthsimple HISA
November 25, 2023
5:52 pm
mordko
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Thanks Doug. This makes sense.

November 25, 2023
6:24 pm
everhopeful
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This whole 3x thing makes me feel less secure about keeping a large balance at WS. I would prefer it to have simple straightforward 100k coverage (in their own name).

November 25, 2023
6:47 pm
Doug
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everhopeful said
This whole 3x thing makes me feel less secure about keeping a large balance at WS. I would prefer it to have simple straightforward 100k coverage (in their own name).  

That is a potentially valid concern. Any time you introduce layers of corporate entities between you and your money, as safe as it may be, it may, ultimately, delay payment to you versus if funds were held directly.

Neo Financial is a different structure than Wealthsimple Cash, but still involves multiple corporate entities, each controlling certain aspects of your relationship with them. For instance, if they decide to terminate the relationship with Concentra Bank, they could leave the funds on your prepaid Neo credit card and terminate your ability to access the behind-the-scenes Concentra Bank account in your name.

I'm personally fine with the added complexity, but others may not like it. I also agree Wealthsimple could be clearer in terms of where the deposits are actually held, though I suspect they don't want to say that on any sort of static page because it may change quite frequently, perhaps even daily, which CDIC MI holds your funds.

Cheers,
Doug

November 25, 2023
6:57 pm
NorthernRaven
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Doug, thanks, the pooled account with beneficiaries makes sense, and from the end user's point of view results in the same thing - coverage on the first $300,000 of your Wealthsimple account. It also makes the interest chain clearer - the banks may or may not have the list of beneficiaries, but it would be available to CDIC, the banks pay interest through the intermediary to Wealthsimple, and have no financial involvement with us.

There is indeed a WS branded Mastercard prepaid card involved with the Cash account, both an optional physical card and a "virtual" card, with separate numbers. You can lock the virtual card from their interface if you don't want it active. And they have indeed done some renaming and product introductions and kills over the years, as I found out when looking into them. They also used to have separate apps for the robo "Invest" side and the self-directed DIY "Trade" side, but it's now a single app. They aren't fetishistic about "app only" like TD Easytrade, and are building out the web interface as well, it seems.

4-5% is a pretty good rate for a HISA-like substance, and I suspect they'll keep it in some proportion to their return from the banks as rates go down, although I wouldn't be surprised if they do less frequent, quarter point adjustments to make for rounder numbers on their promo pages... 🙂

November 25, 2023
7:00 pm
NorthernRaven
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everhopeful said
This whole 3x thing makes me feel less secure about keeping a large balance at WS. I would prefer it to have simple straightforward 100k coverage (in their own name).  

Everyone has their preferences, but I don't see anything terribly worrying about the setup. They are just doing what they would be doing, but there are three clones behind the scenes tripling the CDIC capacity. Even better than the Doublemint Twins... 🙂

November 25, 2023
8:07 pm
Norman1
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Doug said

If Wealthsimple Payments, Inc., were to fail, creditors of Wealthsimple Payments, Inc., would have absolutely zero claim to these assets as they're not held on the balance sheet of Wealthsimple Payments; they are custodial assets held by Canadian Western Trust Company. A receiver would be appointed for Wealthsimple Payments, Inc., and would take over the assets and reporting requirements of Wealthsimple Payments.

There would also be zero coverage for any shortfall the receiver finds in those custodial assets.

Wealthsimple Payments is neither an investment dealer with CIPF coverage nor a deposit taking financial institution with deposit insurance. Wealthsimple Payments is not a regulated trust company either that would have insurance to cover missing assets it held in trust.

November 25, 2023
8:15 pm
everhopeful
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I wonder if/when CDIC will up their limit... when it went up to 100k in 2005, that gave coverage worth about 147k (inflation adjusted) today.

The other hangup that would prevent me from having a large balance with them is having the debit card directly having access to it. To me, it dramatically increases the risk of fraud. EQ has an awesome setup where their debit card is a side account to their (not so) high (right now) interest savings account, which allows us to basically create our own limits on their debit card.

Once the Cash account reaches full functionality on desktop, I may make it my direct deposit, bill payment, and daily spending account. The featureset & interest rate combo is unmatched by anyone else right now.

November 25, 2023
8:17 pm
mordko
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NorthernRaven said
Everyone has their preferences, but I don't see anything terribly worrying about the setup. They are just doing what they would be doing, but there are three clones behind the scenes tripling the CDIC capacity. Even better than the Doublemint Twins... 🙂  

I don’t find anything worrying either but its not quite as good as depositing 100K directly with a bank. That said, it does save some pain if one has between 100 and 300K in a non-reg account. And the rate is decent.

And with 3M Canadian clients, its a serious player. And looking at the write-up they are claiming more flexible and faster payments and transfers than other saving accounts. And seem to be adding features.

Right now just tipping toes with a TFSA but would consider them for cash when current promotions run out.

November 25, 2023
11:02 pm
NorthernRaven
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Norman1 said

Doug said

If Wealthsimple Payments, Inc., were to fail, creditors of Wealthsimple Payments, Inc., would have absolutely zero claim to these assets as they're not held on the balance sheet of Wealthsimple Payments; they are custodial assets held by Canadian Western Trust Company. A receiver would be appointed for Wealthsimple Payments, Inc., and would take over the assets and reporting requirements of Wealthsimple Payments.

There would also be zero coverage for any shortfall the receiver finds in those custodial assets.

Wealthsimple Payments is neither an investment dealer with CIPF coverage nor a deposit taking financial institution with deposit insurance. Wealthsimple Payments is not a regulated trust company either that would have insurance to cover missing assets it held in trust.  

This is true, and anyone actually using WS Cash to park six figures would want to make themselves comfortable with the circumstances. I suppose Wealthsimple Payments could in theory misdirect the funds in or out of the trust company, and be running riot in Rio, but that probably wouldn't be on the top of my list of concerns. It would be interesting to know just what their relation is inside the Wealthsimple world, but I suspect they are on the parent books in some form or another.

For myself, I'd only be using it as a smaller transactional and parking thing in much the way I have with Hubert and EQ. Although I haven't committed to do a TDDI->Wealthsimple move, I did open the Cash account - I managed to get Hubert to link to it, and it now has a grand balance of 37 cents! I suspect that people with large sums and Wealthsimple access might use CASH.TO/PSA sorts of things for a slightly better rate, or if direct CDIC coverage is desired, go somewhere they can acquire the highest rate ISAs, having checked the various rates on a thread here that some helpful fellow keeps updated... 🙂

November 26, 2023
6:37 am
savemoresaveoften
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WS advertise its cash account is up to $300k ($100k per account type) CDIC insured. Is that not true and why all this concern ?
Or are we just talking about fraud or potential rogue business, which can happen at any FI any way ?
I am new to WS so want to make sure any of the mentioned concern is indeed unique to WS only.

November 26, 2023
6:39 am
Norman1
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NorthernRaven said

This is true, and anyone actually using WS Cash to park six figures would want to make themselves comfortable with the circumstances. I suppose Wealthsimple Payments could in theory misdirect the funds in or out of the trust company, and be running riot in Rio, but that probably wouldn't be on the top of my list of concerns. …

Should things go wrong, the receiver could find that some funds never made it to the trust company!

I don't think Wealthsimple Cash is set up this way, with such a gap in protection for the account holders from having Wealthsimple Payments as nominee for the funds.

It would be interesting to hear what Wealthsimple says about this when you talk with them.

November 26, 2023
6:56 am
Norman1
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There is also this convoluted structure for the direct deposits and pre-authorized debits:

24. DIRECT DEPOSIT AND PRE-AUTHORIZED DEBIT ACCOUNTS (BETA FEATURE)

The following terms apply to you to the extent you opt into direct deposit and pre-authorized debit (“DD/PAD”) functionality and open a DD/PAD account (a “DD/PAD Account”) with Wealthsimple Investments Inc. (“WSII”) in addition to your [Wealthsimple Cash] Account. Your receipt of the DD/PAD functionality is contingent upon your agreement to the below terms, and should you decline to accept these terms, your use of DD/PAD functionality will be suspended.

DD/PAD functionality is offered jointly by us [Wealthsimple Payments Inc.] and Wealthsimple Investments Inc. DD/PAD transactions are made to and from your DD/PAD Account with WSII. Wealthsimple Card [the Wealthsimple Cash Prepaid Mastercard] transactions and peer-to-peer transactions are provided by us to and from the [Wealthsimple Cash] Account. WSII will automatically transfer money from your DD/PAD Account to the [Wealthsimple Cash] Account to facilitate these transactions, and we will send the money to the payees of these transactions. …

November 26, 2023
7:32 am
mordko
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Apparently direct deposits arrive a day faster than if you were to have an account with a bank but I have not tried WS.

Right now they don’t have cheques. Sometimes I find myself still needing a cheque, although thats rare. As I understand, WS does not have own ATMs so you will be paying a fee for withdrawing cash, but that does not seem like a problem.

November 26, 2023
7:40 am
Norman1
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Wealthsimple Cash supports Interac e-Transfer. So, one could e-Transfer funds to one's regular chequing account to write a cheque or use an ATM:

Send and receive e‑transfers

Send up to $5,000 per day or $10,000 per week to anyone, anywhere with Interac e-Transfer®.

November 26, 2023
8:01 am
Briguy
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suburbs4life said
Ive been thinking, WS save is starting to appear attractive as a cash storage account. The new ability to send interac email transfers at $5000 per 24 hrs/10k per week with a base savings rate of 4.5% for premium WS clients is better than simplii or Tangs base rates! I may use this if I dont get any new promo offers in the new year.

I doubt ill become a WS generational status member. The “free” WS trades concerns me as it executes trades potentially delayed versus questrade. Ie they are making money on the ask bid spreads on my transaction I suspect.

Anyone had issues moving money out of wealthsimple save? How is the customer service line access?
I use the WS trade platform and it has been smooth so far but have never withdrawn funds or had to contact them via the phone line.  

If you have more than 100K there's a special telephone contact number, otherwise the customer service experience can involves long waits, from what I've read, unless you're lucky enough to contact them at a slow time.

November 26, 2023
8:37 am
NorthernRaven
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mordko said
Apparently direct deposits arrive a day faster than if you were to have an account with a bank but I have not tried WS.

Right now they don’t have cheques. Sometimes I find myself still needing a cheque, although thats rare. As I understand, WS does not have own ATMs so you will be paying a fee for withdrawing cash, but that does not seem like a problem.  

There's a "Order cheques: Join the waitlist and get notified when you can order cheques" item on the Cash account.

November 26, 2023
11:55 am
Doug
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Norman1 said
There would also be zero coverage for any shortfall the receiver finds in those custodial assets.

True, but that's not where I am saying to which liabilities creditors would have claim. I'm talking about Wealthsimple Payments non-custodial assets and liabilities. Only its non-custodied, on-balance sheet assets would creditors have potential claim to in the event of such a claim. Frankly, this strikes me as a bit disingenuous, at best, and fear mongering, at worst.

Wealthsimple Payments is neither an investment dealer with CIPF coverage nor a deposit taking financial institution with deposit insurance. Wealthsimple Payments is not a regulated trust company either that would have insurance to cover missing assets it held in trust.  

No, but Wealthsimple Payments is only the product sponsor and administrative owner of the client relationships. It acts as a temporary entity to facilitate clearing and settlement, at which point the assets are transferred to, and held in trust for, Wealthsimple Investments Inc. (previously, Canadian ShareOwner Investments Inc.), which is a CIPF member and registered investment dealer. Those assets are then further custodied for individual end beneficiaries.

Essentially, every business day, WSP transfers assets from WSP to WSII.

Cheers,
Doug

November 26, 2023
12:03 pm
Doug
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Norman1 said

NorthernRaven said

This is true, and anyone actually using WS Cash to park six figures would want to make themselves comfortable with the circumstances. I suppose Wealthsimple Payments could in theory misdirect the funds in or out of the trust company, and be running riot in Rio, but that probably wouldn't be on the top of my list of concerns. …

Should things go wrong, the receiver could find that some funds never made it to the trust company!

I don't think Wealthsimple Cash is set up this way, with such a gap in protection for the account holders from having Wealthsimple Payments as nominee for the funds.

It would be interesting to hear what Wealthsimple says about this when you talk with them.  

Norman1 said
There is also this convoluted structure for the direct deposits and pre-authorized debits:

24. DIRECT DEPOSIT AND PRE-AUTHORIZED DEBIT ACCOUNTS (BETA FEATURE)

The following terms apply to you to the extent you opt into direct deposit and pre-authorized debit (“DD/PAD”) functionality and open a DD/PAD account (a “DD/PAD Account”) with Wealthsimple Investments Inc. (“WSII”) in addition to your [Wealthsimple Cash] Account. Your receipt of the DD/PAD functionality is contingent upon your agreement to the below terms, and should you decline to accept these terms, your use of DD/PAD functionality will be suspended.

DD/PAD functionality is offered jointly by us [Wealthsimple Payments Inc.] and Wealthsimple Investments Inc. DD/PAD transactions are made to and from your DD/PAD Account with WSII. Wealthsimple Card [the Wealthsimple Cash Prepaid Mastercard] transactions and peer-to-peer transactions are provided by us to and from the [Wealthsimple Cash] Account. WSII will automatically transfer money from your DD/PAD Account to the [Wealthsimple Cash] Account to facilitate these transactions, and we will send the money to the payees of these transactions. …

  

Thanks. That actually supports my post directly above that WSII is actually the nominee broker, not Wealthsimple Payments, in which WSP exists only for handling intra-day transactions occurring via its mobile app and prepaid credit card and the accounts paying yield held at WSII, at which points are swept to WSII at end of day, essentially.

The only assets at risk in a WSP insolvency are the intra-day clearing and settlement liabilities, for which WSP is required to put up reserve funds with the Bank of Canada to cover as it is a Direct Clearer with Payments Canada. It then sub-contracts Bank of Montreal to handle the technological aspects of day-to-day clearing.

Cheers,
Doug

November 26, 2023
12:08 pm
Doug
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Norman1 said

NorthernRaven said

This is true, and anyone actually using WS Cash to park six figures would want to make themselves comfortable with the circumstances. I suppose Wealthsimple Payments could in theory misdirect the funds in or out of the trust company, and be running riot in Rio, but that probably wouldn't be on the top of my list of concerns. …

Should things go wrong, the receiver could find that some funds never made it to the trust company!

This is the same with any company, or a credit union. Credit unions have to settle their transactions with their provincial credit union centrals, and, for registered plans, with the trust company providing custodial services over the assets. This is not a Wealthsimple-specific risk, but rather a systemic risk, albeit a very low one at that, endemic with all financial institutions. The only ones more insulated from this to any significant degree would be the too big to fail Big Five banks, where risk of failure is extremely low (on par with the failure of Canada's central bank or federal government).

I don't think Wealthsimple Cash is set up this way, with such a gap in protection for the account holders from having Wealthsimple Payments as nominee for the funds.

It would be interesting to hear what Wealthsimple says about this when you talk with them.  

You don't know that Wealthsimple Payments Inc. is the nominee

November 26, 2023
12:09 pm
Doug
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NorthernRaven said

There's a "Order cheques: Join the waitlist and get notified when you can order cheques" item on the Cash account.  

Interesting. Good find. I didn't expect them to offer that, but they are a Direct Clearer, in fact the only non-bank Direct Clearer, if I'm not mistaken, so they can definitely do that.

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