Wealthsimple HISA | Page 4 | Wealthsimple | Discussion forum

Their rate changes don't take effect until Monday the 29th, so they haven't updated the website yet. They "ate" the previous 25bps BoC drop in June until now (their partner banks likely reduced the rates given to Wealthsimple right away), but are caught up now after the second BoC drop in July. So it is now going to be 3.5%/4%/4.5%.

Generation customers (was 5%, now 4.5%) are probably pretty close to a "flow through" of what Wealthsimple earns from their deposits. It would be interesting to know what that rate is - after the OSFI hit, it might be a bit higher than what the cash ETFs get - Wealthsimple is providing a goodly sized deposit base, and since they are in trust individually and receiving CDIC coverage, the banks may be able to consider those much more like "retail customer" deposits. WS could still pull a bunch of that and allocate it to one of its other banks, but otherwise the decision to move is up to the customer in a way it isn't with the ETFs.

As a reminder, if you aren't a Generation customer already getting the max interest rate, you can get an additional 0.5% (so 3.5%=>4%, or 4%=>4.5%) if you have $2000/month in direct deposits.

I wasn't worried about the actual trust category, just that it is there, and different from a cash ETF having a single giant account (or whatever the reality is). OSFI considered the ETF managers as being a single point of control, that might "run" on one of their depository banks en-masse separately from the pressure of outflows from their ETF (and of course, the ETFs are often held by informed individuals and institutions that might be more likely to run than a retail deposit customer).

Of course, Wealthsimple could allocate deposits away from a particular institution as well, except for customers with $400-500K, which need all 5 banks for the advertised $500K CDIC coverage. But I'd guess the regulators would consider them much closer to a retail deposit base than the cash ETF 100% runoff in the liquidity/reserves tests, so the banks might be able to provide slightly higher rates to Wealthsimple than an ETF now?

In the pre-OSFI, 5% BoC days, the ETFs were reporting gross yields up to 5.3-5.5%? If Wealthsimple was getting something like that, then they were making only a small margin on their 5% Generation customers, and bigger margins for the 4.5% and 4% clients. They also started giving an extra 0.5% boost to <5% clients who provided $2000 in direct deposits, so just like with their transfer bribe promos, they seem to be in a place where they are willing to spend to build a customer/asset base.

Hypothetically, it might be that my "natural person-ness" as the beneficial owner of whatever CDIC trust category is involved might flow through to the liquidity provisions, although as you point out, the lack my control over the "placement" could easily mean my Wealthsimple money isn't considered placed by a natural person.
There's also language though like "Unsecured wholesale funding provided by small business customers is treated the same way as retail deposits for the purposes of this standard", although at a quick scan I didn't see anything that might apply to those sorts of CDIC trust things.

I don't really care if they are retail or not, just whether their runoff rate might be lower enough from the cash ETFs to make a meaningful difference in the rates the banks might offer Wealthsimple, rather than the post-OSFI ETFs. It looks like it might fall through the wholesale exceptions to the default unsecured wholesale at 100%, though, so no?

I don't know what % of WS's Cash amounts are earning the top interest rate, but they aren't making much from the direct interest that is generating. Of course, paying out 1% of a portfolio balance to passive investors transferring over isn't exactly a profit generator either!