CI Direct Investing Savings Account | General comparisons | Discussion forum

Their site says "CI Direct Investing has selected one or more of the following companies to act as your custodian: CI Investment Services Inc., Credential Qtrade Securities Inc., and National Bank Independent Network." None of these are listed on the CDIC site (even the last one appears separate from National Bank) so no CDIC coverage.

CDIC is a federal crown corporation, CIPF is set up by the financial investment industry, is my understanding, everybody has to decide if that difference matters to them.

mrfalcon said
I'd just like to know, in all practical terms, what the difference is, and if the difference matters to me.

It seems to me that with CIPF if you use Brokerage A to buy $100 worth of shares of company XYZ, and then Brokerage A goes out of business, then you still get to keep your shares of XYZ, but the original $100 it cost you to buy them is not guaranteed (because XYZ's worth varies all the time).

This is what you want in a brokerage. But I just don't see how it applies to a savings account.

And does this have anything to do with why it's on on this site's comparison chart?  

It appears to me the CI HISA can only be purchased through a broker, in this case, CI Direct Investing or CI Direct Trading, the brokerage entities of CI Financial. I don't know in what form savings account units/shares would be purchased but the units/shares would likely be bought and sold at unit/share prices of $1/unit or $10/unit. Example: You want to deposit $6000.... you buy 6000 units @ $1/unit. It would likely invest in money market securities so would not be CDIC insured and in theory, the HISA units could lose value if the underlying securities lose value.

CI also has a Cash ETF with symbol CSAV which is bought and sold through brokerage accounts https://funds.cifinancial.com/en/funds/ETFS/CIHighInterestSavingsETF.html?currencySelector=1&seriesId=14184 It would also not be CDIC insured. It may be available through a number of discount brokerages but there are several other alternatives to CSAV as well.

CDIC insurance insures the value of your deposit (asset) against loss of value. CIPF is different as you have correctly said. It insures you against loss of "units" in the event of brokerage bankruptcy or malfeasance., not against asset loss of value. It may well be a moot point in practice for cash assets since it is highly unlikely cash deposits will lose value.

The CI Direct Investing HISA not really a savings deposit account. It is actually a kind of master account for high yielding brokerage cash accounts at the brokerages

1. CI Investment Services Inc.,
2. Credential Qtrade Securities Inc., and
3. National Bank Independent Network.

There's CIPF coverage, but no CDIC coverage, because funds placed in the HISA end up being cash balances of accounts with the three brokers and not deposits with a CDIC member.

CIPF would insure against failure of any of the three brokerages.

Yes, one would get one's money back in the event of one of the three brokerages going insolvent. Not sure if unpaid interest would be covered as yet-to-be-paid interest would not be part of the account balance yet.

CIPF policy only covers losses from the failure of a brokerage:

D. LOSSES

1. Losses eligible for coverage by CIPF (“Losses”) must be financial losses of a Customer caused solely by the insolvency of a New SRO Member. These losses must arise from the failure of the insolvent New SRO Member to return or account for Property (as defined below) of the Customer previously received, acquired or held by, or in the control of, the New SRO Member, including any such Property unlawfully converted.
…

CDIC insurance won't trigger as well if the CDIC member didn't fail.

Rail Baron said

[...] changes the unit value of your deposit, is there any "insurance" that would match CDIC coverage?  

They can't do this. The issuer will sometimes change the number of units outstanding, which affects the per unit value of the unit, such as when BNS made their ISA units $1.00/unit instead of $10.00 unit, but that's just an accounting change. The total value of one's deposit remains the same.

One other thing important to mention, if you hold this product in a CI Direct Investing registered account, assuming that's available, the funds aren't held directly in CI Direct Investing's accounts; they're still reported as assets under management, in accounting terms, but they're 'segregated' from their balance sheet and held in the accounts of their custodian/trustee for their registered account, so even if CI as a brokerage firm failed, your registered accounts would be safely held by the custodian. 🙂

The largest recent failure of a back-office service provider to discount brokerages and full-service brokerages was Penson Financial Services Canada, and Fidelity Clearing Canada ULC took over, in coordination with IIROC, and simply assumed the accounts and assets under its control. If there were any losses, they were likely minimal. Back then, it was more common for brokerage firms to be 'introducing brokers', providing online platforms and trading services only but outsourcing the client's actual holdings to either Penson, TD Waterhouse (since sold to NBCN), or NBCN. Since then, such brokers like BBS Securities Inc. and Questrade Inc. received approval to become their own carrying brokers, which have added capital adequacy and regulatory reporting requirements.

All of this is should be detailed in your broker's Relationship Disclosure Document, which they're obliged to provide you and you can request at any time. You may also be able to request your broker's Statement of Financial Condition (like an audited financial statement, with some differences), depending on your province of residence.

Cheers,
Doug

The CI Direct Investing HISA is an account and not a mutual fund. There are no units.

Money in a CI Direct Investing HISA becomes the cash balance of a brokerage account. $20,000, for example, stays $20,000 and doesn't become 20,000 units or 2,000 units of something.

It is not set up like those brokerage ISA's, such as DYN6000 from Scotiabank.

As an account and not a simulated mutual fund, one cannot purchase any "units" of it from an RRSP:

Can I use this savings account for my registered savings (RRSP, TFSA, etc.)?

While registered accounts (such as RRSP, TFSA, etc.) do not qualify for this particular account type, we offer similar solutions discussed below.

In March 2020, Canada Life suspended transactions in the following funds:

1. Great-West Life Canadian Real Estate Investment Fund No. 1
2. London Life Real Estate Fund 2.17G
3. Canada Life Real Estate Fund (GWLRA) SF353
4. London Life Real Estate Fund 5.191G