CDIC protection for WS Cash accounts increased to 500K | Page 2 | Wealthsimple | Discussion forum

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.

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.

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.

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/

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.

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.

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.

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).

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.

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...