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Email this12:10 pm
December 12, 2009
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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. 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.
It's actually only partially true; see my response to Norman above.
4:07 am
November 18, 2017
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This is making my math-degreed brain hurt.
RetirEd
11:29 am
April 27, 2017
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WS lowers interest rate by 0.5%. To 4.5% for Generation accounts.
12:21 pm
August 4, 2010
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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.
12:43 pm
April 6, 2013
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NorthernRaven said
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.
…
The deposits are not individual in-trust deposits.
The WeathSimple Cash User Agreement indicates that they are large in-trust deposits held by Wealthsimple Payments Inc. The CDIC coverage is multiplied for Wealthsimple Payments by setting up trust beneficiary disclosures and not by having individual deposits.
1:43 pm
August 4, 2010
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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.
4:14 pm
April 6, 2013
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NorthernRaven said
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?
…
OSFI's Liquidity Adequacy Requirements 2023 2.2.B.1. requires that "retail deposits" be deposits placed by a natural person.
Wealthsimple Payments Inc. is not a natural person. Wealthsimple Payments also does not allow the Wealthsimple Cash account holders to direct how much and at which CDIC issuer to place the part of the funds they have beneficial ownership in. So, it won't be easily to argue that the deposits are "retail deposits", either "stable" or "less stable".
4:56 pm
August 4, 2010
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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!
1:45 pm
April 6, 2013
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Deposits from non-natural persons, like those from a trustee, like Weathsimple Payments Inc., would be considered to be from a legal entity. Such deposits would be wholesale funding.
Yes, unless covered by one of the exceptions for wholesale funding, such deposits would be "Unsecured wholesale funding provided by other legal entity customers" and have a 100% runoff rate on amounts callable within the next 30 days.
Wholesale deposits that cannot be withdrawn in the next 30 days aren't included in the liquidity requirements and effectively have a run-off rate of 0%:
67. Wholesale funding that is callable40 by the funds provider subject to a contractually defined and binding notice period surpassing the 30-day horizon is not included. [Basel Framework, LCR 40.21]
Wealthsimple Payments could obtain a higher yield by contractually agreeing to something like a 31-day notice for withdrawals on some of the deposits, like some of those cash ETF deposits were subject to.
2:08 pm
August 4, 2010
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Since WS is allocating deposits to specific beneficial owners (and institutions), they probably have to keep things on a demand basis, unlike the ETFs with their unattributed pot of money where they might put a portion of that on that 31-day notice since it won't be needed on demand for normal outflows short of a complete meltdown.
I'm sort of curious as to the intentions of WS Cash and a couple of others, since I may lose access to their top rate for 6-7 months this fall. TDDI is offering a ridiculous 2%-of-transfers bribe if I bring my portfolio back from WS (and hold through April), and that's probably too much money to ignore. I can give WS my paycheque and get to BoC+50bps in Cash, but that's not as good as the BoC+100bps I can now with WS. Most of my cash will likely go to TDDI into a MMF fund (that 2% bonus over 6 months is like a 4% boost!), but I'll have some GICs maturing after, so I'll be keeping an eye out for other possible parking spots then.
6:40 pm
April 27, 2017
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NorthernRaven said
TDDI is offering a ridiculous 2%-of-transfers bribe if I bring my portfolio back from WS (and hold through April),
Yes, I took TDDI up on this, but kept enough at WS to keep the status. TDDI does not include LIRAs in their offer anyway. Just make sure that it's the full 2%; seem to recall you have to move money within a couple of months from accepting the offer or the bonus is reduced by 0.5%.
3:19 am
August 4, 2010
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I haven't registered the TDDI offer yet, I'll do that next month before the Aug 31 deadline. You just have to "fund your account" within 30 days of registering to get the extra 0.5% to make 2%, but it applies to all transfers until Oct 31, so I'll likely just do a bill payment of some nominal amount next month, but most of the transfers later.
When I got the offer, I remember thinking "I'll send a chunk back to TDDI for awhile, but stay Generation at WS". Then "enough to stay Premium, and give them my paycheque to get the full Cash rate". Then "every dollar gets that 2% bonus, that outweighs everything - Cash rate, higher GIC rates outside TDDI, whatever". So everything will go back, including any outside GIC money that matures before Oct 31. If I miscalculate and need more of the loose cash than I thought, withdrawing a bit just reduces the total the 2% is eventually calculated on, no other drawback. I don't have any locked accounts..
TDDI was also a perfectly good home, it was just there was basically no advantage after the $15K account level. WS's benefits were mainly a few $10 commissions saved each year, fractional DRIP, and that 5% Cash rate. Nice, but I might not have bothered to move without the WS bribe, and I don't mind sending the portfolio back for the winter for a massively larger bribe! TDDI is actually about to implement fractional positions, although apparently not for the DRIP positions where they are getting treasury shares from the issuer, which is probably all my ETFs.
5:21 am
April 27, 2017
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Never used TDDI until now. Don’t like it. They have a bug and keep sending me paper statements for every transaction even though its set to electronic. They also charge $2 for these statements. Not significant but an irritant, so you have to call to get reimbursement and an apology - its impacting lots of customers - but they still haven’t sorted it out.
Also, transferring money out of TDDI is painful. Etransfer limit is $3K and they won’t increase it even though I have 7 figures with them. They charge for every etransfer. To transfer a larger amount to an outside account you have to call and spend a lot of time on the phone.
In general their interface seems poor and everything takes more clicks than it should. I can’t get info on all the latest activities across accounts and have to keep clicking through.
There are some features I can’t get at WS, like NG, second level quotes and MMFs. Interest on MMFs beats 4.5% at WS, once you account for the 2% bribe. I definitely prefer WS and Questrade though. Yes, 2% is a nice bribe but I feel like I am paying for it in poor service.
9:18 am
September 11, 2013
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The big bank discount brokers I deal with operate better if you also have a bank account with their bank for funds transfer purposes. I've been able to open linked bank accounts that have no fees, though I haven't done it lately.
10:45 am
October 27, 2013
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Bill said
The big bank discount brokers I deal with operate better if you also have a bank account with their bank for funds transfer purposes. I've been able to open linked bank accounts that have no fees, though I haven't done it lately.
That is the key to make it seamless, i.e. in most cases, transfer money to the chequing account and then Bill Payment out an EFT. Some/most of the brokerages also have an EFT option available by filling out a form, attaching a Void cheque, and mailing it in to set up the EFT permanently...so that 'transfers out' are simple.
BMOIL makes it even easier with an AccountLink type of chequing account that automatically holds the cash position in the BMOIL account so that one doesn't have to do the internal transfer to chequing first before using Bill Payment to transfer out funds. IOW, the transfer out pain mentioned by post #73 becomes a red herring (non-existent).
11:01 am
April 27, 2017
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Obviously not a red herring because one shouldn’t be obliged to open a (redundant) chequing account to get a decent service with a brokerage. I was told to open a redundant savings account with TD but that does not really help. Never mind. I should be able to last until May.
11:18 am
April 6, 2013
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AltaRed said
…. Some/most of the brokerages also have an EFT option available by filling out a form, attaching a Void cheque, and mailing it in to set up the EFT permanently...so that 'transfers out' are simple.
Scotia iTRADE offers that. BTC reported that TD Direct Investing does as well:
You can use this form
https://www.td.com/content/dam/wealth/document/pdf/direct-investing/596574-v1-en.pdf
to push funds from TDDI to an external bank account.
Scotia iTRADE offers online access to the transfers to external accounts. Unfortunately, TD Direct Investing does not:
How do I transfer funds from my TD Direct Investing account to a bank account at another financial institution?
You can set up an EFT for your TD Direct Investing accounts in one of the following ways:…
Once the EFT is set up for non-recurring transfers, you will need to contact TD Direct Investing to transfer the funds. TD Direct Investing currently does not offer the ability to transfer to external financial institutions on WebBroker.
11:32 am
August 4, 2010
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Scotia iTrade works just like an external account link at other banks - you can push and pull. TDDI only lets you push out (you can't fund your account with pulls), and you have to phone in. CIBC has an external linking form as well, I think you can push/pull like Scotia, but I don't know that for sure.
I know BMOIL has their pseudo-chequing AccountLink which is effectively an alias for your brokerage account balance, and has branch/transit numbers you can use to set up push/pull to from an external bank.
3:58 pm
April 6, 2013
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Funds can be added to Scotia iTRADE and BMO InvestorLine brokerage accounts using bill payments at another bank. I think TD Direct Investing has that too.
Some people have reported that the bill payee for TD Direct Investing accounts is "TD Waterhouse" (the legal entity TD Direct Investing is a division of) instead of the expected "TD Direct Investing".
As NorthernRaven mentioned, non-registered BMO InvestorLine accounts have an associated Bank of Montreal InvestorLink chequing account. With a banking card, I've deposited funds to that chequing account at a BMO ATM and via BMO branch tellers. I've also pushed funds to that associated chequing account from Tangerine Bank and EQ Bank.
5:03 pm
September 11, 2013
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Don't need Bill Payments, my iTrade account is linked to TD chequing account (done when I opened iTrade account) so can transfer any amount (possibly limited to $100K per transfer, if I remember right), it's available for trading next day assuming I already have that much in assets in the iTrade, i.e. they don't have a hold period if your existing investments cover it
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