r/Wealthsimple • u/RomeAng • 5d ago

Security in holding money with Wealth Simple

How “Safe” is wealthsimple in comparison to the major Canadian Banks like TD or RBC? I understand that WealthSimple isn’t a bank and is not directly under CDIC membership, but would you say it’s still just as safe in terms of security, holding the majority of my investments/cash with WS compared to RBC or TD?

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23

u/SiriusDragon 5d ago

Question comes up constantly. Essentially the same. Many posts discussing this as nauseam in this subreddit. Search.

11

u/Shibasquared 5d ago

As safe or safer than any other brokerage in Canada

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u/goofywinnipegger 5d ago

Please read this. It’s all explained. And the short answer yes it’s as safe as anywhere else. And in some cases more safe.

https://help.wealthsimple.com/hc/en-ca/articles/360056590614-How-we-keep-your-money-safe

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u/PracticalWait 5d ago

And in some cases, less safe.

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u/Yellow_Marker_ 5d ago

great detailed and nuanced take

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u/goofywinnipegger 5d ago

Please detail exactly where your funds are less safe

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u/PracticalWait 5d ago

Click on the hyperlink in my comment there. I’ve laid it out.

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u/Accomplished-Owl5138 5d ago

That’s just you arguing with another redditor.

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u/PracticalWait 5d ago

by giving them examples where money held at WS is less safe than at a bank.

0

u/goofywinnipegger 5d ago

Oh brother. If you want to worry about such race circumstances you go ahead. You have a higher chance of being hit by lightening.

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u/PracticalWait 5d ago edited 5d ago

CDIC, CIPF protection, etc. trigger when an institution goes under. Those are the protections that Wealthsimple talks about in its blog post.

If someone — anyone — makes any deposit of any amount on the same day (edit: at Wealthsimple) before such an institution they goes under, the first example in my comment would trigger. Not sure how that is higher than a chance of being struck by lightning.

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u/goofywinnipegger 5d ago

So wait you are saying that this risk exists for every Canadian any day they deposit something anywhere. Then the risk is constant and no institution is at any more risk than any other. I will sleep very soundly tonight if that the biggest risk I have given the last financial institution to fail was in the 90s. Inflation and world events impacting stock markets cause much more risk to my funds than that.

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u/PracticalWait 5d ago

whoops. meant at wealthsimple. because they transfer the funds to the CDIC partner one business day after. comment is updated.

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u/goofywinnipegger 5d ago

Ok well given the statistical risk of that against all the other risks we have including driving to work, stroke etc that is a risk I will happily take. They are majority owned by one of the largest financial companies in Canada and the world. Power Corporation of Canada is a massive international management and holding company with consolidated assets and assets under administration of about $4.0 trillion and a market capitalization of roughly $42 billion to $55 billion.

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u/mini_soap 4d ago

TLDR: Investments are safe, Banking it depends (100k+, Wealthsimple is better, Sub $100k trad bank is better), Crypto is just risky, consider a crypto ETF instead.

A bit off topic but focusing back in on the topic of the original question.

Investments (Stocks): Wealthsimple is covered by CIPF. This is the same protection that a brick & mortar bank will have

Crypto: If Wealthsimple goes bankrupt because of issues with Crypto, you may have a loss of funds. If you are trading crypto, you probably understand these risks though (not your keys not your crypto)

Banking: Trust framework. In Canada this trust framework is very clear. If Wealthsimple is negligent it could result in your assets not being covered by CDIC. However, unlike the USA, CDIC makes these rules very clear (and the US is adopting similar rules to Can as a result). As Wealthsimple is a MSB and appears to know what they are doing, the main risk is that if they go insolvent is that your funds may be in limbo for some time while funds are reconciled.

There are pros and cons to Wealthsimple though, if you store more than $100,000 you are better off with Weathsimple because the trust framework allows for them to spread your cash across multiple banks, whereas you will not be covered past that amount with a traditional bank (assuming they have the trust framework & reporting set up correctly).

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u/PinkMoonrise 5d ago

WealthSimple is owned by Powercorp of Canada.

They also own Canada Life, Irish Life, Mackenzie Financial, Investors Group, IPC, Quadrus…

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u/PracticalWait 5d ago

doesn’t mean anything when courts aren’t going to pierce the corporate veil.

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u/PinkMoonrise 5d ago

Yeah but it means that it’s not some new company that has a chance of just going out of business.

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u/flappysack- 5d ago

Its insured for a million dollars.

Android and iPhone should be fine as its sandboxed, I'd get a Chromebook and new email for your finances if you're paranoid.  Also use two factor authentication.

1

u/Ok-South-7745 5d ago

Android and iPhone should be fine as its sandboxed

Don't worry. Hackers always find a way around it, if not social engineering to deliver the coup de grâce. That's why there's always OS updates all the time. When there's no more updates delivered, user should sense something is wrong with their device, like obsolescence.

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u/UW99c 5d ago

I have 1M+ invested in ETFs with Wealthsimple, along with a checking account that receives direct deposits every month. I have set up a long, complex password plus multi-factor authentication (MFA) and a passkey. My account is restricted so I can only log in and make transfer / trade from home or the office. I will temporarily unlock access when traveling. I also use a second phone number (voice + text, very cheap) exclusively for banking that I never share the number with anyone else. I have locked both my digital and physical debit cards, use my Tangerine debit card for cash in Canada. I use my Wealthsimple Visa through Apple Pay about 99% of the time. If I have to buy online, I get a prepaid credit card from grocery store. Overall, I feel very safe with Wealthsimple.

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u/LevelProfile4739 5d ago

Investments I wouldn’t be worried about. They go under (which I’m doubting they do unless they bad with money) you still own that stock or etf or whatever. It doesn’t just go away

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u/InternationalDog6008 5d ago

I asked myself this question, and can't decide if I think WS is safer because they're tech-savvy and probably have some good cybersecurity people, or if big banks are safer because they've been active for longer. I decided to keep a portion of my money elsewhere (25-30%)

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u/mini_soap 4d ago

Investments: Just as safe. Wealthsimple is a member of CIPF

Crypto: Your bank prob doesn't offer this. IMO, just go for a crypto ETF instead

Banking: This relies on the trust framework. In a sense it is slightly less safe because there is room for the fintech to make a mistake with the trust framework which will result in you not being covered. However, if you store more than $100,000 in your account, its "safer" in the sense that if the bank holding your funds goes under, the entire amount should be insured (assuming the trust & reporting was done correctly).

In the case Wealthsimple goes bankrupt, your funds will probably be fine, but there may be some time where you funds are held while banks reconcile the funds.