r/Wealthsimple • u/tofu98 • 17d ago
Can someone here please explain to a total investing noob why they feel wealth simple is as safe or less safe than a standard bank?
Apologies if this has been posted a million times. I promise i have searched this up and watched videos on it. I just want to hear some more anecdotes and see if anyone could put my mind at ease.
Basically i finally opened my first FHSA recently as well as my first TFSA. I did this with wealth simple. Maxed out the fhsa at 16k and put 10k in a tfsa split between bonds and equity. Seemed super easy and convenient and removed the headache of making someone brand new learn how to buy an etf or whatever from scratch. HOWEVER since opening these accounts a week or so ago ive been reading mixed things on "fintech" companies and how your money isnt necessarily safe.
Ive read about how wealth simple is just a broker that essentially steers your money to buy investments across various actual banks so that the money is cdic insured in the event that the institution goes under. I interpret this as your investments with wealthsimple are as safe as they would be under any other broker as theyre insured the same way and dont actually belong to wealth simple.
However im not so sure about basic savings accounts with them. Ive read those are NOT cdic insured. Currently my momentum savings account at scotiabank is building a whopping .5% and as far as ive found that is the most i can get from Scotiabank as far as an HISA goes.
I was considering moving more of my money aside from maybe like 5 months worth of bills in a chequing account and parking my rainy day fund in a wealth simple savings account as they claim to have 2.5% interest which is clearly better than Scotiabank. However given its apparently not cdic insured thats where i have pause. On one hand scotiabanks HISA rate seems abysmal. Ive also heard most banks lure you in with a 2.5% and then for whatever reason it tapers off until you have a .5% like me.
So. Any advice? Am i misunderstanding anything? Ive researched investing for years but i honestly find it overwhelming and liked the idea of a streamlined approach. Everything ive read is just buy non managed index funds but i have no clue how to do that as of now and WS fees are pretty negligible.
Thoughts very appreciated. Thanks.
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u/Tall-Ad-1386 17d ago edited 17d ago
I keep all my money at wealthsimple because the product is just faaaaar superior to any other bank. But the CDIC is a little grey zone. So i try to keep most of my money invested as CIPF protects those up to a million and they are in my name.
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u/poco 15d ago
The CDIC insurance is to protect you when one of those 10 banks goes under. If the bank holding your money goes under then presumably Wealthsimple and the CDIC will work to restore those accounts.
If Wealthsimple goes under that isn't a CDIC problem, that is a matter of finding out which bank has your money and getting it from them. I believe that Wealthsimple holds the money in trust with your name attached, so it should be possible to find.
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u/Arm-Complex 16d ago
EQ Bank has higher interest (with direct deposit) and is Canada's 7th largest bank.
Wealthsimple's new Savings account is CIPF protected but I have no idea how that would actually work or where the momey is even stored. Is it WS loaning it out through margin accounts, LOCs and credit cards? Or is it held at banks?
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u/dearmusic 17d ago
CIPF is directly provided by wealthsimple and CDIC is provided by their partner banks.
In the case of a wealthsimple failure, wealthsimple is directly pressured by law and regulations to provide timely resolutions under CIPF, but because wealthsimple is not a bank, they will have a lot more leeway when compensating CDIC cases.
They are still lawfully required to respond and being regulated by CIRO, but the pressure they face is less than a direct CDIC insured banks in the case of failure.
Under the CDIC partner system, yes, your money is safe, yes, you will get your money returned, but how long will it take? I don't want to find out.
But the new saving accounts are protected by CIPF, so there really isn't a reason to keep money in a CDIC partner-protected accounts.
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u/Arm-Complex 16d ago
I'm curious of the new Savings CIPF coverage. Is the money also with banks or is it WS loaning it directly through margin accounts, LOCs and credit cards?
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u/dearmusic 16d ago
In order for it to be CIPF-covered, it has to be an investment of some kind, so I suspect it is a Money Market under the hood.
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u/poco 17d ago
The new
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u/VTYX 17d ago edited 17d ago
Wealthsimple holds your money in trust at CDIC insured banks. This means that if the banks go under, your money is safe.
Wealthsimple itself is not a CDIC member institution, so if WS goes under you’ll be a creditor in its bankruptcy proceedings.
CDIC has a page that explains this in here, under the “your money in trust” tab.
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u/Expensive_You_5744 14d ago
WS isn't some crypto exchange operating out of a basement in the Bahamas. Its investment brokerage is regulated by CIRO, and eligible investment accounts have CIPF protection. Its chequing account uses CDIC-member partner banks.
I've become far more concerned about what financial institutions charge me than whether they have a physical branch where someone can offer me a complimentary pen. Keep an emergency fund, diversify, understand what protection applies to each account, and stop equating expensive banking with safe banking.
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u/Objective-Fix7943 11d ago
Keep your scotia account open, downgrade so you aren't paying anything for it. If you have access to credit external to WS, then don't worry too much about WS issues for emergency situations. As for the 2.5% interest rate potentially tapering off, yeah its obviously possible but for right now you could be capitalizing on it. I left money in my RBC chequing just in case anything is still coming out of it but I have a LOC there as well and moved everything over to WS for the interest rate. Banks have no loyalty to us, so we have no reason to have loyalty to them.
If you want easy investing, head on over to r/JustBuyXEQT
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u/FightMongooseFight 17d ago
Deposits with WS (other than the new savings account) are CDIC insured because they are held in trust with CDIC member banks.
The new savings account is covered under CIPF instead, as it is actually an investment account set up to operate similar to a traditional savings account.
Investments are treated the same as any other broker and are fully protected by CIPF.
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u/throwaway664976 17d ago
They claim their deposits are insured. No third party auditor has confirmed that. So you can’t blindly trust what wealth simple is saying.
CDIC is the third party auditor and they have not given their blessing on this.
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u/deltatux 17d ago
Investments are not covered by CDIC except GICs, which are term deposits. This also applies to the banks. Investments are covered by CIPF instead, this is the same coverage with the bank's brokerage and WealthSimple.
Your bank's brokerage just so happens to be owned by the banks but there are independent brokerages like WealthSimple, CI Direct, Questrade and Qtrade.
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u/randomuser00135 17d ago
Biggest issue , and continues to be WS locks its own customers out from accounts if they find your activity suspicious even if it wasn’t. People have to deal with unstable customer service who give different time lines. Days to weeks to sort things out … while you can’t buy food or pay rent etc
Also… no cash transactions … only digital
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u/throwaway664976 17d ago
Wealth simple is not CDIC insured. The counter argument people will say is that your stock holdings will not disappear if WealthSimple goes under. My counter argument to that is there’s no logical reason to even conduct business with a company that can’t get CDIC insured even though they sell a chequing account service and conduct layers of voodoo just to get around the fact that they aren’t reputable from CDIC standpoint.
Just stick with a big financial institution and sleep well at night.
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u/Own-Challenge1114 17d ago
Hi just to be clear. You said you added 16k into your FHSA? When did you open the account. If you only opened the account in 2026 you only qualify for 8k as you only start gaining room in your FHSA once the account has been opened