Wealthsimple Trade is a relatively new platform in Canada, founded on 2014. Over time, they have added different features like introducing TFSA and RRSP accounts on 2019. Also, they launched Wealthsimple Trade on 2019.
Trading stocks was only available through the Wealthsimple Trade app. It’s only recently on 2021 when trading directly through their website on a desktop is possible.
Wealthsimple, like the big banks, is safe since assets on Invest and Trade accounts are held by ShareOwner Inc., a CIPF member and regulated by IIROC. In case Wealthsimple and ShareOwner go bankrupt, accounts are CIPF insured up to $1 million per account since assets are held by a CIPF member.
Wealthsimple Trade is a division of Canadian ShareOwner Investments Inc. (ShareOwners Inc.), an organization that has been around for 30+ years.
On the other hand, Wealthsimple Crypto is not insured by neither CDIC nor CIPF. In case of a bankruptcy, Wealthsimple Crypto is not insured, unlike Wealthsimple Invest and Trade which are CIPF (Canadian Investor Protection Fund) insured.
IIROC (Investment Industry Regulatory Organization of Canada) is a non-profit national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada to protect investors. (iiroc.ca)
Aside from Wealthsimple Trade, Invest, and Crypto, Wealthsimple also offers other kind of account known as Wealthsimple Cash. Wealtshimple Cash is not CIPF insured. A section of this article will discuss whether Wealthsimple Cash has a different kind of insurance or not.
What will Happen if Wealthsimple go Bankrupt
In case Wealthsimple go bankrupt, Wealthsimple Invest and Trade accounts would be largely unaffected since assets are held by ShareOwner, registered in your name. Investments can be kept with ShareOwner or it can also be moved to other platforms or to a bank account.
If ShareOwner Inc. go bankrupt, CIPF insurance of up to $1 million per account will kick in. CIPF insurance is automatically applied for accounts with a CIPF member like ShareOwner Inc.
How to Confirm ShareOwner is a Member of both CIPF and IIROC
Here is a link to the list of current CIPF members on cipf.ca. Canadian ShareOwners Investments Inc. is a CIPF member. Other notable CIPF members include RBC Direct Investing Inc., TD Securities Inc., Scotia Capital Inc., etc.
To confirm ShareOwner is an IIROC dealer member, here is a link to the list of dealers IIROC regulates on iiroc.com. Assets inside Wealthsimple Trade is held by Canadian ShareOwner Investments Inc.
Canadian ShareOwner Investments Inc. is listed as a dealer member of IIROC. Other IIROC dealer members include BMO InvestorLine Inc., CIBC Investor Services Inc., Scotia Capital Inc., RBC Direct Investing Inc., etc.
When visiting ShareOwners.com, they inform that they have moved to Wealthsimple website.
TFSA – Tax-Free account. However, deposits are limited to around $6,000 per year.
Personal account – Taxable account. Profits are taxable when you sell. Dividends are taxable when you receive dividends.
A more detailed comparison will be found in this article: Wealthsimple Personal vs Wealthsimple TFSA account (Full Comparison)
Tutorial – How to Buy and Sell Stocks on Wealthsimple Trade
Kind of Investments that are CIPF Insured
According to CIPF.ca, they cover cash, securities, futures contracts, and segregated insured funds in the event of insolvency, that is, if a CIPF member firm has gone bankrupt.
Securities include bonds, GICs (guaranteed investment certificates), shares or stock of a company, units or shares of an investment fund such as mutual fund or an ETF (exchange-traded fund), and units of limited partnerships.
Clients can hold stocks, ETFs, and cash on a Wealthsimple Trade account. All of these assets are included on CIPF insurance.
Wealthsimple Invest accounts are automatically invested to different stocks, bonds and gold.
Limitations to CIPF Insurance
CIPF insurance will only kick in during insolvency of a member firm, that is, when ShareOwner Inc. has gone bankrupt. Also, CIPF will consider a firm insolvent when “clients no longer have unrestricted access to their accounts if, for example, the member firm is suspended by IIROC.”
CIPF will not insure losses from poor investment choices. After all, all investments have their own risks and upsides. CIPF will insure when an investment dealer in Canada that is a member has gone bankrupt.
For example, let us say Apple stock have gone down 10% because of some bad news. CIPF will not insure these losses.
Qtrade Direct InvestingTM – Get up to $2,000 cashback when you open any new self-directed trading account with Qtrade Direct Investing.
Qtrade Key Features
- No minimum requirement. Anyone can start with $1,000 or less.
- Invest in Stocks & ETFs listed on stock exchanges in the United States and Canada such as NYSE, NASDAQ, and TSE
- Trade stocks, ETFs (exchange-traded funds), options, mutual funds, bonds, GICs, and other securities.
- Offers a commission-free ETF program: 100+ ETFs are free to buy and sell with no minimum.
Qtrade is the trusted online brokerage provider for over 100,000 clients across Canada and the trusted partner of many of Canada’s leading financial institutions. Qtrade has provided online brokerage services to Canadian investors since 2000.
Risks of Investing
Investments like stocks have their own risks and upsides. Generally, riskier investments gives the highest potential returns while less risky assets returns the lowest.
The most common way to lessen risk is by diversifying on different asset classes or different kinds of stocks. Also, another way is by doing research on investments to understand risks and upsides of a specific asset like stocks.
Individual stocks can potentially go down 50% or more for any reason. Also, companies can go bankrupt. For example, Sears stock have gone bankrupt years ago. The worst case scenario for stocks is when it go bankrupt, of which a stock goes to $0.
How Much is CIPF Insured
These are the three points from the coverage page on CIPF website.
- $1 million for all general accounts combined (such as cash accounts, margin accounts and TFSAs), plus
- $1 million for all registered retirement accounts combined (such as RRSPs, RRIFs and LIFs), plus
- $1 million for all registered education savings plans (RESPs) combined where the client is the subscriber of the plan.
CIPF will give back the value of your investments based on the date a CIPF member firm (in this case, ShareOwner) have gone bankrupt.
Wealthsimple Trade and Wealthsimple Invest currently offers Personal, TFSA, and RRSP accounts. Investments with a combined value of up to $1 million are CIPF insured inside Personal (cash account) and TFSA account.
In addition, another $1 million is CIPF insured on an RRSP account.
Amounts above $1 million is not CIPF insured. At this point, spreading out to different accounts or platforms may be helpful.
Is Wealthsimple safe for SIN?
Wealthsimple are safe for SIN since they are regulated by IIROC, like the big banks. SIN is used to verify a person’s identity by the CRA. CRA checks if right amount of taxes are declared, and they track the amount of withdrawals and deposits on registered accounts such as TFSA and RRSP accounts.
For the most part, SIN is required for investment dealers in Canada that offers stocks and other assets. SIN is used for tax purposes by the CRA.
Also, it confirms the identity of the person holding the assets are themselves. If SIN is not required, other people may be able to use an individual’s name and address, and make them accountable to other people’s taxes.
Registered accounts like TFSA and RRSP offers tax advantages when used correctly, but can have penalties when a person over contributed to these accounts, or pay higher taxes if not correctly used.
To be aware of the rules and how you can use each accounts, here is an article for full comparison between Personal, TFSA, and RRSP accounts.
Are Personal Information Safe with Wealthsimple?
Wealthsimple Invest has more requirements because they have to obtain more information to figure out what portfolio is suitable for your investment goals. On the other hand, Wealthsimple Trade is a self-directed platfrom where the investment dealer will not offer any advise.
Advisors/firms ask for these information to comply with IIROC rules, federal legislation (such as anti-money laundering and tax legislation), securities regulations and/or international agreements. (Source)
- Full legal name and date of birth
- Occupation
- Politically exposed persons*
- Third parties with a financial interest or trading authority over your accounts
- Intended use of your account
- Source of funds (Savings, salary, etc.)
- Your signature
- Social insurance number
- Citizenship
Wealthsimple Platform
Aside from username and password, Wealthsimple app also has two-factor authentication (2FA) and data encryption to help secure its platform for users.
Wealthsimple has now more than 1.5 million people who use at least one of Wealthsimple products. Founded on 2014, they are constantly adding new products and features.
Wealthsimple Crypto
Unlike Wealthsimple Trade and Invest which are CIPF insured, Wealthsimple Crypto is not covered by CIPF nor CDIC insurance. In the event of bankruptcy, there is a chance that assets on Wealthsimple Crypto will be lost.
Cryptos on Wealthsimple Crypto is held by Gemini Custody. Cryptos like Bitcoin and Ethereum is mostly decentralized and not regulated as much as other assets.
Buying the actual Bitcoin and Ethereum may be a better option than buying through Wealthsimple Crypto since it is not insured by CIPF nor CDIC. Moreover, cryptos are highly speculative and risky, make sure to do your own research. Cryptos can easily go down 50% or more anytime.
For the most part, Wealthsimple Crypto is designed for smaller amounts since they charge 1.5% fee and no insurance.
Wealthsimple Cash
According to Wealthsimple website:
“All cash balances from your Wealthsimple Cash and Save account(s) are held in trust at a Canada Deposit Insurance Corporation (CDIC) member institution. … For eligible deposits held in trust at a CDIC member institution, CDIC insures up to $100,000 for each beneficiary named in a trust, provided certain disclosure rules are met. Coverage is free and automatic.”
Wealthsimple website
Wealthsimple do not mention the specific member institution that cash on Wealthsimple Cash is held on. Thus, we cannot verify on the CDIC website whether their partner banks are CDIC insured or not.
I have contacted the Wealthsimple Team and they said “due to our contractual agreements, Wealthsimple is not able to disclose who its partner banks are.”
How Wealthsimple makes Money
In general, Wealthsimple makes money by charging 0.5% for most clients on managed accounts on Wealthsimple Invest. Also, they make money by charging 1.5% for exchange rate fees for US stocks and ETF trades when using their DIY platfrom known as Wealthsimple Trade.
Wealthsimple Trade makes money by charging 1.5% for exchange rate fee when clients are trading stocks in US dollars. In addition, they charge an optional $3 a month for clients who want access to real time stock quotes and up to $1,000 instant deposits.
On the free plan, users can only deposit up to $250 instantly and have 15 minutes delayed stock quotes.
Wealthsimple Invest charges a management fee of 0.5% per year for amounts less than $100,000 invested and a management fee of 0.4% per year for amounts more than $100,000.
In comparison, most mutual funds charges around 2% per year and the big banks charges around $9.95 per trade on CAD and US trades.
Wealthsimple Invest vs Wealthsimple Trade
With Wealthsimple Trade, clients can specifically choose stocks and ETFs to invest in. People can sell stocks and ETFs anytime as long as the market is open (Mondays to Fridays 9:30 am to 4:00 pm, except holidays). People can withdraw anytime too. Stock trades settle in 2 business days.
Wealthsimple Invest automatically invests money in diversified asset classes. When signing up, a person has to fill up a survey and indicate how much risk you want to take. After this, Wealthsiple Invest will build a portfolio based on the answer from the survey and how much risk a person is willing to take.
Wealthsimple Invest will automatically invest money as soon as it is deposited to an account, whereas a person has to choose what stocks or ETFs to invest on Wealthsimple Trade once money is deposited to an account.
Wealthsimple Invest charges 0.5% management fee while Wealthsimple Trade charges $0 for Canadian dollar trades and 1.5% fee for stocks and ETFs in US dollars.
Wealthsimple Trade – Trade (buy or sell) individual stocks and ETFs listed on stock exchanges on US and Canada. $0 fee for trades in Canadian dollars, 1.5% exchange rate fee for US dollar trades.
Wealthsimple Invest – Wealthsimple will automatically invest (robo-advisor) funds to diversified assets based on the amount of risk you are willing to take. Wealthsimple charges a 0.5% yearly management fee on Wealthsimple Invest. Deposit or withdraw funds anytime.
| Wealthsimple Trade | Wealthsimple Invest |
| Buy or sell individual stocks anytime | Deposits will automatically be invested to diversified stocks and bonds. |
| $0 fees when for every buy/sell of Canadian stocks | Fees applies on a per year basis (0.50% per year) |
| 1.5% exchange rate fee for every buy/sell US stocks | Withdraw anytime |
| Withdraw anytime | Close an account anytime |
| Close an account anytime | No minimum to start investing |
| No minimum to start trading | Managed for you by Wealthsimple for 0.50% fee per year |
| Manually managed |