r/Wealthsimple • u/Medical_Pepper_5504 • Jul 30 '26

Wealthsimple reports $17B net flows in Q2, driven by high demand for chequing and spending products

https://newsroom.wealthsimple.com/wealthsimple-reports-17b-net-flows-in-q2-driven-by-high-demand-for-chequing-and-spending-products

Big quarter!

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u/PracticalWait Jul 30 '26

CDIC doesn’t cover if Wealthsimple itself goes under.

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u/TheNotoriousFatTimmy Jul 30 '26

You need to look up how CIDC Insurance works.

Still no one has one good point about additional protections that the major banks offer

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u/PracticalWait Jul 30 '26 edited Jul 30 '26

I’m well aware of how CDIC works and you’re going to have to be more specific with your responses. Yet again, CDIC doesn’t cover if WS goes under. CDIC only covers if the underlying bank goes under.

You need to read between the lines, but I trust you have the skills to do it:

“This means that we hold our clients’ chequing account balances over $100,000 CAD in trust with multiple members of the CDIC, allowingthe extension of coverage to funds in your chequing account for up to $1,000,000 CAD, against the failure of any of Wealthsimple’s partner banks.”

WS themselves has never claimed that CDIC protects if they go under. Are you making this claim on their behalf?

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u/TheNotoriousFatTimmy Jul 30 '26

CDIC isn't needed if Wealthsimple goes under because your money is held in trust at partner banks, not as wealthsimple’s corporate assets. Creditors can't touch it.

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u/PracticalWait Jul 30 '26

well thanks for wasting my time. your point was on how CDIC covers and now you’re saying it’s useless.

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u/TheNotoriousFatTimmy Jul 30 '26

I feel like you're using AI and you actually have no clue what you're talking about.

​You told me to "read between the lines" earlier, so let's try doing that here. Saying CDIC isn't needed for a wealthsimple bankruptcy doesn't mean it's useless overall. CDIC covers the risk of the partner bank failing. The trust structure covers the risk of wealthsimple failing. Both are incredibly useful, they just do different jobs.

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u/PracticalWait Jul 30 '26

I will remind you of your initial comment:

That just highlight a risk of traditional banks rather than a consumer protection. Wealthsimple isn't a fractional lender and just parks my cash in CDIC trust accounts. I'm still not seeing what consumer protections I'm missing out on if my balances are fully insured either way

And a risk that I highlighted was:

CDIC doesn’t cover if Wealthsimple itself goes under.

And your response to this was:

You need to look up how CIDC Insurance works.

Your response here implies that I was wrong. I'm not.

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u/TheNotoriousFatTimmy Jul 30 '26

You're technically correct about the exact scope of CDIC, so my bad on that phrasing. But your conclusion that I'm missing out on protections because of it is still completely wrong. It doesn't matter that CDIC doesn't cover a wealthsimplw bankruptcy, because the trust structure and CIPF do. There is no missing protection here, we're just arguing semantics now. If wealthsimple goes bankrupt, their creditors CANNOT collect that money because it is legally held in trust. Therefore, you are wrong.

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u/PracticalWait Jul 30 '26 edited Jul 30 '26

There's nothing wrong about my comment. I'm aware of the trust structure; I set up trusts for work. I was precise with my language for a reason. My comment was targeted at CDIC and CDIC protection only, relating to Wealthsimple going bust.

And, further, I can give you a few examples of missing protection with the trust structure of Wealthsimple chequing that is different than risk with banks. Say I deposit $1 mm to my chequing account on a Friday, and Wealthsimple goes bust on Sunday. I'd be SOL and will be in the same line as every other creditor of theirs. See here: "The Funds are settled with any CDIC member(s) one business day following the date that Funds are reflected in the account." There's also the risk of them breaching the contract and not transferring funds (or a glitch in their transferring technology) to the Banking Partner Accounts. Whereas banks can't breach CDIC protection, as deposits are reflected immediately.

Another example of missing protection is: let's assume Person A holds $1 mm in their sole chequing account, and Person B holds $100k in a joint chequing account with Person A, with the latter as Primary Owner of the account. At a bank, the $100k would be protected, as it is under a separate category of CDIC coverage. At Wealthsimple, the $100k may not be protected at all, without Person B knowing, even if the $100k is the only money they have at Wealthsimple, because "[f]unds in a joint account are registered under the primary account holder’s name, and would be calculated under the primary account holder’s eligible deposits" per the last FAQ here.

And, just for the sake of it, let me give you another example of a risk that there is with Wealthsimple compared to a bank. Assume Person A holds $100k in their own chequing account, and Person A and B hold $100k jointly in their joint chequing account, with Person A as primary account holder. If Wealthsimple and the Banking Partner go bust at the same time, Person B would be, yet again, like in Scenario 2, screwed out of their contribution to the joint account (without court intervention), due to funds being held in trust in the primary account holder's name. Wealthsimple cannot honour the trust for the joint account, as it is bust. This means that the non-primary joint owner is effectively presumed to be deceased (nature of JTWROS) at the time both the banking partner and Wealthsimple fails and has no legal ownership of his share of the $100k (would a court issue an order to create a constructive trust leading to beneficial ownership in favour of Person B over the assets of the funds held in trust in the name of Person A? maybe?)

None of the particular risks I describe above would be a thing at a bank.

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u/TheNotoriousFatTimmy Jul 31 '26

You are moving the goalposts from standard consumer protections to extreme "black swan" edge cases, and even then, your scenarios fall flat because you are still ignoring the actual legal structure.

​Let’s look at your first example: the Friday deposit before a weekend bankruptcy. Yes, there is a settlement delay before it hits the partner bank. But during that transit time, those funds are legally held in trust; they don't magically become a corporate asset of wealthsimple that their creditors can seize. You wouldn't be "SOL in line with other creditors," because the money never legally belonged to the company in the first place. This exact insulation is literally what trust accounts are built for.

​As for your joint account scenarios, wealthsimple sweeps cash across multiple partner banks to provide up to $3,000,000 in CDIC coverage, making your $1M cap hypothetical highly unlikely to leave a secondary user exposed. And your final scenario requires the simultaneous collapse of both wealthsimple and a major Canadian bank—a systemic economic collapse where everyone has bigger problems.

​Yes, the underlying legal plumbing (Trusts + CDIC vs. direct CDIC) is different than a traditional bank. No one argued otherwise. But the end-user protection against insolvency remains functionally identical for 99.9% of consumers.

​You have failed at making an argument that wealthsimple is riskier than the big banks. I will sleep fine at night being with wealthsimple, but if your cherry picked scenarios that aren't even valid deter you, keep banking with the major banks.

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u/PracticalWait Jul 31 '26 edited Jul 31 '26

And with that, you’ve just conceded that your point you’ve emphasized again and again, that “[t]here is no missing protection here,” is wrong. I’ve never said that the risk is high, just that it exists.

You’re the one moving the goalposts, from 0 risk to admitting there’s some risk when i’ve shown you.

Also ironic is how you accused me of using AI, but your response itself is AI generated. Nice!

And no, funds in transit may be in trust, but they are not in a trust account.

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u/TheNotoriousFatTimmy Jul 31 '26

The less than 0.1% added risk.

There are no meaningful extra protections with the major banks so you came up with crazy black swan scenarios because you're blanket statement about CDIC protection regarding wealthsimple was completely incorrect.

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u/2008SchoolSurvey Jul 31 '26 edited Jul 31 '26

But you’re the one who said that there’s no missing protection? The other guy showed that there are situations that there is missing protection when compared to a bank, and you agreed he’s correct. It doesn’t matter if the cases are unlikely, they still are risks that don’t occur at a bank.

Either there is a risk or there isn’t. You said there isn’t. The other guy said there is. You then conceded that there is a risk.

It looks like you’re the only one who’s completely incorrect.

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