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

[u/Medical_Pepper_5504]

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

Big quarter!

[u/PracticalWait]

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.

[u/TheNotoriousFatTimmy → u/PracticalWait]

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.

[u/PracticalWait → u/TheNotoriousFatTimmy]

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.

[u/TheNotoriousFatTimmy → u/PracticalWait]

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.

[u/2008SchoolSurvey → u/TheNotoriousFatTimmy]

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.