Here’s Why Wealthsimple Is Safe To Use

Is Wealthsimple Safe?

Yes, Wealthsimple is a safe trading platform.

In fact, the platform is trusted by over 1.5 million users across Canada.

The company manages upwards of $8 billion dollars of assets and has industry-standard security measures in place.

While Wealthsimple is an online-only financial service provider with no branches or physical locations, you can rest assured that your money is just as safe as it would be at any traditional financial institution.

Is it safe to link your bank account to Wealthsimple?

Yes, linking your bank account to Wealthsimple is safe.

Wealthsimple has several safeguards in place to ensure your account information remains secure.

To link your bank account, you will likely be required to log in to online banking through your financial institution.

After logging in, Wealthsimple states that bank login credentials are never stored on their servers.

The secure login technology is a result of a partnership with a company named Plaid.

Through this technology, customers are able to securely link their bank accounts to their Wealthsimple account.

This process is undertaken using a number of encryption safeguards that undergo rigorous independent security testing.

This technology allows for different applications and services to connect with your bank account in a secure way.

Did you know? Plaid’s technology is trusted by over 4,500 companies around the world, including Wealthsimple.

What Happens to my Investments if Wealthsimple Goes Bankrupt?

In the unlikely event that Wealthsimple goes bankrupt, protections are in place to limit financial impacts to customers.

Wealthsimple is affiliated with Canadian ShareOwner Investments Inc, which acts as the custodial broker for the company.

This means that through this organizational structure, securities in your account are held under them.

If Wealthsimple were to go bankrupt, your assets would remain with Canadian ShareOwner Investments and you would be able to transfer your money to another financial institution.

In addition, Wealthismple is a member of the Investment Industry Regulatory Organization of Canada (IIROC).

This regulatory organization oversees all firms that provide securities trading services in Canada.

Being a member of IIROC means that the company must abide by strict compliance measures.

According to the IIROC website, these measures include “financial and operations compliance, business conduct compliance and registration requirements, as set out in the Dealer Member Rules”

All members of IIROC are also automatically members of the Canadian Investor Protection Fund (CIPF) as well.

This fund provides investors with support in the event that a member firm becomes insolvent.

Guy logging into Wealthsimple

For individuals, CIPF provides the following protections:

  • $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.

Is my Crypto Portfolio Safe with Wealthsimple?

For those using Wealthsimple Crypto, several security measures are in place to protect investors.

While cryptocurrency is not as highly regulated as other securities like stocks, investors can still feel safe knowing that there are checks and balances in place.

Wealthsimple Crytpo works with custodial company Gemini Inc.

This means that any crypto purchased by users is held by Gemini for additional layers of security.

Gemini is well recognized in the crypto industry for its industry-leading crypto storage and security technology.

Their facilities offer “cold storage”, meaning that assets are stored disconnected from networks in a way that prevents theft.

In addition, Gemini’s insurance policy will cover up to $200 million in aggregate losses for Wealthsimple customers that are a result of theft, security breaches, or fraudulent employee activity.

In addition, Wealthsimple also has a partnership with Coincover, a leading cryptocurrency insurance provider that provides Secure Key Material Storage and Recovery Deposit Protection Guarantee.

While Wealthsimple is a member of IIROC and CIPF, cryptocurrency does not fall under any of the investment categories that these regulatory bodies cover.

As a result, there are no investor protections in place from these organizations in the event of cryptocurrency losses.

Wealthsimple’s Security Features

As an online only brokerage, Wealthsimple takes cybersecurity seriously.

Here are just a few examples of how Wealthsimple is keeping its clients and their money safe:

1. Encryption

All account information is encrypted.

This means that when information is transmitted from your device and Wealthsimple’s servers, everything that contains identifiable information (name, passwords, account information) is secured behind 256-bit encryption.

This means that to intercept information as it passes between your device and Wealthsimple servers, hackers would need to figure out a 256-digit number that changes each time. 

2. Two-step verification

In the event one of your accounts is hacked or your device is stolen, two-step verification provides another layer of security to protect against theft.

After logging in on a new device or from a new location, Wealthsimple will ask for you to verify the login through either a text, phone call, or e-mail to the contact information you have provided.

Even if a thief has your Wealthsimple login information, they will not be able to access your account without your phone or your e-mail login information.

This additional verification also gives you a warning when someone is trying to login to your account.

This information can give you time to change your passwords before the hacker has a chance to get into your account. 

3. Backups

All data is backed up on Wealthsimple systems through cloud technology.

This reduces the risk of data loss and provides an additional layer of security.

Backups occur multiple times a day, ensuring that account information is up to date and accessible in case of service disruptions.

4. Dedicated Security Team

Wealthsimple has a team of dedicated individuals who are constantly applying industry-standard practices to keep customers and their information secure.

Policies and procedures related to security are constantly updated and informed by the latest information and best practices. 

How Does Wealthsimple Make Money?

One of the main ways Wealthsimple makes money is by charging conversion fees.

When Canadians buy and sell stocks listed in U.S. exchanges using Wealthsimple Trade, they are charged a 1.5% currency exchange fee.

Additionally, Wealthsimple makes money through its robo-investing service Wealthsimple Invest.

Users of this service are charged 0.5% in management fees if their account has under $100,000, and 0.4% in management fees for those who have over $100,000. 

Does Wealthsimple Sell Any of my Personal Information?

No, Wealthsimple does not sell any personal information of clients.

Collection of personal information is strictly for legal purposes related to reporting obligations.

All information disclosure to third parties is only done when required by law.

For full information on how information is used and stored, please see their privacy policy here

How Does Wealthsimple’s Security Compare to Traditional Banks?

Wealthsimple provides very similar layers of protection as traditional banks.

Like Wealthsimple, all traditional banks that provide brokerage services are members of IIROC.

This includes Bank of Montreal (through BMO InvestorLine Inc), CIBC (through CIBC Investor Services Inc.), RBC (through RBC Direct Investing Inc.), Scotiabank (through Scotia Capital Inc.) and TD bank (through ​​TD Securities Inc.).

Wealthsimple employs security features that are comparable to those used by the Big Five traditional banks.

Industry-standard cybersecurity features like encryption and two-step verification are used by both Wealthsimple and traditional institutions to provide security to their customers.

Overall, the security for online brokerages like Wealthsimple is on the same level as traditional institutions.

While these security features are in-line with traditional financial institutions, some customers may still prefer the Big Five banks due to their traditional brick-and-mortar locations. 

Reasons for this preference may include more product options or a more personalized customer service experience.

Frequently Asked Questions

  • Is it okay to give my SIN to Wealthsimple?
  • Can Wealthsimple be hacked?

I have been investing for half a decade, using the perspectives gained from my work experience in the private, public, and non-profit sectors to shape my investment outlook. I have a specific interest in the potential of emerging disruptive technologies and their impact on the future.