Many investors wonder if discount brokerages offer and carry the same level and type of insurance as those provided by financial institutions like Banks and Credit Unions. This write-up will explain and answer the question, is Questrade insured?

How are investments protected in Canada?

For Questrade to be insured, it must be a member of an insurance protection organization. There are a few such organizations in Canada that provide insurance for investors and asset holders.

The Canada Deposit Insurance Corporation covers deposits at member institutions for up to $100,000 including principal and interest. The CDIC is backed by the Government of Canada and is a federal Crown corporation. Products and accounts that are covered include chequing accounts, saving accounts, term deposits (GIC), debentures, money order, and certified cheques. Therefore, wealthier individuals tend to have multiple chequing and savings accounts to protect their funds in case their financial institution declares bankruptcy which has happened with large banks such as the Bank of Credit and Commerce Canada in 1991 and Bank of British Columbia in 1986. Bank failures have become even more common in the United States with institutions such as Washington Mutual forsaking $307 billion of their clients’ money in 2008. You can view the list of CDIC members here. As you can notice Questrade is not a member of the CDIC. However, if you keep reading, you’ll find out why Questrade is not CDIC insured – at least a primary reason why.

Furthermore, the Mutual Fund Dealers Association Investor Protection Corporation (MFDA) protects investment assets up to $1 million per account with member institutions. The MFDA is a not-for-profit corporation and is a self-regulated organization.

What about CIPF?

Great question. Questrade is regulated by the IIROC which is the abbreviation for the Investment Industry Regulatory Organization of Canada. The IIROC is the equivalent of the United States Securities Exchange Commission (SEC). Their job is to protect investors by establishing industry standards which ultimately strengthens the markets. To make things clear, all IIROC governed firms must carry (Canadian Investor Protection Fund) CIPF protection up to $1 million. Questrade hasn’t specified publicly how much coverage they carry per account. In fact, you’ll have to request this information specifically for you. However, if you are an account holder looking to invest up to $1 million, then you’ll want to make sure you have the maximum coverage for your account.

Furthermore, CIPF does not protect investments for IIROC members that are registered with another securities regulator. Because CDIC or the MDFA are considered securities regulators, registering with them would make Questrade ineligible for protection. Therefore, CIPF is the right protection option for a discount brokerage like Questrade.

The CIPF will ensure a safe return of property but not the value of the property.

Are certain investments guaranteed?

You may be surprised to learn that the CIPF does not guarantee an investment. However, certain investments are guaranteed. These investments will carry a lower rate on return, but they are safe and predictable.

Medical advances and good nutrition habits have led to Canadians leading longer and happier lives. However, every Canadian needs to ensure that their savings last as long as they do.

Firstly, payout annuities are a type of protection option that ensures that you do not outlive your money. Life annuity means that you are provided guaranteed income payments for as long as you live. A term certain annuity offers guaranteed income payments for a limited and pre-specified period. Canadians who have arrived at their 71st birthday must convert their RRSP into income products by the end of the year.

Moreover, Insurance GICs are also a type of annuity. In fact, they are an accumulation annuity which is only offered by life insurance companies. They are insured by Assuris which is the organization that provides savings and benefit protection to member insurance companies.

Finally, segregated Funds are very similar to mutual funds because they also combine many people’s money and direct those assets into investments such as stocks, securities, and bonds. When the contract matures (usually ten years), they allow you to guarantee a percentage of your contributions, and you can even choose a guaranteed income.

Some of these guaranteed investments may not be suitable for everyone; therefore, it is advised that you speak with a financial consultant before acting.

Even Self-Directed Investors Turn to Advice

Self-directed investors are smart. And no one doubts your intellect, but even self-directed investors turn to advice.

In fact, the world of trading, investing, and saving can be quite complicated sometimes. If you’re not willing to consult with a human financial advisor, then consider a robo-advisor. A robo-advisor is a highly specialized computer program that customizes financial advice to your portfolio. They don’t cost as much as a financial advisor and are accessible around the clock. Many software programs exist, and Questrade itself has a whole suite of them to help you customize your investing and trading. Best of all, these robo-advisors are free of charge as their included with your account!

Conclusion

Questrade is CIPF insured, but the CIPF insurance limit is $1 million. However, Questrade offers additional private insurance for up to a maximum of CAD 10 million. Indeed, Questrade is insured, but like with all financial matters, it is most important to read the details and fine print of your contract. As a result, you’ll be a more informed and successful investor.