What's the CIPF?

Andrew Goldman

Andrew Goldman has been writing for over 20 years and investing for the past 10 years. He currently writes about personal finance and investing for Wealthsimple. Andrew's past work has been published in The New York Times Magazine, Bloomberg Businessweek, New York Magazine and Wired. Television appearances include NBC's Today show as well as Fox News. Andrew holds a Bachelor of Arts (English) from the University of Texas. He and his wife Robin live in Westport, Connecticut with their two boys and a Bedlington terrier. In his spare time, he hosts “The Originals" podcast.

For many new investors deciding to place their money in an investing account, a big question on their mind is: "Is my money safe?" While investing is always an endeavour that carries a certain amount of risk with it, the money you transfer to a financial institution is protected by something called the Canadian Investor Protection Fund (CIPF).

What is the CIPF?

The CIPF protects you, an investor, if the financial institution where you've been keeping your money goes bankrupt. If a company goes bankrupt and it is a member of CIPF, you may be eligible for coverage up to specified limits if the company cannot return your money to you. That's why it's always important to make sure the financial institution you're using is a member of CIPF: If it is, you're automatically covered.

It’s important to note that the financial loss must be caused by insolvency. It doesn’t cover things like losses in the stock market. The CIPF doesn't protect against the risk inherent to investing; it only protects your money in terms of the account where it's kept. The CIPF also doesn't protect you if you've been defrauded or somehow manipulated.

So let's say you have $20,000 in an investment account you opened with financial institution XYZ. If XYZ was a CIPF member and suddenly went bankrupt, your $20,000 would be covered, since CIPF covers up to $1 million in funds. However, if you've lost your $20,000 because you decided to buy 60,000 shares of a new company selling zero-calorie water (which surprisingly wasn't a massive success), then there's nothing the CIPF can do about that.

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Pros and Cons of the CIPF

What are the pros? You don’t have to do anything. If your investment firm is a member of CIPF, you, Joe Investor, will automatically become eligible for coverage when you open an account.

Is there anything to be careful about? Always double-check with CIPF to make sure that the investment company is actually a member. Wealthsimple is not a member of CIPF, but our brokerage providers that hold your money are members. Also keep in mind that only funds up to $1 million are protected; anything above that won't be covered by the CIPF in case of (unlikely) disaster.

If you want to make sure that the financial institution where you want to open an investment account is a member of the Canadian Investor Protection Fund, you should contact your investment advisor or representative, or call CIPF at (416) 866-8366 or toll free at 1 (888) 243-6981. 

In the unlikely event that an investment company becomes insolvent (it’s only happened 20 times in Canada since 1969) and CIPF gets involved, accounts will be frozen and it will take some time to access your money again.

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Last Updated November 19, 2020

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