This is the latest installment of our "Ask Wealthsimple" series, where our financial guru Dave Nugent helps you navigate the world of investing.

I guess I’m the Worrier-in-Chief here, Dave. But here’s my concern: I wear sneakers that have been around longer than Wealthsimple. Why should I trust a company the same age as Prince George with my retirement savings?

Here is the shortest answer to your question: We don't hold your money directly at Wealthsimple. We don’t even have the ability to touch your money, except to take our fees (which, as I’m sure you know, are incredibly low). So that's partly why you're in good hands.

Now, if you want to understand a little more specifically why the money you invest with Wealthsimple is as safe as it is anywhere, I’m going to need to get a little technical—you have only yourself to blame, Andrew! The first thing to know is that Wealthsimple is what’s called a Registered Investment Advisor (RIA). That means we're a company that the SEC allows to buy and sell securities on behalf of our clients. So our job is to help you choose a mix of investments, and then buy and sell them for you according to the plan. There are a lot of complex rules about what a company's obligations are to the client. But because we only help you buy and sell investments, we have a very simple set of regulatory priorities: to make decisions that are in your best interest. A lot of advisors don't have the same obligation — that's what all the discussion about the so-called fiduciary rule has been about. But in short: you want someone who is financially obligated to your best interests, not the firm's he or she work for.

I know you dot-com types—there are probably high-stakes foosball tournaments in the office. But you’re telling me that if you lose big and need to cover your losses for a day or so, you’re not even able to get into my account?

We are not. That is correct.

But you do have a foosball table in the office right?

No. We have a Ping-Pong table.

I knew it! OK, so if you don’t have my money, who does?

Your assets are actually held by a firm we work with called Apex, which holds $30 billion in assets and works with more than 100 financial institutions. It's a different kind of company than we are, called a custodian – that's a financial institution that doesn't make trades, but instead safeguards assets.

But then what if something happens to Apex? Maybe it gets hit by an asteroid and all my money literally ignites.

Time to get into the financial weeds again a little. Apex is a member of the Financial Industry Regulatory Authority (FINRA), which is a private corporation that regulates member brokerage firms and exchange markets. The purpose of FINRA is to protect investors as well as support the overall health of the U.S. markets. All FINRA members are also members of SIPC, the Securities Investor Protection Corporation. Every Apex account is covered up to $500,000 (the maximum amount of coverage for cash holdings is $250,000). So if Apex were ever to go bankrupt, you'd get up to $500,000 per account back. This is the same level of protection offered by any of the big banks. The other thing is that the funds you own are in your name. If anything happens, they just revert to you anyway.

Then I guess my question is how do I know the people at Apex who actually hold my money aren’t a bunch of degenerate foosball gamblers who need my money to cover their debts?

Maybe it’s time to tell you a little bit about why Wealthsimple isn’t your typical start-up. Wealthsimple’s financial backer is Power Financial. It is headquartered in Canada, and is one of the largest and most well-respected financial firms in the world. It has more than $1.22 trillion in assets. You may know some of the brands that Power Financial owns: Great West Life Insurance, London Life, Putnam Investments, Mackenzie Financial. They don’t own Wealthsimple, but they have invested $74 million in us, and their powerful assets serve as a pretty major insurance policy so that we do well, and we do well by our clients.

Meanwhile, as I mentioned, Apex itself has more than $30 billion in assets and is quite stable.

The fact that you’re backed by heavy-hitters seems stable. But what about cases like the MF Global bankruptcy a few years ago—seemed totally legit, but it turned out that they were dipping into client accounts to cover shortages. It was in truth a bit of a Ponzi scheme.

MF Global did a lot of complicated and risky stuff—a lot of derivatives and derivative contracts and debt in margin. Wealthsimple's business is very boring and very straightforward. We buy ETFs to match our clients’ investment needs and manage those accounts so they’re truly optimized. We are not involved in lending, capital markets, or any of the high-risk businesses that caused banks to go under in the U.S. in 2008. We don't do derivatives. We don’t even have leverage—which is the common financial-industry practice of borrowing money and betting you can make more on it than the interest you owe to whomever you borrowed it from. The cash we use to buy client securities is the cash that the clients have in their account.

Is all automated investing this safe? There are all kinds of new financial companies out there, and I can't tell who does what. From a security standpoint, how do I know who to trust?

I would say that so long as the firm is a member of the SEC, you should feel comfortable that there's regulatory oversight, and if they're not doing the right thing then the regulators will tell them to do the right thing.

I was giving you a nice opportunity to slag your competitors and you whiffed.

I’m sorry to disappoint you, Andrew. But the way we see it, there is no other investing business like ours in the US, or the world, that has grown the way we have, has raised the kind of capital we have, or has the kind of team that we do.

Wow, Dave. I’m not used to such bold pronouncements from you. You’re normally so mild-mannered.

Shh. Don’t tell anyone.

Wealthsimple makes smart investing simple and affordable.

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