Tag Archives: investment planners

How The Right Financial Planner Can Help When You Are Facing Uncertain Times

Uncommon Situations and How Proper Financial Planning 

Helps in Protecting Interest of Investors in Such Situations

Financial planning is an important aspect you need to look into if you want to build your investment portfolio. However, some unexpected situations can arise and you need to have the right information to deal with such situations. So, here we will look at one such situation where an investment dealer or broker whom you are working with decides to file bankruptcy. What would be the implications for you? Are there any chances that you will be losing your investments? Let us delve into the details.

Examination of Filing of Bankruptcy by a Dealer or Broker From Investor's Perspective

financial planningIf this type of situation arises then Canadian Investor Protection Fund implements measures for transferring your account (including its associated assets) onto another solvent firm. CIPF primarily focuses on the task of successful transfer of assets and payment of associated expenses. It is also worth mentioning here that investors get coverage of at least $1,000,000 in case their securities were held by a dealer or broker who is a Canadian Investor Protection Fund (CIPF) member. Investors are entitled to such minimum coverage if they open an account with any broker or dealer who is a member of Canadian Investor Protection Fund. You also need to know the losses that get coverage or are not covered by the  Canadian Investor Protection Fund.

Losses Under Coverage of CIPF

  • Securities and cash balances
  • Commodities and future contracts
  • Insurance funds (segregated) which are held or acquired on your behalf by any CIPF member

Uncovered Losses

  • Losses incurred due to issuer defaulting, changes in values taking place in a securities market or selection of inappropriate investments.
  • If investor is not able to file a claim within 180 days with CIPF or the bankruptcy trustee from actual date of insolvency of broker or dealer.
  • Any segregated funds/securities that are not held by the investment broker or dealer or in case there is no recorded entry which states that broker held these funds/securities.

Coverage Provided by CIPF

As part of financial planning it will be important for you to know about two different types of coverage provided by CIPF. These are; consolidated coverage and separate coverage. Let us look at differences between the two.

Consolidated Coverage: Here calculation for coverage you will be entitled to is performed by combining or consolidating all investment accounts you have. As such, in case there are non-registered investment accounts (like margin, option and cash accounts) then values of all these accounts will be added for evaluating coverage you are entitled to get.

Separate Coverage: If investor has investment accounts as mentioned below then in such situation CIPF will be providing separate coverage for such accounts without consolidating them together.

  • Education savings plans (Registered)
  • Joint accounts as well as partnership
  • Any trust account like testamentary trusts, inter vivos trusts, etc.
  • Associations or organizations which are unincorporated


Thus, at the time of financial planning you need to take into account your position in case your broker decides to file bankruptcy and take necessary to steps to prevent losses.