Clients of the Index House have their portfolio (cash and securities) held in an account at a separate financial institution called a custodian. Like a safety deposit box for your portfolio, the main purpose of the custodian is to safeguard your assets.
The custodian provides monthly statements as well as online access to your accounts, verifying your holdings and account activity. These are independent of any reporting offered by the Index House.
Granting the Index House trading authority allows your portfolio to be managed according to the investment policy statement authorized by you during account setup.
Deposits to your accounts are made payable to the custodian and not the advisor or the Index House. If you wish to withdraw money from your portfolio the funds can be electronically fund transferred (EFT) to your bank account if you previously provided a void cheque and your banking information is on record with the custodian. A cheque can also be mailed from the custodian to the address on your account. All other requests require a “letter of direction” with your signature and provided to the custodian for processing.
The custodian is also responsible for the settlement of trades, the collection of investment income and the issuance of year-end tax slips.
The custodian is a member of the Canadian Investor Protection Funds (CIPF).
The Canadian Investor Protection Fund was created by the investment industry to ensure that client assets are protected if an investment dealer who is a CIPF member becomes insolvent. The coverage limit is $1,000,000 for general accounts and another $1,000,000 for registered accounts per investor. The $1,000,000 coverage applies to your shortfall, which in most cases will be substantially less than the value of your account. It’s important to remember that coverage applies to losses as a result of the insolvency of a CIPF member and market losses are not covered.