The Canada deposit insur-ance Corp. (CDIC) is hoping to leverage the reach of financial advisors to help better educate Canadians about exactly what CDIC insurance covers and what it does not.

“Explaining deposit coverage is not something you can just throw on a TV ad,” says Michèle Bourque, president and CEO of CDIC, an Ottawa-based Crown corporation. “Getting the message out through financial advi-sors is a better way because they have that face-to-face interaction with Canadians.”

The CDIC has entered into a corporate sponsorship with Toronto-based Advocis, the organization that represents financial advisors across the country, to boost public awareness. The partnership is one of “reciprocal promotion and education” and will see the CDIC and Advocis co-operating on a number of initiatives, including sponsoring and contributing to some of each other’s conferences and events.

According to the CDIC’s research, more than 80% of Canadians who deal with a financial advisor are aware that CDIC insurance exists, but that percentage drops to below 60% among Canadians who don’t have a relationship with an advisor.

FAILURES ARE A RARITY

Admittedly, Canadians may be forgiven for not having a stronger awareness of CDIC insurance, as there hasn’t been a bank failure in Canada since 1996. In fact, there have been only 43 bank failures since the CDIC was created in 1967. In contrast, there have been almost 50 bank failures in the U.S. this year, as of November.

Despite the relative rarity of bank failures in this country, says Bourque, they could happen here again. The bank crisis of 2008, which saw governments in the U.S. and Europe forced to bail out financial services industry giants, proves that.

The CDIC insures up to $100,000 of eligible deposits held in Canadian dollars at member institutions. Generally, deposits held in bank accounts and guaranteed investment certificates (GICs) with a maturity of five years or less are eligible for CDIC insurance.

MISUNDERSTANDINGS

The CDIC says that one of the most common misunderstandings about CDIC insurance is the belief that the $100,000 guarantee extends to accounts denominated in foreign currency. Some Canadians, for example, live part of the year in the U.S., and find it convenient to hold their funds in U.S.-dollar accounts. However, monies in those accounts would not be eligible for CDIC insurance in the event of a failure.

The other common misunderstanding is the belief that CDIC insurance extends to mutual funds, with this mistake being even more pronounced among individuals who invest in funds through a bank, Bourque contends. Some Canadians mistakenly assume that the coverage protecting their GIC at a bank also extends to a money market fund at that same institution — which it doesn’t. IE