This web site is dedicated to investment fund investor education and protection. The multi-billion fund industry plays a key role in the savings and retirement plans of millions of Canadians. Many industry practices provide beartraps for the unsuspecting investor and securities regulations have not kept up with the pace of change in the industry.
Thursday, May 25, 2017
Self-Protection Checklist for Seniors
We're pleased to provide a Checklist that should help you protect
your savings nest egg. Once you retire or stop working full time, there is
little room for error when it comes to your investments. A loss when you are 35
years old gives you years to recover—and leaves you the opportunity to delay
retirement if you must-but a mistake when you are 65 or 70 years old can be
devastating and irrecoverable. Elderly investors are disproportionately
targeted by unscrupulous brokers (aka “advisors”).The Investment Industry Regulatory
Organization of Canada has published Guidance for dealers on how senior
investors should be treated and protected. http://www.iiroc.ca/Documents/2016/87c0e6d5-8054-4e88-9b56-9a079b8c35aa_en.pdf
Here's a Checklist you can use to assess the actual treatment you have
·Does your broker use a title that truly reflects his/her
qualifications? Be aware many brokers use made up titles like VP that are
unrelated to their qualifications or registration. His/her actual registration
is Dealing representative or salesperson.Check for any limitations or
·Does your broker routinely explain products, costs and
associated risks before selling them to you?
·Ask your broker regarding his experience in managing a RRIF
account that requires a minimum annual withdrawal and special skills.
·Ask your broker if you have been sold any product ( like
a mutual fund sold on a deferred sales charge basis) with early redemption
penalties or minimum hold periods? If so, ask why.
·Ask your broker to demonstrate with comparative
mathematical calculations that your account type is the most appropriate and
cost-effective for you. ?
·Do you receive confirmation slips from your dealer for
·Do you receive a Monthly account statement? Do you check
it for errors or unexplained or confusing transactions?
·Has your broker provided you with a report detailing your
rate of return for each account and the annual fees you have paid?
·Do you have a well-articulated Power Of Attorney specific
to investments filed with your dealer? (as applicable)
·Did your broker develop a documented Investment Policy
Statement with you?
·Did your broker ask you to provide a trusted person
·Did your broker tell you that he/ she works to an advice
standard that is not required to be in your best interests? i.e. it is not a
·Were you informed as to how your broker is compensated?
·Were you informed by your broker of any
·Do you and your broker have a common understanding
regarding the objectives for each investment account?
·Do you and your broker agree on the time horizon for each
·Are you comfortable that your broker understands your
risk tolerance and capacity? Your true level of investment knowledge and
·Are you and your broker clear as to the composition of
your net Worth?
·Has your broker asked about your cash flow needs?
·Has your broker asked as to the composition of your
annual income? If not, consider informing him/ her.
·Has your broker asked about your debt obligations? If not,
consider telling him/ her.
·Has your broker asked about your insurance coverage? You
decide if he should know this.
·Have you informed your broker of any medical issues that
may be relevant to his/ her provision of advice?
·Do you have a signed/ dated copy of your Know-Your-Client
·Has your KYC been updated at least annually?
·Ask your broker whether he/she is licensed to sell other
products like annuities or Segregated funds? If so ,be aware you might be sold
a product that is not processed through your dealer and could be unsuitable for
·Has your broker asked you to sign blank forms? If so, raise
a Red flag.
·Has your broker tried to borrow money from you? If so, raise
a Red flag.
·Has your broker attempted to get you to make investments
not processed through the dealer? If so, raise a Red flag.
·Has your broker attempted to have you assign them as a
trustee or executor? If so, raise a Red flag.
·Are you being pressured to take out a Home Equity Loan or
establish a margin account? If so, raise a Red flag.
·Have you been asked to write a cheque in the broker's name
or the name of an entity other than your dealer? If so, raise a Red flag
·Have you been asked to increase your risk tolerance for
no apparent/valid reason? If so, raise a Red flag.
·Were you informed on how to file a complaint?
·If you have filed a complaint and are not satisfied with
the response, escalate the complaint within the firm. Consider getting some
help in articulating your complaint.
·If you have a complaint or issue with your account, act
quickly. If your dealer is bank-owned do not allow the dealer to nudge you to
the internal:” ombudsman”.
·Has your dealer informed you that if you are dissatisfied
with their handling of your complaint, you can refer it to the Ombudsman for Banking
Services and Investments (www.obsi.ca), an independent and free
dispute resolution service?
NOTE: For seniors,
many investor advocates consider a fiduciary duty as an important consideration
in the client-advisor relationship. Tell your broker IN WRITING, that you are
relying upon them 100% for fair, honest and professional investment advice that
is entirely in your interest and in the interests of none other…..in
other-words, you are assuming that your financial relationship with the broker
is one of a fiduciary level of care, as it is understood in law. Ask them to
confirm this in writing to you and to reply if they cannot confirm this
standard of care to you in writing. If not a fiduciary, you may be sold
products and services that, while not unsuitable, may not be optimum for you
and may be more expensive than other available alternatives.