tag:blogger.com,1999:blog-47665859860035713842024-03-13T04:26:58.812-04:00Canadian Fund WatchThis 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.Unknownnoreply@blogger.comBlogger228125tag:blogger.com,1999:blog-4766585986003571384.post-76131693245756374492023-08-12T12:44:00.000-04:002023-08-12T12:44:11.123-04:00<p> <b><span style="background: white; border: none windowtext 1.0pt; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-border-alt: none windowtext 0cm; padding: 0cm;">Client Focused Reforms (CFR) and client complaint handling</span></b></p>
<p class="MsoNormal"><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">Regulators<span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"> have not provided any direct
guidance in this area. However, based on the general principles underlying CFR
we believe that the putting clients interest first and resolving conflicts-of-interest
in the best interests of clients provisions suggest the following best
practices: </span><br />
<br style="box-sizing: border-box; white-space-collapse: preserve-breaks;" />
<span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"><span style="box-sizing: border-box; white-space-collapse: preserve-breaks;">Complaint resolution should be considered a material conflict-of-interest requiring definitive Dealer mitigation.</span></span><br style="box-sizing: border-box; white-space-collapse: preserve-breaks;" />
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<!--[endif]--><span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"><o:p></o:p></span></span></p>
<span style="box-sizing: border-box; white-space-collapse: preserve-breaks;"><span style="background-color: white; font-family: Verdana, sans-serif;">All complaint-related communications should be in plain language including the final response letter</span><p class="MsoNormal"><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">
<span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"><span style="box-sizing: border-box;">Dealers should assist complainants in articulating their complaints when needed</span></span><br style="box-sizing: border-box;" />
<span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"><span style="box-sizing: border-box;">Dealers should help complainants understand the rules and regulations applicable to the subject matter of their complaint</span></span><br style="box-sizing: border-box;" /></span><span style="background-color: white; font-family: Verdana, sans-serif;"><br /></span></p><p class="MsoNormal"><span style="background-color: white; font-family: Verdana, sans-serif;">Dealers should effect a sanity check on recorded KYC information, </span><span style="background-color: white; font-family: Verdana, sans-serif;"> objectives, risk profile, experience and consistency</span></p><span style="box-sizing: border-box;"><p class="MsoNormal"><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">
<span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"><span style="box-sizing: border-box;">Dealers should clarity what will happen at each stage, how long each stage should take and keep the complainant informed of progress.</span></span><br style="box-sizing: border-box;" />
<span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"><span style="box-sizing: border-box;">If the Dealer identifies other issues in the investigation of the client complaint, such issues should be investigated and appropriately remediated for the client</span></span><br style="box-sizing: border-box;" /></span><span style="background-color: white; font-family: Verdana, sans-serif;"><br /></span></p><p class="MsoNormal"><span style="background-color: white; font-family: Verdana, sans-serif;">If the Dealer identifies an error or wrongdoing,</span><span style="background-color: white; font-family: Verdana, sans-serif;"> it should take action or offer compensation that places the consumer in the </span><span style="background-color: white; font-family: Verdana, sans-serif;"> position they would have been had the error or wrongdoing not </span><span style="background-color: white; font-family: Verdana, sans-serif;">taken place</span></p><span style="box-sizing: border-box;"><p class="MsoNormal"><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">
<span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"><span style="box-sizing: border-box;">Dealers should provide complainants an opportunity to present information</span></span><br style="box-sizing: border-box;" /><br /></span></p><span style="box-sizing: border-box;"><p class="MsoNormal"><span style="background: white; border: none windowtext 1.0pt; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-border-alt: none windowtext 0cm; padding: 0cm;">The loss calculation should use the Opportunity cost methodology</span><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;"><br style="box-sizing: border-box;" /></span><span style="background-color: white; font-family: Verdana, sans-serif;"><br /></span></p><p class="MsoNormal"><span style="background-color: white; font-family: Verdana, sans-serif;">The Dealer should offer compensation/remediation </span><span style="background-color: white; font-family: Verdana, sans-serif;"> for non-financial losses</span></p><span style="box-sizing: border-box;"><p class="MsoNormal"><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">
<span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"><span style="box-sizing: border-box;">The final response letter should be provided within 90 calendar days including all internal steps</span></span><br style="box-sizing: border-box;" />
<span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"><span style="box-sizing: border-box;">The final response letter should provide sufficient information for the complainant to make an informed decision</span></span><br style="box-sizing: border-box;" />
<span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"><span style="box-sizing: border-box;">The final response letter should delineate the dispute resolution alternatives available</span></span><br style="box-sizing: border-box;" />
<span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"><span style="box-sizing: border-box;">The time for the complainant to accept (or not) the final response letter should be fair and reasonable</span></span><br style="box-sizing: border-box;" /><br /></span></p><span style="box-sizing: border-box;"><p class="MsoNormal"><span style="background: white; border: none windowtext 1.0pt; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-border-alt: none windowtext 0cm; padding: 0cm;">Dealers should make it clear that complaint details can be shared with the applicable regulator or police</span><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;"><br style="box-sizing: border-box;" />
<span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"><span style="box-sizing: border-box;">Dealers should not gag complainants speaking about the complaint or how well it was handled</span></span><br style="box-sizing: border-box;" />
<span style="background: white; border: none windowtext 1.0pt; mso-border-alt: none windowtext 0cm; padding: 0cm;"><span style="box-sizing: border-box;">Release letters, if used, should be fair and reasonable </span></span><o:p></o:p></span></p>
<p class="MsoNormal"><b><span style="background: white; border: none windowtext 1.0pt; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-border-alt: none windowtext 0cm; padding: 0cm;">Characteristics of a good complaint response letter</span></b><span style="background: white; border: 1pt none windowtext; font-family: Verdana, sans-serif; padding: 0cm;">:</span></p>
<p class="MsoNormal"><b><span style="background: white; color: #4472c4; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-themecolor: accent5;">Communicating Reasons for Decisions <o:p></o:p></span></b></p><p class="MsoNormal"><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">A response to a complaint should be presented to the complainant in a style that is clear and informative. Generally speaking, good reasons will: <o:p></o:p></span></p><p class="MsoListParagraphCxSpFirst" style="margin-left: 3.75pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">clearly describe the complaint and the issues addressed in the complaints process <o:p></o:p></span></p><p class="MsoListParagraphCxSpMiddle" style="margin-left: 3.75pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variation-settings: normal; line-height: normal;"> </span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">use plain language and avoid legal/ industry jargon <o:p></o:p></span></p><p class="MsoListParagraphCxSpMiddle" style="margin-left: 3.75pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variation-settings: normal; line-height: normal;"> </span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">outline the steps the Dealer took to investigate or otherwise resolve the complaint <o:p></o:p></span></p><p class="MsoListParagraphCxSpMiddle" style="margin-left: 3.75pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">set out the relevant facts considered in the review of the complaint <o:p></o:p></span></p><p class="MsoListParagraphCxSpMiddle" style="margin-left: 3.75pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">set out any applicable laws regulations, or policies, in simple language, that were
relevant to the complaint <o:p></o:p></span></p><p class="MsoListParagraphCxSpMiddle" style="margin-left: 3.75pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">connect the facts with the relevant laws or policies used to reach a conclusion <o:p></o:p></span></p><p class="MsoListParagraphCxSpMiddle" style="margin-left: 3.75pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variation-settings: normal; line-height: normal;">
</span></span><!--[endif]--><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">identify the outcome and any remedies the organization is offering to resolve the person’s complaint <o:p></o:p></span></p><p class="MsoListParagraphCxSpMiddle" style="margin-left: 3.75pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variation-settings: normal; line-height: normal;">
</span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">provide the contact information for a representative at the Dealer that the person can contact to discuss the outcome
<o:p></o:p></span></p><p class="MsoListParagraphCxSpMiddle" style="margin-left: 3.75pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variation-settings: normal; line-height: normal;"> </span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">advise the complainant of any review or appeal rights that exist and the ability to complain to OBSI and any other external oversight body with jurisdiction over the complaint/decision in question <o:p></o:p></span></p><p class="MsoListParagraphCxSpLast" style="margin-left: 3.75pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 7pt; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variation-settings: normal; line-height: normal;"> </span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">be translated into a language other than English or French where appropriate <o:p></o:p></span></p> <p class="MsoNormal" style="margin-left: 3.75pt;"><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">Such a letter would provide the information necessary for the complainant to make an informed decision on whether or not to accept the response.</span><span style="background: white; border: none windowtext 1.0pt; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-border-alt: none windowtext 0cm; padding: 0cm;"><o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p> </span></span></span></span></span></span>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-5430418098332666152023-03-20T09:10:00.002-04:002024-01-12T10:03:49.788-05:00<p> <!--[if gte mso 9]><xml>
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Name="List Bullet"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Number"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Bullet 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Bullet 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Bullet 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Bullet 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Number 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Number 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Number 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Number 5"/>
<w:LsdException Locked="false" Priority="10" QFormat="true" Name="Title"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Closing"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Signature"/>
<w:LsdException Locked="false" Priority="1" SemiHidden="true"
UnhideWhenUsed="true" Name="Default Paragraph Font"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text Indent"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Continue"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Continue 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Continue 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Continue 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="List Continue 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Message Header"/>
<w:LsdException Locked="false" Priority="11" QFormat="true" Name="Subtitle"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Salutation"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Date"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text First Indent"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text First Indent 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Note Heading"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text Indent 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Body Text Indent 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Block Text"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Hyperlink"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="FollowedHyperlink"/>
<w:LsdException Locked="false" Priority="22" QFormat="true" Name="Strong"/>
<w:LsdException Locked="false" Priority="20" QFormat="true" Name="Emphasis"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Document Map"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Plain Text"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="E-mail Signature"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Top of Form"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Bottom of Form"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Normal (Web)"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Acronym"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Address"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Cite"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Code"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Definition"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Keyboard"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Preformatted"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Sample"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Typewriter"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="HTML Variable"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Normal Table"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="annotation subject"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="No List"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Outline List 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Outline List 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Outline List 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Simple 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Simple 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Simple 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Classic 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Classic 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Classic 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Classic 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Colorful 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Colorful 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Colorful 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Columns 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 6"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 7"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Grid 8"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 4"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 5"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 6"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 7"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table List 8"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table 3D effects 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table 3D effects 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table 3D effects 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Contemporary"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Elegant"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Professional"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Subtle 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Subtle 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Web 1"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Web 2"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Web 3"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Balloon Text"/>
<w:LsdException Locked="false" Priority="39" Name="Table Grid"/>
<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
Name="Table Theme"/>
<w:LsdException Locked="false" SemiHidden="true" Name="Placeholder Text"/>
<w:LsdException Locked="false" Priority="1" QFormat="true" Name="No Spacing"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading"/>
<w:LsdException Locked="false" Priority="61" Name="Light List"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 1"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 1"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 1"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 1"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 1"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 1"/>
<w:LsdException Locked="false" SemiHidden="true" Name="Revision"/>
<w:LsdException Locked="false" Priority="34" QFormat="true"
Name="List Paragraph"/>
<w:LsdException Locked="false" Priority="29" QFormat="true" Name="Quote"/>
<w:LsdException Locked="false" Priority="30" QFormat="true"
Name="Intense Quote"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 1"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 1"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 1"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 1"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 1"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 1"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 1"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 1"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 2"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 2"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 2"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 2"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 2"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 2"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 2"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 2"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 2"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 2"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 2"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 2"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 2"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 2"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 3"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 3"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 3"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 3"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 3"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 3"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 3"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 3"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 3"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 3"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 3"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 3"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 3"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 3"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 4"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 4"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 4"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 4"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 4"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 4"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 4"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 4"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 4"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 4"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 4"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 4"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 4"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 4"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 5"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 5"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 5"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 5"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 5"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 5"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 5"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 5"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 5"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 5"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 5"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 5"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 5"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 5"/>
<w:LsdException Locked="false" Priority="60" Name="Light Shading Accent 6"/>
<w:LsdException Locked="false" Priority="61" Name="Light List Accent 6"/>
<w:LsdException Locked="false" Priority="62" Name="Light Grid Accent 6"/>
<w:LsdException Locked="false" Priority="63" Name="Medium Shading 1 Accent 6"/>
<w:LsdException Locked="false" Priority="64" Name="Medium Shading 2 Accent 6"/>
<w:LsdException Locked="false" Priority="65" Name="Medium List 1 Accent 6"/>
<w:LsdException Locked="false" Priority="66" Name="Medium List 2 Accent 6"/>
<w:LsdException Locked="false" Priority="67" Name="Medium Grid 1 Accent 6"/>
<w:LsdException Locked="false" Priority="68" Name="Medium Grid 2 Accent 6"/>
<w:LsdException Locked="false" Priority="69" Name="Medium Grid 3 Accent 6"/>
<w:LsdException Locked="false" Priority="70" Name="Dark List Accent 6"/>
<w:LsdException Locked="false" Priority="71" Name="Colorful Shading Accent 6"/>
<w:LsdException Locked="false" Priority="72" Name="Colorful List Accent 6"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid Accent 6"/>
<w:LsdException Locked="false" Priority="19" QFormat="true"
Name="Subtle Emphasis"/>
<w:LsdException Locked="false" Priority="21" QFormat="true"
Name="Intense Emphasis"/>
<w:LsdException Locked="false" Priority="31" QFormat="true"
Name="Subtle Reference"/>
<w:LsdException Locked="false" Priority="32" QFormat="true"
Name="Intense Reference"/>
<w:LsdException Locked="false" Priority="33" QFormat="true" Name="Book Title"/>
<w:LsdException Locked="false" Priority="37" SemiHidden="true"
UnhideWhenUsed="true" Name="Bibliography"/>
<w:LsdException Locked="false" Priority="39" SemiHidden="true"
UnhideWhenUsed="true" QFormat="true" Name="TOC Heading"/>
<w:LsdException Locked="false" Priority="41" Name="Plain Table 1"/>
<w:LsdException Locked="false" Priority="42" Name="Plain Table 2"/>
<w:LsdException Locked="false" Priority="43" Name="Plain Table 3"/>
<w:LsdException Locked="false" Priority="44" Name="Plain Table 4"/>
<w:LsdException Locked="false" Priority="45" Name="Plain Table 5"/>
<w:LsdException Locked="false" Priority="40" Name="Grid Table Light"/>
<w:LsdException Locked="false" Priority="46" Name="Grid Table 1 Light"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark"/>
<w:LsdException Locked="false" Priority="51" Name="Grid Table 6 Colorful"/>
<w:LsdException Locked="false" Priority="52" Name="Grid Table 7 Colorful"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 1"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 1"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 1"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 1"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 1"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 1"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 1"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 2"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 2"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 2"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 2"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 2"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 2"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 2"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 3"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 3"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 3"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 3"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 3"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 3"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 3"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 4"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 4"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 4"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 4"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 4"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 4"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 4"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 5"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 5"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 5"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 5"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 5"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 5"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 5"/>
<w:LsdException Locked="false" Priority="46"
Name="Grid Table 1 Light Accent 6"/>
<w:LsdException Locked="false" Priority="47" Name="Grid Table 2 Accent 6"/>
<w:LsdException Locked="false" Priority="48" Name="Grid Table 3 Accent 6"/>
<w:LsdException Locked="false" Priority="49" Name="Grid Table 4 Accent 6"/>
<w:LsdException Locked="false" Priority="50" Name="Grid Table 5 Dark Accent 6"/>
<w:LsdException Locked="false" Priority="51"
Name="Grid Table 6 Colorful Accent 6"/>
<w:LsdException Locked="false" Priority="52"
Name="Grid Table 7 Colorful Accent 6"/>
<w:LsdException Locked="false" Priority="46" Name="List Table 1 Light"/>
<w:LsdException Locked="false" Priority="47" Name="List Table 2"/>
<w:LsdException Locked="false" Priority="48" Name="List Table 3"/>
<w:LsdException Locked="false" Priority="49" Name="List Table 4"/>
<w:LsdException Locked="false" Priority="50" Name="List Table 5 Dark"/>
<w:LsdException Locked="false" Priority="51" Name="List Table 6 Colorful"/>
<w:LsdException Locked="false" Priority="52" Name="List Table 7 Colorful"/>
<w:LsdException Locked="false" Priority="46"
Name="List Table 1 Light Accent 1"/>
<w:LsdException Locked="false" Priority="47" Name="List Table 2 Accent 1"/>
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</p><p class="MsoNoSpacing"><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">KYC update for
seniors -Problem prevention<br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span></b></p>
<p class="MsoNoSpacing"><span style="font-family: "Tahoma",sans-serif; mso-fareast-language: EN-CA;"></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">In order for your advisor to recommend an optimum portfolio of
investments she/ he must have up to date information on your financial status
and needs. Advisors are not always proactive in soliciting clients of changing
conditions, resulting in stale KYC information .Stale information can result in
poor outcomes and result in complaints.<br />
<br />
Seniors should inform advisors of life changes and not wait to be approached by
their advisor. Examples include:</span></p>
<p class="MsoNoSpacing"><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;"></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Transition to retirement</span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">A material change in income</span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Death of a spouse </span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">A change in dependents </span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Sale of primary residence/ new address and phone
number /email </span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Nomination of a Trusted Contact Person ( TCP)</span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">A material change in expense profile<br />
A material change in risk profile - tolerance, capacity , need </span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Serious illness / decline in health A change in
beneficiaries </span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Identification of POA holder </span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">A change in financial objectives </span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Need for liquidity Time horizon for each account </span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Change in tax status / tax rate Desire to
change fee structure e.g. fee-based , fee only ,robo </span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Changes in life/ health insurance coverage </span></p>
<p class="MsoNoSpacing" style="margin-left: 35.45pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Desire to change type of account e.g.
discretionary/ non- discretionary<br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span></p>
<p class="MsoNoSpacing"><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">As a result of the changes, the financial plan will likely need to
be updated.<br />
<br />
Due to conflicts-of-interest, it is not wise to name your advisor as a TCP, POA, executor, trustee or
beneficiary .<br />
<br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span></p>
<p class="MsoNoSpacing"><span style="font-family: "Verdana",sans-serif;"> </span></p>
<p></p>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-41304743119925178802021-11-25T12:07:00.000-05:002021-11-25T12:07:04.065-05:00Proprietary investment funds and financial well-being<p> <!--[if gte mso 9]><xml>
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" SemiHidden="true" UnhideWhenUsed="true"
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<w:LsdException Locked="false" Priority="72" Name="Colorful List"/>
<w:LsdException Locked="false" Priority="73" Name="Colorful Grid"/>
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Name="List Table 6 Colorful Accent 5"/>
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</w:LatentStyles>
</xml><![endif]--><!--[if gte mso 10]>
<style>
/* Style Definitions */
table.MsoNormalTable
{mso-style-name:"Table Normal";
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-parent:"";
mso-padding-alt:0cm 5.4pt 0cm 5.4pt;
mso-para-margin-top:0cm;
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</p><p class="MsoNoSpacing"><span style="font-family: "Tahoma",sans-serif; mso-fareast-language: EN-CA;"></span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">A proprietary fund is a fund where the sale and manufacture of the fund
are part of the same corporate entity. The obvious advantage of this
arrangement is the company makes profit on managing the fund AND on selling it.<br />
<br />
If the salesperson does not offer a variety of competitive funds to you, it
reduces your choices and could mean you are not being offered the best funds
for your needs. “Best “includes such characteristics as risk, cost and
performance.<br />
<br />
Sometimes Reps selling prop funds are rewarded more for selling these funds
instead of better, more competitive funds. Over time, this skewed advice can
materially impact your returns and retirement income security.<br />
<br />
Another issue with proprietary funds is transferability between dealers. In
some cases, it may mean you will have to sell the fund because it cannot be
transferred “in kind”. This could trigger unwanted capital gains tax exposure
or sale at an inopportune time.<br />
<br />
Be aware too that bank-owned discount brokers may not offer competing funds so you
may need to shop around.<br />
<br />
Some prop funds can be out- performers of course, just be sure you understand
the potential downside of dealing with a Firm that only sells proprietary funds.<br />
<br />
Professional financial advisors would not normally put themselves in such a
conflicted position. It should be noted though, that securities laws do not
prohibit Firms from restricting their product shelf to proprietary funds.
In fact, most bank branches only offer their own proprietary mutual
funds.</span></p>
<p class="MsoNoSpacing"><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;"> </span></p>
<p class="MsoNoSpacing"><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Caveat Emptor. Control your own financial destiny or someone else will.</span></p>
<p class="MsoNoSpacing"><span style="font-family: "Verdana",sans-serif;"> </span></p>
kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-19412688925754856212021-05-15T07:22:00.001-04:002021-05-15T09:29:30.379-04:00Fund Facts has a dirty little secret<p><!--[if gte mso 9]><xml>
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</p>
<p class="MsoNoSpacing"><span style="font-family: "Verdana",sans-serif;">The Fund Facts
disclosure document is given to every investor in a mutual fund. Fund Facts
provides key information about the fund. Some of the useful information provided
includes the MER, top 10 holdings and past performance. Fund Facts however does
not provide information on the fund’s investment strategy, the risks involved
in owning the fund and the actual amount of trailing commission that the fund
will be paying dealers (it merely discloses a range from 0-1%).While Fund Facts
doesn’t provide all the information necessary to make an investment decision,
at least the information provided is not untruthful - <span style="color: red;">EXCEPT</span>
for the trailing commission payment with respect to owners of the fund with an
account at a discount broker.</span></p>
<p class="MsoNoSpacing"><span style="font-family: "Verdana",sans-serif;"> </span></p>
<p class="MsoNoSpacing"><span style="font-family: "Verdana",sans-serif;">So why
exactly do we say that fund facts is untruthful? Take the TD Canadian Equity
Fund – Investor Series Fund Facts document </span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;"><br />
<a href="https://www.tdassetmanagement.com/Fund-Document/pdf/Fund-Facts/TD-Mutual-Funds/TDB161E.pdf" target="_blank"><span style="color: #007dbc;">https://www.tdassetmanagement.com/Fund-Document/pdf/Fund-Facts/TD-Mutual-Funds/TDB161E.pdf</span></a>
for example</span><span style="font-family: "Verdana",sans-serif;">. </span><span style="background: white; font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;"> Extract from TDAM Fund Facts:</span><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;"><br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span><span style="font-family: "Verdana",sans-serif; font-size: 12.0pt; mso-fareast-language: EN-CA;"></span></p>
<p class="MsoNoSpacing"><i style="mso-bidi-font-style: normal;"><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">“More about
the trailing commission: The trailing commission is an ongoing commission. It
is paid for as long as you own the fund. <span style="color: red;">It is for the
services and advice that your representative and their firm provide to you. </span>TDAM
pays the trailing commission to your representative's firm, <u>including a
discount broker</u>. It is paid from the fund's management fee and is based on
the value of your investment. The rate is 0.00% to 1.00% of the value of your
investment each year. This equals $0.00 to $10.00 each year for every $1,000
invested.”</span></i><i style="mso-bidi-font-style: normal;"><span style="mso-fareast-language: EN-CA;"><br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span></i></p>
<p class="MsoNoSpacing"><span style="font-family: "Verdana",sans-serif;">A discount
broker is registered as an Order Execution Only dealer which means that it
cannot provide any personalized advice or services to investors. It cannot
provide any service that could be perceived to be personalized advice or could
influence an investor to make a purchase.<br />
<br />
Who are the players that are involved with Fund Facts? They include the fund
sponsor, trustees of the fund, the Independent Review Committee that is
supposed to opine on conflicts-of-interest, the Portfolio Manager who is
responsible for the diligent management of the assets of the fund and of course
the securities regulator who approves the FF document for delivery to
prospective investors in the fund.<br />
<br />
Any client with an account Agreement with a discount broker is entitled to use
the information and tools provided on the dealer’s website. If the client
wishes to buy a stock, bond, exchange-traded fund or an actively managed fund
ETF, they could use the information and purchase the fund for a nominal
commission rate, typically about $9.95., a one-time payment.<br />
<br />
Fund Facts however, asserts that the self-directed unitholder must pay up to 1%
for advice and services, advice and services that any client with an account
has access to. The assertion is simply untrue and is harmful to investors.
Holding a mutual fund paying such a trailer does not give the unitholder any
additional benefits that he or she does not already have as a result of being a
client of the discount broker.<br />
<br />
If a client owns a portfolio of say $50,000 of such funds, he/she will pay $500
per annum for the number of years they own the fund instead of a $9.95
commission charge at the time of purchase as is the case for other securities. If
the DIY investor holds the funds for 5 years, the amount paid will be $2500,
more if the fund has appreciated in value, instead of $9.95. <span style="mso-spacerun: yes;"> </span>That’s 250X of overcharging!<br />
<br />
The long-term impact of these falsely described, misleading commissions can
devastate retirement income security.</span></p>
<p class="MsoNoSpacing"><span style="background: white; color: black; font-family: "Verdana",sans-serif; mso-themecolor: text1;">This untruthful Fund Facts disclosure
also harms all unitholders when fund assets are used to finance the commission
payments to the discount brokers. Their returns will be reduced by the amount
of commissions removed from the fund for no purpose that benefits the fund .The
only winners are the fund companies who acquire more assets upon which to levy
a management fee and the discount brokers who receive cash for no purpose. Main
Street is left holding the bag. As John Bogle, the founder of Vanguard funds has
remarked “<i style="mso-bidi-font-style: normal;">The scandal isn’t what’s
illegal, it’s what’s legal</i>”</span><span style="font-family: "Verdana",sans-serif;"><br />
<br />
Our question to the gatekeepers, including securities Commissions, charged with
protecting investors is simple -Why are you allowing this broad daylight
robbery?</span></p>
<p class="MsoNoSpacing"><span style="font-family: "Verdana",sans-serif;"></span></p>
<p class="MsoNoSpacing"><span style="background: white; color: black; font-family: "Verdana",sans-serif; mso-themecolor: text1;">The good news, such as it is, is that
securities regulators will not allow mutual funds to make trailing commission
payments to discount brokers after June 1, 2022. The bad news is that these
payments can continue up to this date without any requirement to provide
rebates to clients for the years of overcharging.</span><span style="color: black; font-family: "Verdana",sans-serif; mso-themecolor: text1;"></span></p>
<p class="MsoNoSpacing"><span style="font-family: "Verdana",sans-serif;"><br />
Fund Facts was designed to assist investors. Instead, the actors involved have
turned it into an evil, destructive instrument that harms self-directed investors.
All of them should be held to account for their negligence, greed, incompetence
and breach of their lawful duties and mandates. <span style="color: red;">Caveat
Emptor.</span></span></p>
<p class="MsoNoSpacing"><span style="color: red; font-family: "Verdana",sans-serif;"> </span></p>
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<![endif]-->kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-78857858062650628612021-04-18T14:02:00.003-04:002021-04-18T15:29:03.207-04:00The real impact of retaining the DSC sold mutual fund <p> </p><p class="MsoNoSpacing"><br /></p>
<p class="MsoNoSpacing"><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">When the Ford government failed to go along with
other provinces in banning the toxic DSC fund, it had a profound impact on
confidence in financial markets and their regulation. Some of the unintended
consequences include: <br />
</span></p><p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">It showed how special interests can be brought to
bear on the Government to the detriment of ordinary citizens <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">It alienated other provincial jurisdictions that
had thought the OSC was on board with a ban <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">The intervention was the likely cause of Maureen
Jensen’s early departure as OSC Chair. Ms. Jensen was regarded as
an outstanding thought leader in modern securities regulation<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">It showed how government can ignore empirical
evidence and research in making policy decisions <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">It showed how the government can blatantly ignore
the voices of financial consumers in reaching decisions. <br />
<br style="mso-special-character: line-break;" />
<!--[if !supportLineBreakNewLine]--><br style="mso-special-character: line-break;" />
<!--[endif]--><o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">It placed an emotional strain on OSC staff who had
worked for years on reaching a conclusion to ban the DSC <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">It placed the OSC in the uncomfortable position of
having to develop restrictions on DSC to limit the damage of the government’s
policy decision <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">It ignored a 2019, OSC Investor Advisory Panel
(IAP) report that found evidence of potential shortfalls in the
financial advice Canadians get, particularly those with smaller
accounts<o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">It restrained fair comparisons of lower cost, high
quality investment products and services, and discouraged competition and
innovation in the Canadian asset-management space </span></p><p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><span lang="EN-US" style="font-family: Symbol; font-size: 12pt; line-height: 115%; text-indent: -18pt;">·<span style="font-family: "Times New Roman"; font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;"> </span></span><span face="Verdana, sans-serif" lang="EN-US" style="font-size: 12pt; line-height: 115%; text-indent: -18pt;">Some of the proposed
restrictions can only work to further marginalize small investors, especially
minority investors and seniors. Investors with the least money and/or shorter
time horizons have the most to lose</span></p>
<p class="MsoNoSpacing"><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;"> <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">It exposes Ontarians of modest means to a very bad
product that will impair their retirement income security<o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">The value of academic research and researchers
declined<o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">Independent researchers were intimidated and
bullied for supporting a ban <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">The professionalism of advice suffered a setback <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">It caused the CSA to provide an exemption for
DSC on the implementation of CFR conflict of interest rules that will
come into effect at the end of June <o:p></o:p></span></p>
<p class="MsoNoSpacing"><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;"><o:p> </o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="background: white; color: black; font-size: 12pt; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">It will have a chilling effect on OSC staff contemplating investor protection reforms</span><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;"><o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">Funding and support for investor advocacy groups
declined <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="color: black; font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA; mso-themecolor: text1;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="background: white; color: black; font-size: 12pt; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">Despite the Ontario government's mandate to reduce bureaucracy and
red tape, this does the exact opposite. It creates an elaborate checklist
that must be enforced when people purchase DSC mutual funds and one that must
be applied by national firms on only a subset of a subset of a subset of
Canadians</span><span face=""Verdana",sans-serif" style="color: black; font-size: 12pt; mso-fareast-language: EN-CA; mso-themecolor: text1;"><o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="color: black; font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA; mso-themecolor: text1;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="background: white; color: black; font-size: 12pt; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">It harms the reputation of the entire Canadian mutual fund industry </span><span face=""Verdana",sans-serif" style="color: black; font-size: 12pt; mso-fareast-language: EN-CA; mso-themecolor: text1;"><o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36pt; mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><span style="font-family: Symbol; font-size: 12pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]--><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;">Canada’s already low international investor
protection stature took a hit.<o:p></o:p></span></p>
<p class="MsoNoSpacing"><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;"> <o:p></o:p></span></p>
<p class="MsoNoSpacing"><span face=""Verdana",sans-serif" style="background: white; color: black; font-size: 12pt; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">The decision will also complicate fund disclosure and add to investor
confusion. There will now need to be a Fund Facts for Ontario investors and a
separate one for the rest of Canada that excludes the DSC material.</span><span face=""Verdana",sans-serif" style="color: black; font-size: 12pt; mso-fareast-language: EN-CA; mso-themecolor: text1;"><o:p></o:p></span></p>
<p class="MsoNoSpacing"><span face="Verdana, sans-serif" style="font-size: 16px;">It must be very stressful for </span><span face="Verdana, sans-serif" style="font-size: 12pt;">OSC staff wrestling with
the best way to satisfy their government overlord and still look like a normal
regulator. </span></p>
<p class="MsoNoSpacing"><span face="Verdana, sans-serif" style="font-size: medium;"><span style="background-color: white; font-family: Verdana, sans-serif; font-size: 16px;">Our message to the Government of Ontario </span></span><span face="Verdana, sans-serif" style="font-size: medium;"> </span><span face="Verdana, sans-serif" style="font-size: 12pt;">- </span><b style="font-family: Verdana, sans-serif; font-size: 12pt;">reverse position and do the right thing for
the people, instead of the financial services industry. </b><span style="background-color: white; font-family: Verdana, sans-serif; font-size: 12pt;">This would stop
wasting precious OSC staff resources on retention of a harmful product and let
them focus on their prime objective - investor protection. That would be in the Public interest.</span></p>
<p class="MsoNoSpacing"><b style="mso-bidi-font-weight: normal;"><span face=""Verdana",sans-serif" style="font-size: 12pt; mso-fareast-language: EN-CA;"><o:p> </o:p></span></b></p>
<p class="MsoNormal"><span style="font-size: 12pt; line-height: 107%;"><o:p> </o:p></span></p>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-14118378997953864082020-10-24T10:23:00.001-04:002020-10-24T10:23:11.593-04:00Protecting seniors/vulnerable investors: some basics for CSA consideration<p> </p><p class="MsoNormal"><span style="font-family: Verdana, sans-serif;">In addition to wreaking havoc on the Canadian </span><a href="https://www.morningstar.com/articles/988669/how-fast-can-the-us-economy-recover-from-covid-19" style="font-family: Verdana, sans-serif;" target="_blank"><span style="color: #5e5e5e; text-decoration-line: none;">economy at large</span></a><span style="font-family: Verdana, sans-serif;">, COVID-19 has had sudden and significant
repercussions for how individuals, especially seniors, conduct their financial
planning—specifically, how they approach investments and saving goals.</span></p>
<p class="MsoNoSpacing"><span style="font-family: Verdana, sans-serif;">Many households have experienced income shocks and have burned through
their cash reserves, illustrating the </span><a href="https://www.morningstar.com/features/what-covid-means-for-the-future-of-financial-planning?utm_campaign=newsletter_email&utm_source=sendgrid&utm_medium=email#emergencies" style="font-family: Verdana, sans-serif;" target="_blank"><span style="color: #5e5e5e; text-decoration-line: none;">critical role that liquid assets play</span></a><span style="font-family: Verdana, sans-serif;"> in the health of
any financial plan. Other workers have experienced health challenges at the
same time they’ve experienced income reductions or outright unemployment, highlighting
the importance of emergency funds and factoring healthcare outlays into a total
financial plan.</span></p>
<p class="MsoNoSpacing"><span style="font-family: Verdana, sans-serif;">The pandemic’s economic side effects also have </span><a href="https://www.morningstar.com/features/what-covid-means-for-the-future-of-financial-planning?utm_campaign=newsletter_email&utm_source=sendgrid&utm_medium=email#retirement" style="font-family: Verdana, sans-serif;" target="_blank"><span style="color: #5e5e5e; text-decoration-line: none;">significant implications for when and how older adults relate to their
investments</span></a><span style="font-family: Verdana, sans-serif;">. Not only have older workers experienced high rates of
job loss , but based on </span><a href="https://www.morningstar.com/articles/997242/its-not-the-2008-global-recession-all-over-again" style="font-family: Verdana, sans-serif;" target="_blank"><span style="color: #5e5e5e; text-decoration-line: none;">previous recessions</span></a><span style="font-family: Verdana, sans-serif;">, it could take older unemployed workers a
much longer time to become re-employed than younger ones. For those in or near retirement,
the time for investment accounts to recover is limited. With increased longevity,
savings will have to last much longer than ever before.</span></p>
<p class="MsoNoSpacing"><span style="font-family: Verdana, sans-serif;">As for
regulators, we believe the following actions would be very effective in
protecting seniors/ vulnerable clients:</span></p>
<p class="MsoNoSpacing"><span style="font-family: "Verdana",sans-serif;"><o:p> </o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Redefine
“vulnerable client” per U.K. FCA standard <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Establish
a Code for the fair treatment of vulnerable investors <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Make
researching Firm and individual registration and disciplinary history more
investor-friendly and fulsome <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Do
not permit Dealing Reps to act as POA’s , executors or a beneficiary of a
non-family member clients <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Increase
Representative proficiency standards re de-accumulation accounts such as RRIF’s<o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Require
a KYC update period of one year for vulnerable clients<o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Introduce
rules related to trusted contact persons/ temporary holds as proposed by NASAA<o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Hold
Dealers accountable in cases of Off-book transactions and personal financial
dealings <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Introduce
best-in-class <span style="mso-spacerun: yes;"> </span>dealer complaint handling
rules that empathize with elderly, vulnerable clients <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Provide
objective suitability criteria for utilization of fee-based accounts <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Add
a requirement to document recommendations whenever a DSC mutual fund is
recommended to an older or vulnerable client<o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Update
constraints on “ Free lunch seminars” targeted at seniors/ retirees<o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Increase
level of sanction if a vulnerable investor has been financially assaulted <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Adjust
sanctions based on whether or not harmed clients were fully compensated for
undue losses<o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Make
investor compensation a priority consideration <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Give
OBSI a binding decision mandate to eliminate low-ball settlements <o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Consider
establishing a Senior’s Helpline based on the FINRA Model ( see their report <a href="https://www.finra.org/investors/insights/finras-senior-helpline">https://www.finra.org/investors/insights/finras-senior-helpline</a>
<span style="mso-spacerun: yes;"> </span>)<o:p></o:p></span></p>
<p class="MsoNoSpacing" style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span style="font-family: "Verdana",sans-serif;">Increase
cooperation with insurance regulators to reduce regulatory arbitrage<o:p></o:p></span></p>
<p class="MsoNoSpacing"><span style="font-family: Verdana, sans-serif;">NOTE: In
April 2017, FINRA (equivalent to a Canadian SRO) announced that the National
Adjudicatory Council (NAC) revised FINRA’s Sanction Guidelines to include a new
principal consideration titled “Consideration for Vulnerable Customers.” The
NAC is FINRA’s appellate tribunal for disciplinary cases and is a 15-member
committee composed of industry and non-industry members. The new principal
consideration reaffirms that financial exploitation of senior and other
vulnerable customers should result in strong sanctions. While FINRA’s decisions
have acknowledged that exercising undue influence is an aggravating
circumstance on a case-by- case basis, the new principal consideration makes
clear that the Sanction Guidelines contemplate coverage for vulnerable
individuals or individuals with diminished capacity. We encourage the CSA and
SRO’s to take similar stands</span></p>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-7870942832293721642020-06-04T11:08:00.000-04:002020-06-04T11:08:31.190-04:00Access Equals Delivery (AED) –NOT SO FAST
<br />
<b><span style="font-family: "Verdana",sans-serif;"></span></b><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif;">
<br />
<span style="color: black; font-family: "Verdana",sans-serif; mso-themecolor: text1;">Canadian securities regulators are<span style="background: white;"> contemplating implementing access equals delivery for prospectuses,
financial statements and MD&A, and possibly other types of documents,
including rights offering materials, proxy-related materials and bid circulars.</span>
The </span><span style="background: white; color: black; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">regualtors describes
“delivery” to mean document filing on SEDAR (</span><span style="background: white; color: black; font-family: "Verdana",sans-serif; mso-bidi-font-family: Arial; mso-themecolor: text1;">The System for Electronic Document Analysis and
Retrieval</span>)<span style="background: white; color: black; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">, posting on the</span> issuer website and issuance of a News Release.
We do not believe that such a process is actually <i style="mso-bidi-font-style: normal;">delivery</i>. It is insufficient to protect and engage
investors, and in particular retail investors and individual shareholders,
absent additional measures. <br />
<br /></span><span style="font-family: "Verdana",sans-serif;"><a href="https://www.osc.gov.on.ca/en/SecuritiesLaw_pol_20111118_11-201_amd-electronic.htm"><span style="border: none windowtext 1.0pt; color: #007bff; mso-border-alt: none windowtext 0cm; padding: 0cm;">National Policy 11-201</span></a><span style="background: white; color: #31343a;"><span style="-webkit-text-stroke-width: 0px; float: none; font-size-adjust: none; font-stretch: inherit; font-style: inherit; font-variant: inherit; line-height: 1.5rem; orphans: 2; word-spacing: 0px;">
provides that “delivery” can generally be satisfied through electronic
distribution, provided that the investor receives notice that the document has
been, or will be, delivered electronically; the investor has easy access to the
document; the document received is the same as the document delivered; and the
issuer has evidence that the document has been delivered.</span> This is
reasonable.</span></span><br />
<br />
<br />
<br />
<span style="background: white; color: #31343a; font-family: "Verdana",sans-serif;">As of 2013, the “</span><span style="font-family: "Verdana",sans-serif;"><a href="https://www.osc.gov.on.ca/en/SecuritiesLaw_csa_20121129_54-101_amendments.htm" style="-webkit-text-stroke-width: 0px; border-color: currentColor; border-image: none; box-sizing: border-box; font-size-adjust: none; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; orphans: 2; word-spacing: 0px;"><span style="border: none windowtext 1.0pt; color: #0056b3; mso-border-alt: none windowtext 0cm; padding: 0cm;">notice and access</span></a><span style="background: white; color: #31343a;"><span style="-webkit-text-stroke-width: 0px; float: none; font-size-adjust: none; font-stretch: inherit; font-style: inherit; font-variant: inherit; line-height: 1.5rem; orphans: 2; word-spacing: 0px;">” model
of delivery set out in National Instruments </span></span><a href="https://www.bcsc.bc.ca/Securities_Law/Policies/Policy5/PDF/54-101__NI___February_8_2013/" style="-webkit-text-stroke-width: 0px; border-color: currentColor; border-image: none; box-sizing: border-box; font-size-adjust: none; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; orphans: 2; word-spacing: 0px;"><span style="border: none windowtext 1.0pt; color: #007bff; mso-border-alt: none windowtext 0cm; padding: 0cm;">54-101</span></a><span style="background: white; color: #31343a;"><span style="-webkit-text-stroke-width: 0px; float: none; font-size-adjust: none; font-stretch: inherit; font-style: inherit; font-variant: inherit; line-height: 1.5rem; orphans: 2; word-spacing: 0px;"> and </span></span><a href="https://www.bcsc.bc.ca/Securities_Law/Policies/Policy5/PDF/51-102__NI___June_12__2018/" style="-webkit-text-stroke-width: 0px; border-color: currentColor; border-image: none; box-sizing: border-box; font-size-adjust: none; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; orphans: 2; word-spacing: 0px;"><span style="border: none windowtext 1.0pt; color: #007bff; mso-border-alt: none windowtext 0cm; padding: 0cm;">51-102</span></a><span style="background: white; color: #31343a;"><span style="-webkit-text-stroke-width: 0px; float: none; font-size-adjust: none; font-stretch: inherit; font-style: inherit; font-variant: inherit; line-height: 1.5rem; orphans: 2; word-spacing: 0px;"> has
applied to permit electronic delivery of proxy materials for shareholders’
meetings. This works fine – investors wanting electronic access can have it,
investors wanting paper copy can have it at no charge. After all, it is
investor money that is financing the Company so they should have the right to
choose how they want disclosure delivered. </span></span></span><br />
<br />
<span style="background: white; color: #31343a; font-family: "Verdana",sans-serif;">
<br />
<span style="background: white; color: black; font-family: "Verdana",sans-serif; mso-themecolor: text1;">The key difference under the current
proposed model is that nothing would need to be sent by mail. The system
relies on investors finding and accessing materials online through SEDAR and
the issuer’s website.</span> We are not aware of any way for investors to be
sure that they receive these news releases in a timely manner and in a way that
they can distinguish them from other news releases. There is currently no
mechanism through SEDAR by which a person might receive alerts that a SEDAR
filing has been made. In other words, AED does not actually require <b style="mso-bidi-font-weight: normal;">delivery</b> to retail investors. And yet,
the regualtors cite disclosure as a cornerstone of investor protection.<span style="background: white; color: black; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-themecolor: text1;"> This mere notice and
posting, without a determination of whether participants actually open the notice
or access the disclosure, is not enough to be considered a measure reasonably
calculated to ensure actual receipt of the disclosed material by investors.</span></span>.<br />
<br />
<br />
<br />
<span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">The regualtors assert that AED is
more efficient, is environmentally friendly and will save companies money via
reduced mailing costs. But what about investor protection? Not everyone has
access to a computer, the internet or is comfortable using the internet in seeking and
utilizing financial information. Some just find it easier to read paper copy
rather than off a computer screen. </span><br />
<br />
<br />
<br />
<span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">Some limitations of an access equals
delivery model include:</span><br />
<br />
<span style="color: #555555; font-family: "Verdana",sans-serif;"><br />
</span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;"><span style="-webkit-text-stroke-width: 0px; cursor: auto; float: none; orphans: 2; white-space: pre-wrap; word-spacing: 0px;">• lower utilization and engagement by those retail investors who prefer paper copies, or because emails can more easily get not noticed or forgotten;</span></span><span style="color: #555555; font-family: "Verdana",sans-serif;"><br style="-webkit-text-stroke-width: 0px; box-sizing: content-box; orphans: 2; white-space: pre-wrap; word-spacing: 0px;" />
</span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;"><span style="-webkit-text-stroke-width: 0px; cursor: auto; float: none; orphans: 2; white-space: pre-wrap; word-spacing: 0px;">• lower readership by investors cautious about cybersecurity concerns ;</span><span style="color: #555555; font-family: "Verdana",sans-serif;"><br />
</span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;"><span style="-webkit-text-stroke-width: 0px; cursor: auto; float: none; orphans: 2; white-space: pre-wrap; word-spacing: 0px;">• lower readership of important and time-sensitive documents if notifications to investors are generic and fail to provide sufficient detail regarding the nature of the document and applicable deadlines;</span></span><span style="color: #555555; font-family: "Verdana",sans-serif;"><br style="-webkit-text-stroke-width: 0px; box-sizing: content-box; orphans: 2; white-space: pre-wrap; word-spacing: 0px;" />
</span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;"><span style="-webkit-text-stroke-width: 0px; cursor: auto; float: none; orphans: 2; white-space: pre-wrap; word-spacing: 0px;">• potential increase in investor complaints if they are not made adequately aware of time-sensitive decision-making and if decision deadlines lapse;</span></span><span style="color: #555555; font-family: "Verdana",sans-serif;"><br style="-webkit-text-stroke-width: 0px; box-sizing: content-box; orphans: 2; white-space: pre-wrap; word-spacing: 0px;" />
</span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;"><span style="-webkit-text-stroke-width: 0px; cursor: auto; float: none; orphans: 2; white-space: pre-wrap; word-spacing: 0px;">• scrolling on a screen may lead to a more cursory review;</span></span><span style="color: #555555; font-family: "Verdana",sans-serif;"><br style="-webkit-text-stroke-width: 0px; box-sizing: content-box; orphans: 2; white-space: pre-wrap; word-spacing: 0px;" />
</span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;"><span style="-webkit-text-stroke-width: 0px; cursor: auto; float: none; orphans: 2; white-space: pre-wrap; word-spacing: 0px;">• challenges in locating disclosure documents on difficult to navigate reporting issuer websites;</span></span><span style="color: #555555; font-family: "Verdana",sans-serif;"><br style="-webkit-text-stroke-width: 0px; box-sizing: content-box; orphans: 2; white-space: pre-wrap; word-spacing: 0px;" />
</span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;"><span style="-webkit-text-stroke-width: 0px; cursor: auto; float: none; orphans: 2; white-space: pre-wrap; word-spacing: 0px;">• difficulties in navigating SEDAR until the planned SEDAR</span> overhaul is finalized; and</span></span><span style="color: #555555; font-family: "Verdana",sans-serif;"><br style="-webkit-text-stroke-width: 0px; box-sizing: content-box; orphans: 2; white-space: pre-wrap; word-spacing: 0px;" />
</span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;"><span style="-webkit-text-stroke-width: 0px; cursor: auto; float: none; orphans: 2; white-space: pre-wrap; word-spacing: 0px;">• low readability on phone screens by investors who primarily, or exclusively, access the internet</span>
through smart phones.</span><br />
<br />
<br />
<br />
<span style="background: white; color: #31343a; font-family: "Verdana",sans-serif;"><span style="background: white; color: black; font-family: "Verdana",sans-serif; mso-themecolor: text1;">Some consequences of access equals
delivery are still to be determined, such as how to address investors’
withdrawal rights (the right to withdraw from an agreement to purchase
securities within two business days of <u>receipt</u> of the latest
prospectus). The regulators are no doubt cognizant that introducing this
model for disclosure documents requiring immediate shareholder attention and
participation could raise investor protection concerns and could have a
negative impact on shareholder engagement.</span> There seems to be no benefit
to investors even if, as improbable as it is, any cost savings are passed on to
investors.<span style="background: white; color: black; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-themecolor: text1;"></span><br />
</span>
<br />
<span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">Finally, given that an increasing
number of Canadians are now responsible for managing their own retirement
accounts, there is a renewed importance to effective disclosure</span>. <br />
<br />
<br />
<br />
<span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">A transition to a delivery system
where access equals delivery will make it less likely that certain retirement
savers read issuer disclosures and, as a result, these investors could make
less informed investment decisions. In short, the regulators are proposing to
seduce a material swath of retirement savers and retirees into a disclosure
system that they didn’t ask for and which may not work well for them.</span><br />
<br />
<br />
<br />
<span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">We’d like to see regulators focus
more on improving the accuracy and quality of disclosures, increase use of plain
language and improve financial literacy among Canadians.</span><br />
<br />
<br />
<br />
<br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-622808304286727802020-04-04T07:48:00.002-04:002020-04-04T09:31:06.393-04:00Investor Bulletin- KYC/Suitability under COVID-19 <span style="font-family: "Arial",sans-serif;"></span><br />
<div style="margin-bottom: 7.5pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">The
pandemic is likely to be a life- altering event for many individual investors
who might experience, among other things: </span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 0cm; mso-list: l1 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #333333; font-family: "symbol"; font-size: 12.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">a loss or significant decrease in employment or business income,
</span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 0cm; mso-list: l1 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #333333; font-family: "symbol"; font-size: 12.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">a significant decrease in the value of their investments, and/or</span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 0cm; mso-list: l1 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #333333; font-family: "symbol"; font-size: 12.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">become seriously ill </span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">This
means that the investors’ know-your-client (KYC) information could need
updating.<span style="mso-spacerun: yes;"> </span></span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">Portfolio
holdings and/or accounts might no longer be suitable for them.</span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">We expect
risk tolerance, risk capacity, objectives and time horizon to be severely
impacted for many investors. </span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 11.5pt;">For
accounts subject to the suitability determination requirements in National
Instrument 31-103 Registration Requirements, Exemptions and Ongoing
Registrant Obligations (NI 31-103), Firms must: </span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 0cm; mso-list: l0 level1 lfo2; text-indent: -18.0pt;">
<span style="color: #333333; font-family: "symbol"; font-size: 12.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">take reasonable steps to keep current the investor’s KYC
information before making a recommendation, accepting an investor’s instruction
to buy or sell a security, or making a purchase or sale of a security for a
managed account. </span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 0cm; mso-list: l0 level1 lfo2; text-indent: -18.0pt;">
<span style="color: #333333; font-family: "symbol"; font-size: 12.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">take reasonable steps to ensure that the purchase or sale of the
security is suitable for the client. [Suitability standards <a href="https://www.blogger.com/null" style="mso-comment-date: 20200403T1345; mso-comment-reference: HG_1;"><span style="mso-spacerun: yes;"> </span>will further tighten up under the Client Focussed
Reforms to </a></span><span style="mso-comment-continuation: 1;"><span lang="EN" style="color: #4d4d4d; font-family: "arial" , sans-serif; font-size: 12.0pt;">be phased in during a two-year transition period, with
the Amendments relating to KYC, suitability ,conflicts-of-interest and the
associated relationship disclosure information provisions taking effect on
December 31, 2020, and the remaining Amendments taking effect on December 31,
2021].</span></span><span style="mso-comment-continuation: 1;"><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">.</span></span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 36.0pt; margin-right: 0cm; margin-top: 0cm; mso-list: l0 level1 lfo2; text-indent: -18.0pt;">
<span style="color: #333333; font-family: "symbol"; font-size: 12.0pt;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">consider significant changes in the portfolios as a trigger for
updated KYC information.</span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">Note: A
suitability determination is not required for accounts held with discount
brokers.</span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">A Firms’
duty to update KYC information is occurring at the same time as investors and
registrants are coping with the dislocations caused by quarantine measures and
the shift to work-from-home arrangements</span><span style="color: #333333; font-family: "arial" , sans-serif; font-size: 11.5pt;">.</span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">We
recommend that investors be proactive and advise the Firm of any and all
changes in your personal circumstances that could impact your time horizon,
risk tolerance, investment objectives, comfort with your financial plan and/or
your investments. As investor’s personal circumstances change during a time of
crisis, it is important that this be shared with the investment advisor.<span style="mso-spacerun: yes;"> </span>Investors should take careful notes of all
communications about your KYC information and keep those notes indefinitely.</span></div>
<br />
<div style="margin-bottom: 7.5pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<span style="color: #333333; font-family: "arial" , sans-serif; font-size: 12.0pt;">COVID-19
or not, Firms must have policies and procedures for updating KYC information,
including in situations like these where registrants have ample reason to
believe that investors’ circumstances have changed, or are about to change,
significantly.<span style="mso-spacerun: yes;"> </span></span></div>
<br />
<br />
<span style="color: black; font-family: "arial" , sans-serif; font-size: 12.0pt;">
<br />
<span style="background: white; color: black; font-family: "arial" , sans-serif; font-size: 12.0pt;">The know-your-client </span>and suitability obligations are among the most
fundamental obligations owed by registrants to their clients and are
cornerstones of the investor protection regime. <span style="color: black; font-family: "arial" , sans-serif; font-size: 12.0pt;">There is no chance that regulators will provide exemptive relief for
this fundamental requirement but work-from-home creates risks for investors. Be
vigilant. Control your own financial destiny or somebody else will.</span><br />
</span><br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-62957825946169807672020-03-24T12:22:00.000-04:002020-03-24T13:26:30.013-04:00Investment Time horizon- simple concept but… <br />
<span style="font-family: "verdana" , sans-serif;"><span style="color: #001000;"><span style="background-color: white;">I<span style="background-attachment: scroll; background-clip: border-box; background-image: none; background-origin: padding-box; background-position: 0% 0%; background-repeat: repeat; background-size: auto;">nvestment
objectives are the result desired by the client from investing and should
relate to the type of investments that will be purchased by the client. <u>Be
sure to articulate the time horizon in your statement of objectives.</u> Time
horizon is a critical parameter in the Know-Your-Client (KYC) process.</span></span></span></span><br />
<span style="font-family: "verdana" , sans-serif;"></span><span style="color: #001000;"></span><span style="background-color: white;"></span><br />
<br />
<br />
<span style="background: white; color: #333333; font-family: "verdana" , sans-serif;">Time
horizon is the period from now to when the client will need to access a
significant portion of the money invested. It can be defined in absolute terms
or in ranges that provide for a sufficient number of categories to assess the
suitability of the products sold or investment strategies used. </span><span style="color: black; font-family: "verdana" , sans-serif; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In
principle, time horizon seems to be a simple concept. However, it gets tricky,
because investment horizon can fluctuate based on evolving financial interests and
other variables and an account can have more than one objective.</span><span style="background: white; color: #333333; font-family: "verdana" , sans-serif;"></span><br />
<br />
<br />
<br />
<span style="color: black; font-family: "&quot" , serif; font-size: 13.5pt;">It is </span><span style="color: black; font-family: "verdana" , sans-serif; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">important to
determine your time horizon before deciding what type of assets you should have
in your portfolio. If you do not need your money for a long time, for example,
decades, you can own a riskier mix of investments compared to a person who
needs money within the next few weeks or months. </span><span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">Time horizon is not the only
deciding factor, but it is a key one. It must be considered alongside and in
concert with return expectations, cash flow needs and other factors. A longer
time horizon means investors have more time to allow compounding of returns and
ride through volatile markets <u>assuming they have the financial capacity and
risk tolerance to do so</u>. During the 2008 financial crisis, many investors
bailed out when markets tumbled because of fear or urgent need for cash for
daily living expenses. </span><br />
<br />
<br />
<br />
<span style="background: white; color: black; font-family: "verdana" , sans-serif;">In many cases, an
investor will have multiple goals with multiple time horizons at any given
time. For example, you may have a Registered Retirement Savings Plan (RRSP)
with a 30-year horizon, a Registered Education Savings Plan (RESP) for a child
in grade school, and an open non-registered account to save for an upcoming
vacation.</span><span style="background: white; color: #444444; font-family: "verdana" , sans-serif;"> </span><span style="background: white; color: black; font-family: "verdana" , sans-serif;">You may even have multiple time horizons
during retirement. You’ll need some short-term, lower-risk investments to
generate income as well as longer-term higher-risk investments designed to
provide growth and keep you ahead of inflation.</span> <span style="font-size: large;">To avoid misunderstandings,
<u>ensure your advisor understands your full time horizon profile</u>. Be sure
to <u>update</u> your profile as your situation changes.<u> </u></span><u><span style="color: black; font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA; mso-themecolor: text1;"></span></u><br />
<span style="font-size: large;"></span><br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">Investment Firms distinguish between short-, medium- and long-term time
horizons. Short-term investments are generally considered to have time horizon
up to three years. The investor tends to have a low risk tolerance and should
invest in guaranteed securities, such as GIC’s or high-interest savings accounts. <span style="mso-spacerun: yes;"> </span>Medium-term investments cover the period from
3 to 10 years. </span><br />
<br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">Long-term investments are more often designed to be held for 10 or more
years. With this time horizon, investors typically include a higher percentage
of riskier, more volatile investments.</span><span style="background: white; color: black; font-family: "verdana" , sans-serif;"> For those investors with Registered
Education Savings Plans, the time horizon is the point at which the child needs
to enter university. In this case it is important to update time horizon at
various points prior to university entrance especially those years immediately
ahead of the planned use of the funds. Think of COVID-19’s abrupt impact on an education
portfolio.</span><br />
<br />
<u><span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">It is essential to understand the time horizon definitions
used by your Firm</span></u><span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;"> before ticking off any time horizon boxes on forms.</span><br />
<br />
<br />
<br />
<span style="color: black; font-family: "verdana" , sans-serif; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">The majority of advisors would suggest average
30-years-old investors to have asset allocation of a portfolio more heavily
weighted in equities than that of someone who is close to retirement. Investor
age is not the sole determinant of the duration of time horizon. For example, a
middle-aged investor wanting to save money for a down payment on a house in one
year would be investing with a one-year time horizon, even though her/his
retirement is years away. </span><br />
<br />
<br />
<br />
<span style="background: white; color: #333333; font-family: "verdana" , sans-serif;">Some
Firms define long term time horizon as greater than 3 years, making the
recommendation of a purchase of a DSC mutual fund with a 6 year redemption
schedule unsuitable. </span><span style="font-family: "tahoma" , sans-serif; mso-fareast-language: EN-CA;"></span><span style="background: white; color: #333333; font-family: "verdana" , sans-serif;"> As another example, where a minimum time
horizon has been established as a guideline for recommending leveraging, the
time horizon on the KYC should be able to support that this criteria has been
met. </span><br />
<br />
<br />
<br />
<span style="background: white; color: #333333; font-family: "verdana" , sans-serif;">A </span><span style="color: #333333; font-family: "verdana" , sans-serif; mso-bidi-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">client with a <i style="mso-bidi-font-style: normal;">long term</i> time horizon, significant net worth, and income level may
be able to withstand fluctuations in the market over the long term, which could
lead to the conclusion that the client is medium to high risk or should invest
a significant portion of his or her portfolio in riskier investments.
However, if the client is unwilling or unable to accept that level of
risk or is not comfortable with investing in risky or volatile investments, the
KYC form should reflect the client’s decision and not the advisor’s opinion of
what the client’s risk profile should be.</span><br />
<br />
<br />
<br />
<span style="background: white; color: black; font-family: "verdana" , sans-serif;">Be realistic. If you plan to retire at
age 55 this may mean you will need to</span><span style="color: black; font-family: "verdana" , sans-serif; mso-themecolor: text1;"><br style="-webkit-text-stroke-width: 0px; box-sizing: content-box; orphans: 2; white-space: pre-wrap; word-spacing: 0px;" />
<span style="background: white;"><span style="-webkit-text-stroke-width: 0px; cursor: auto; float: none; orphans: 2; white-space: pre-wrap; word-spacing: 0px;">take<br />significantly more risk for the potentially higher returns. If you are<br />seriously ill or at an advanced age, your time horizon likely shouldn’t be long<br />term.</span></span></span><span style="color: black; font-family: "verdana" , sans-serif; mso-bidi-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-themecolor: text1;"></span><br />
<br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">Never sign an incomplete KYC Form: A pre-signed form may allow an
unscrupulous advisor to unduly increase your time horizon. Because every
investment recommendation and every investment decision is based upon
information contained on the KYC forms, any inaccuracy in the information
necessarily taints a recommendation or decision made based on that information.
Further, the uncertainty about time horizon impairs a Firm’s ability to ensure that
all recommendations are suitable for you. An incorrect time horizon can lead to
unsuitable investment recommendations and undue losses. <u>In the event of a
complaint, the Firm may point to your signature and deny your claim for restitution</u>.</span><br />
<br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">Think liquidity and cash flow:</span><span style="color: #555555; font-family: "verdana" , sans-serif;"> Your portfolio may have multiple time horizons and it needs to
provide liquidity</span> and certainty of liquidity to meet these liabilities
as and when they fall due. This is particularly important for
RESP’s and for retired people drawing cash for living expenses. <span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;"></span><br />
<br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">Joint Accounts: For joint accounts, certain KYC information, such as age
and investment knowledge, is collected for each individual account holder.
Annual income and net worth are typically collected for each individual or on a
combined basis, as long as it is clear which method has been used. However, Investment
objectives, risk tolerance and time horizon <u>relate to the account</u> and not
each individual. That will influence the construction of the portfolio.</span><br />
<br />
<br />
<br />
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">Now is a
good time to revalidate your time horizon(s) and other critical KYC parameters
with your Firm.</span></b><br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-51232516908251636332020-03-20T07:48:00.001-04:002020-03-20T07:48:14.092-04:00Investor ALERT: When you receive a letter from your dealer....
<br />
<span style="color: purple; font-size: x-large;"><b>Introduction</b></span><br />
<br />
<span style="font-size: large;"><br /></span>
Investors receive many
documents from their investment dealers.
Not all documents are of equal importance. INVESTORS BEWARE: some documents are Red
flags and investors should review these documents with special attention and
care<span style="font-size: large;">.</span><br />
<br />
<br />
<br />
<h1>
The problem – Red flags</h1>
<br />
<span style="font-size: 11.0pt;">We often read something like
the following in regulatory sanction decision documents: </span><br />
<br />
<div style="margin-left: 36.0pt;">
<i><span style="font-size: 11.0pt;">“On
November 14, 2017, the Member sent a letter with a 3-year transactional summary
to all clients serviced by the Respondent. The Member requested that the
clients review their transaction summaries to ensure that the trading activity
was completed as directed and to report any inconsistencies by December 14,
2017. <b>No clients have reported any concerns.” </b></span></i></div>
<br />
<br />
<br />
<span style="font-size: 11.0pt;">What this text is literally
saying is that no investor reported any concerns about any transactions that
were made in their account. It could simply mean that investors didn’t respond
or did not understand what an <i>inconsistency </i>means. It could be a red
flag. </span><br />
<br />
<br />
<br />
<span style="font-size: 11.0pt;">The above quotation, or similar
wording, can also be interpreted to mean: </span><br />
<br />
<div style="margin-left: 36.0pt;">
<span style="font-size: 11.0pt;">“We
asked clients to review their transaction summaries and check that they had in
fact approved these transactions and all these clients failed to raise any
concerns.<span style="mso-spacerun: yes;"> </span>As a result we interpret the
investors non-response as saying, “yes, we had approved all transactions in
those summaries. “. </span></div>
<br />
<br />
<br />
<h1>
The investor’s dilemma</h1>
<br />
<span style="font-size: 11.0pt;">An investor cannot be sure
exactly what the wording in the regulatory sanction decision document actually
means. </span><br />
<br />
<br />
<br />
<span style="font-size: 11.0pt;">It could mean that a recipient
of such a letter from their dealer is not aware that the dealer is
investigating her/his advisor or that regulators are investigating the dealer
and /or advisor. </span><br />
<br />
<br />
<br />
<span style="font-size: 11.0pt;">It could be the investor didn’t
understand the red flag when they received this document from their dealer, or was
simply too busy to respond or didn’t think it was important to respond. </span><br />
<br />
<br />
<br />
<span style="font-size: 11.0pt;">It is our experience that
retail investors do not fully appreciate why the dealer sent them the letter. </span><br />
<br />
<span style="font-size: 11.0pt;">We anticipate that many
investors will receive similar Red flag documents in the weeks, months and even
years to come.<span style="mso-spacerun: yes;"> </span>When a down market
occurs, problems with advice and investment advisors are more likely to come to
the attention of investment dealers and, as a result, these types of letters
are more common.</span><br />
<br />
<br />
<br />
<span><span style="font-size: 16.0pt;">Any
letter received from your dealer requesting you to review your account is a
huge Red flag</span></span><span style="font-size: 11.0pt;">. </span><br />
<br />
<span style="font-size: 11.0pt;">When an investor receives a
document like this, it is entirely reasonable to assume the dealer or regulator
has uncovered some wrongdoing or suspicious acts by the advisor or the dealer. </span><br />
<br />
<br />
<br />
<span style="font-size: 11.0pt;">The dealer is asking you to
identify any questionable transactions and given you 30 days to spot and report
them. If you don’t report anything, the dealer may assume you are comfortable
with the transactions. This could be used against you in the event you file a
complaint in the future. </span><br />
<br />
<br />
<br />
<span><span style="font-size: 16.0pt;">When
you receive such a letter</span></span><span style="font-size: 11.0pt;"> </span><br />
<br />
<span style="font-size: 11.0pt;">These types of letters should
be considered as warnings that the people you trust with your nest egg have
very likely done something wrong including one or more of the following things:
</span><br />
<br />
<div style="margin-bottom: .95pt;">
<span style="font-size: 11.0pt;">
Broken a dealer rule or securities regulation </span></div>
<br />
<div style="margin-bottom: .95pt;">
<span style="font-size: 11.0pt;">
Bought or sold something without your permission </span></div>
<br />
<div style="margin-bottom: .95pt;">
<span style="font-size: 11.0pt;">
Changed information about you ( KYC) that permitted ( and could permit future
mis-selling) an unsuitable transaction </span></div>
<br />
<span style="font-size: 11.0pt;"> Forged your signature on a document
</span><br />
<br />
<br />
<br />
<span style="font-size: 11.0pt;">The advisors’ errors or wrongdoings
could have resulted in you owning an unsuitable investment, paying commissions
for trades you didn’t need to make or even signing you up for an investment
loan you neither want nor need. Many investors are not aware of such errors and
wrongdoings.<span style="mso-spacerun: yes;"> </span>Often the advisor’s error
is explained away as “its just the markets”.<span style="mso-spacerun: yes;">
</span>Investors should look further into the cause of their financial losses.</span><br />
<br />
<br />
<br />
<h1>
Recommended Investor Actions</h1>
<br />
<span style="font-family: "Verdana",sans-serif; line-height: 115%;"><span style="font-size: x-small;">First review all documents that suggest you may be
approving past actions and decisions by your financial advisor’s action.</span></span><br />
<br />
In effect, there has been a breach of trust. You and your
investments were and may still be in harm’s way. <br />
<br />
<br />
<br />
Not only should you carefully review your account and question
the dealer directly w<span style="color: windowtext;">hy you have received this
letter, you should also request a meeting with your advisor and their immedi</span>ate
supervisor.<br />
<br />
<br />
<br />
<span style="font-size: x-small;"><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Verdana",sans-serif;">Recommended reading</span></b><span style="font-family: "Verdana",sans-serif;"> : Investor’s Guide to Complaints <a href="https://static1.squarespace.com/static/58350df5b3db2bbc30614fbf/t/5b2444c86d2a734942edff91/1529103562413/Complaints+Process+for+Retail+Investments+in+Canada.Handbook.MBC+FLAG+2018.pdf" target="_blank">https:<wbr style="box-sizing: content-box; line-height: 1.4em;"></wbr>//static1.<wbr style="box-sizing: content-box; line-height: 1.4em;"></wbr>squarespace.<wbr style="box-sizing: content-box; line-height: 1.4em;"></wbr>com/static/58350df5b3db2bbc306<wbr style="box-sizing: content-box; line-height: 1.4em;"></wbr>14fbf/t/5b2444c86d2a734942edff<wbr style="box-sizing: content-box; line-height: 1.4em;"></wbr>91/1529103562413/Complaints+Pr<wbr style="box-sizing: content-box; line-height: 1.4em;"></wbr>ocess+for+Retail+Investments+i<wbr style="box-sizing: content-box; line-height: 1.4em;"></wbr>n+Canada.Handbook.<wbr style="box-sizing: content-box; line-height: 1.4em;"></wbr>MBC+FLAG+2018.<wbr style="box-sizing: content-box; line-height: 1.4em;"></wbr>pdf<wbr style="box-sizing: content-box; line-height: 1.4em;"></wbr></a></span></span><span style="font-family: "Verdana",sans-serif;"></span><br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><span style="font-size: x-small;"></span>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-55431390090963183562020-03-14T15:19:00.000-04:002020-03-14T15:19:07.670-04:00ALERT: Things to do and not do in the COVID-19 investing environment
<br />
<span style="color: #005000; font-family: "Verdana",sans-serif;"></span><br />
<br />
<br />
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Update
your KYC profile especially risk capacity/tolerance ;time horizon; objectives </span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Avoid
being sold mutual funds based on the Fund Facts Risk rating –these ratings are
flawed </span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Do not
let yourself be sold DSC mutual funds- liquidity essential in turbulent times </span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Avoid
“advisor” recommendations to borrow for investing </span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Establish
an emergency fund or add to it if you have one </span></div>
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;"><br /></span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Do not
loan money to your “ advisor “ </span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Do not
effect any transactions on the side with your “ advisor” </span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Think
at least twice before being sold a “ hot” IPO <span style="mso-spacerun: yes;"> </span></span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Consider
equity crowdfunding at your own risk and peril </span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Negotiate
lower fees for advice and seek out lower cost products that meet your needs </span></div>
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;"><br /></span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Avoid
internal bank “ ombudsman “ ; escalate complaint directly to OBSI</span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Stay
away from “Free lunch” educational seminars -can be bad for your financial and physical health</span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Assume
your “advisor” is influenced by biased dealer compensaion ; do not assume
she/he has your Best interests at heart- be constructively critical </span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Check
your Account statement for unusual transactions -respond immediately to any
transactions you do not understand or do not agree with.</span></div>
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;"><br /></span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Establish
a Trusted Contact Person with your financial institution.</span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Ensure
you have a Power of Attorney in place in case you are ill for an extended
period of time </span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="color: #555555; font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">And
last but not least , have an up-to-date will just in case the worst happens. </span></div>
<br />
<span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;"><br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span><br />
<br />
<span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;">Please forward to family,
friends, and colleagues.<br />
</span><span style="color: red; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;"><br />
Caveat Emptor </span><span style="color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica; mso-fareast-language: EN-CA;"></span><br />
<br />
<br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-63335635619463755642020-02-24T18:10:00.001-05:002020-02-24T18:10:32.314-05:00Bank complaint system wholly inadequate, FCAC review finds
<br />
<br />
<div style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<br />
<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">The<a href="https://www.canada.ca/en/financial-consumer-agency/programs/research/banks-complaints-handling-procedures.html"><span style="color: #0550c8; text-decoration: none; text-underline: none;"> review of
Canada's Big Six banks</span></a> released on Feb. 19, 2020 by the
Financial Consumer Agency of Canada (FCAC) found the banks have no clear
process for dealing with complaints and the average time to
resolve them can take up to seven months, which is far longer than the
90-day requirement.</span><br />
<br />
<br />
<br />
<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">The review
found more than five million Canadians file at least one complaint
with a bank each year. It said 76 % of those "relatively simple
complaints" are resolved at the first point of contact. It appears 24% go
into a kind of black hole.</span><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif;">The review
found that in general, the <abbr style="border-bottom: 1px dotted; box-sizing: border-box; cursor: help; text-decoration: none;" title="senior complaints officers">Senior
Complaints Officers (SCOs</abbr>’) reporting procedures are underdeveloped.
Most could not produce or describe the steps taken to verify and ensure the
accuracy of information about their activities (such as the number of
complaints resolved to consumers’ satisfaction), which they are required to
report publicly. FCAC found a number of inconsistencies in the SCOs’ records
during the review of complaint investigation files, such as incorrect records
of the date when the complaints were received at the second level. Even
more shocking -most SCOs have a narrow interpretation of the reporting requirements
in the Bank Act -most<span style="background-color: white; color: #001000;"> </span></span><span style="background-attachment: scroll; background-clip: border-box; background-image: none; background-origin: padding-box; background-position: 0% 0%; background-repeat: repeat; background-size: auto; font-family: "Verdana",sans-serif;"><span style="color: #001000;"><span style="background-color: white;"><span style="-webkit-text-stroke-width: 0px; float: none; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; text-align: start; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">do not have the authority to reimburse consumers or
impose settlements on business units contributing to the delays in resolving client
complaints.</span> In other words, the complaint system is unmanaged and
designed to fail.</span></span></span><br />
<span style="color: #001000;"></span><span style="background-color: white;"></span><br />
<br />
<br />
<b style="mso-bidi-font-weight: normal;"><span style="background: white; color: #333333; font-family: "Verdana",sans-serif; mso-bidi-font-family: Arial;">Complainants kept in the dark </span></b><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Verdana",sans-serif;"></span></b><br />
<br />
<br />
<br />
<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">More than 90% of
consumers whose complaints weren't resolved satisfactorily at the first point
of contact did not escalate the complaint, a troubling figure.</span><br />
<br />
<br />
<br />
<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">It also found
banks' procedures are not accessible, timely or effective when it comes to
cases that aren't resolved by frontline staff and that the ability to resolve
more of those cases "declines significantly" when consumers escalate
their complaint.</span><br />
<br />
<br />
<br />
<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">The FCAC found clients
who escalate complaints "tend to experience fatigue and frustration"
because of inefficient bank procedures .Lengthy delays cause clients to drop
their complaints before they are resolved leaving them exposed to uncompensated
losses.</span><br />
<br />
<br />
<br />
<b><span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">Staff training
'generally inadequate' or 'totally absent'</span></b><br />
<br />
<br />
<br />
<span lang="EN" style="font-family: "Verdana",sans-serif; mso-ansi-language: EN;">The review found banks' procedures for handling
complaints objectively "are inadequate," noting the same frontline
staff who deal with them "are under pressure to make sales and control
costs, and these pressures may influence their decision to reimburse the
customer." This in in direct breach of <span style="mso-spacerun: yes;"> </span>FCAC’s CG-12 </span><span style="color: #333333; font-family: "Verdana",sans-serif; mso-bidi-font-family: Arial;">Internal dispute
resolution rule.</span><br />
<br />
<br />
<br />
<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">Banks are
required to provide clients with brochures in their branches about their
complaint-handling process. The FCAC found employees don't know when to give
brochures, which in some cases do not provide clear information on escalating
the complaints process and in one case contained outdated information. Based on
our review , most brochures provide incorrect information as regards access to
an External Complaints Body.</span><br />
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<b><span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">Long cycle time </span></b><br />
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<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">FCAC CG-12
require banks to resolve the majority of complaints within 90 calendar days,
which the review said is about 50 % longer than the standard in the U.K.
and twice as long as permitted in Australia. </span><br />
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<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">FCAC guidelines
don't require the 90-day clock to start until the complaint has been escalated
to a bank's senior complaints officer, "which means the time consumers
spend going through various steps at the first level is not counted." It
points out most jurisdictions start the clock when the complaint is first
submitted. This is one of many deficiencies inherent in CG-12.</span><br />
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<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">The review found
4 unidentified banks take anywhere from 107 to 207 days instead of the required
90 days. Only two of the banks reviewed complied with the stipulated timeline,
resolving complaints on average in 88 and 89 days, respectively . Enhanced
FCAC enforcement with meaningful sanctions would quickly address this issue.</span><br />
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<b><span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">Areas for
improvement</span></b><br />
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<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">The report cited
a number areas where banks must deal more effectively with complaints, such as:</span><br />
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<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo2; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">Implementing robust policies and procedures to
ensure escalated complaints are handled consistently and effectively. </span></div>
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<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo2; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">Doing a much better job of monitoring, assessing
and improving complaint-handling procedures.</span></div>
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<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo2; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">Improving employee training programs, which are
currently largely informal.</span></div>
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<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo2; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="background: white; color: #333333; font-family: "Verdana",sans-serif; mso-bidi-font-family: Arial;">Ensuring complaints are resolved objectively and implementing
comprehensive and well-developed <span style="mso-spacerun: yes;"> </span>client reimbursement
policie</span>s<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"></span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo2; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="background: white; color: #333333; font-family: "Verdana",sans-serif; mso-bidi-font-family: Arial;">Bringing cycle time into compliance with the regulations and
international standards. </span><span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"></span></div>
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<b style="mso-bidi-font-weight: normal;"><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">Our take on the report</span></b><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;"> </span><span style="color: #555555; font-family: "Verdana",sans-serif;"><br style="-webkit-text-stroke-width: 0px; box-sizing: content-box; orphans: 2; white-space: pre-wrap; word-spacing: 0px;" />
</span><br />
<span style="-webkit-text-stroke-width: 0px; cursor: auto; float: none; orphans: 2; white-space: pre-wrap; word-spacing: 0px;"><br />
<div style="margin-left: 36.0pt; mso-list: l1 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: Symbol; mso-ansi-language: EN; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">Complainants become fatigued by the complex process and unduly drop legitimate complaints against the banks</span> <span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"></span></div>
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<div style="margin-left: 36.0pt; mso-list: l1 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: Symbol; mso-ansi-language: EN; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">Complainants are being short changed in the resolution of their complaint </span><span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"></span></div>
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<div style="margin-left: 36.0pt; mso-list: l1 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: Symbol; mso-ansi-language: EN; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">Complainants suffer collateral financial harm as a result of poor and slow complaint handling</span><br /><span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"></span></div>
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<div style="margin-left: 36.0pt; mso-list: l1 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: Symbol; mso-ansi-language: EN; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">There are too many stages in the bank complaint process-The internal ombudsman step should be removed</span> <span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"></span></div>
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<div style="margin-left: 36.0pt; mso-list: l1 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: Symbol; mso-ansi-language: EN; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">The banks do not provide required public statistical summary reporting as required by CG-12 </span><span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"></span></div>
<br /><br />
<div style="margin-left: 36.0pt; mso-list: l1 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: Symbol; mso-ansi-language: EN; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">FCAC CG- 12 is an inadequate standard for modern complaint handling</span> <span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"></span></div>
<br /><br />
<div style="margin-left: 36.0pt; mso-list: l1 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: Symbol; mso-ansi-language: EN; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">The FCAC needs to treat complainant exploitation and non-compliance with regulations more seriously through robust enforcement actions</span> <span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"></span></div>
<br /><br />
<div style="margin-left: 36.0pt; mso-list: l1 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: Symbol; mso-ansi-language: EN; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">There are non-financial impacts of poor complaint handling including emotional distress and harmful physical health issues </span><span style="mso-spacerun: yes;"> </span><span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"></span></div>
<br /><br />
<div style="margin-left: 36.0pt; mso-list: l1 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: #222222; font-family: Symbol; mso-ansi-language: EN; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: EN-CA;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span style="background: white; color: #555555; font-family: "Verdana",sans-serif; mso-bidi-font-family: Helvetica;">There is no evidence that the banks use complaint information to improve products or services</span><span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"></span></div>
<br /><br />
<span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-weight: bold; mso-fareast-language: EN-CA;">It is now up to the</span><span lang="EN" style="color: #222222; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"> finance minister to respond to the report and ensure client protection is improved. A time-delaying consultation is not necessary as the facts point to the required action(s).</span><br />
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<br /></span><b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><br />kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-71534347539180215082019-11-02T08:38:00.000-04:002019-11-02T08:38:05.207-04:00Consider Naming a Trusted Contact Person for your Account(s)
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<span lang="EN-US" style="font-family: "Verdana",sans-serif; mso-ansi-language: EN-US;">Seniors are a rapidly growing demographic in Canada.
Average life expectancy of Canadians is rising and by 2036, seniors have been
projected to account for between 23% to 25% of the Canadian population.
Research conducted by the Mutual Fund Dealers Association (MFDA), the regulator
for mutual funds, indicates that clients 65 years of age or older account for
21% of all households serviced by MFDA Members and 34% of Member Assets Under
Administration (“AUA”).Seniors thus have a disproportionate amount of financial
assets .Such statistics give rise to a number of investor protection concerns. <span style="mso-spacerun: yes;"> </span></span><br />
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<span style="background: white; font-family: "Verdana",sans-serif;">As the human body ages, it is normal for changes to take place.</span><span lang="EN" style="font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica;"> A client may lose the capacity to provide instructions
to a salesperson, due to dementia, a psycho-social or developmental disability
or health reasons such as episodic delirium or medication use. The fund salesperson
may be concerned that trades are radically different than previously, or that
the client is acting erratic or forgetful.</span><span lang="EN" style="font-family: "Verdana",sans-serif;"> </span><span style="background: white; font-family: "Verdana",sans-serif;">Diminished capacity also makes seniors vulnerable to
potential financial exploitation and fraud.</span> A<span lang="EN" style="font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica;"> client may exhibit behaviour or provide instructions to
a representative that the salesperson believes to be unduly influenced by external
forces.</span><span lang="EN" style="font-family: "Verdana",sans-serif;"> </span><span style="font-family: "Verdana",sans-serif;">Perhaps someone is stealing from that
client and account withdrawals are going to a fraudster (e.g. <span style="mso-spacerun: yes;"> </span>a romance scam).</span><br />
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<span style="color: black; font-family: "Verdana",sans-serif; mso-themecolor: text1;">A mutual fund salesperson may be among the first to
notice diminished capacity and/or unusual transactions. In cases like these,
you might expect the salesperson to be proactive and contact someone to help.
Perhaps a family member or a good friend. </span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">Due to confidentiality
and privacy laws, we have a roadblock.</span><br />
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<span style="font-family: "Verdana",sans-serif;">A solution
is for the client to identify a trusted contact person (TCP) like an emergency contact.
Then the Firm/salesperson would have the client’s consent to contact the
trusted person if they suspected declining diminished capacity or wrongdoing.
The person should be informed and agree that his/her contact information will be
provided to the Firm as a TCP. </span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">The role of the TCP is really as a resource for a salesperson or Firm to
contact to determine whether the TCP has also noted concerns related to
diminished capacity or, in the case of financial exploitation, the presence of
a new individual in the client's life or increasingly fearful behaviour,
increased social isolation imposed by another person, etc.</span><span style="color: black; font-family: "Verdana",sans-serif; mso-themecolor: text1;"></span><br />
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<div style="-webkit-text-stroke-width: 0px; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
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<div style="-webkit-text-stroke-width: 0px; box-sizing: border-box; font-variant-caps: normal; font-variant-ligatures: normal; orphans: 2; text-decoration-color: initial; text-decoration-style: initial; widows: 2; word-spacing: 0px;">
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-themecolor: text1;">The MFDA has released a <u><a href="https://mfda.ca/bulletin/bulletin0797-p" target="_blank"><span style="color: black; mso-themecolor: text1;">brief bulletin</span></a></u> that
introduces the idea of a Trusted Contact Person for use by its Members.</span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-themecolor: text1;"> </span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">A trusted contact should be someone with sufficient knowledge and standing
in the client’s life to know what is happening on a personal level.</span><span lang="EN" style="font-family: "Verdana",sans-serif;"> </span><span style="font-family: "Verdana",sans-serif;">A trusted contact person should be a
trusted and neutral person and must </span><span lang="EN-US" style="color: #333333; font-family: "Verdana",sans-serif; mso-ansi-language: EN-US; mso-bidi-font-family: Arial;">be an individual over the age of majority. </span></div>
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<span lang="EN-US" style="color: #333333; font-family: "Verdana",sans-serif; mso-ansi-language: EN-US; mso-bidi-font-family: Arial;">Contacting a
TCP could be of assistance in situations where, among others, there are
concerns that a client is being financially exploited or concerns regarding the
client’s mental capacity.</span><span lang="EN-US" style="font-family: "Verdana",sans-serif;">
</span><span lang="EN" style="color: #333333; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial;">A TCP is not intended to be a
substitute for a power of attorney (POA), but a complement to the POA and
almost always should be a separate person. The TCP <u>should not be</u> an
individual who has an interest in the client's account and/or is involved in
making financial decisions to the account.</span><br />
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<span lang="EN-US" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-themecolor: text1;">The TCP <u>does not have
decision making powe</u>r with respect to, or authority to effect changes to,
the client’s account by virtue of being the trusted contact.</span><span lang="EN-US" style="background: white; color: black; font-family: "Verdana",sans-serif; letter-spacing: .35pt; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;"> </span><span lang="EN" style="background: white; color: black; font-family: "Verdana",sans-serif; letter-spacing: .35pt; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">Naming someone other than a person
given power of attorney provides additional protection because it separates the
roles of a TCP from an agent granted such powers. And in the event that either
one is involved in financial fraud against the senior, the other can help to
protect the senior.</span><span lang="EN-US" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN-US; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-themecolor: text1;"></span><br />
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<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial; mso-themecolor: text1;">As a best practice, the MFDA recommends that members take reasonable steps
to obtain the name and contact information of a TCP when a client opens an
account and keeps it current upon KYC updates. </span><br />
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<span style="font-family: "Verdana",sans-serif;">Naming a
trusted contact person would not just benefit seniors. It would be helpful for
clients of any age. </span><span lang="EN" style="color: #555555; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-bidi-font-weight: bold;">Some reasons your Firm might communicate with a trusted contact person
include: </span><br />
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<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: black; font-family: Symbol; mso-ansi-language: EN; mso-bidi-font-family: Symbol; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-bidi-font-weight: bold;">Confirming current contact information, if the Firm cannot reach you. </span></div>
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<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: black; font-family: Symbol; mso-ansi-language: EN; mso-bidi-font-family: Symbol; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-bidi-font-weight: bold;">Confirming your current health status, if your Firm suspects
you are sick or suffering from diminished capacity.</span></div>
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<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: black; font-family: Symbol; mso-ansi-language: EN; mso-bidi-font-family: Symbol; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-bidi-font-weight: bold;">Confirming the identity of any legal guardian, executor,
trustee or holder of a POA on your account(s)</span></div>
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: black; font-family: Symbol; mso-ansi-language: EN; mso-bidi-font-family: Symbol; mso-bidi-font-weight: bold; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "Verdana",sans-serif;">If
you are involved in an accident, your salesperson might not be able to contact you
on an important issue in your investment account.</span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-bidi-font-weight: bold;"></span></div>
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif;">It goes
without saying that you have to select a TCP while you still have mental
capacity.</span><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif;">You are
not obligated to name a TCP but Kenmar highly recommend that you consider
naming a trusted contact person for yourself and/or family members whether or
not they are in their retirement years and/or are exhibiting signs of a decline
of mental capacity. </span><br />
<br />
<br />
<br />
<br />
<br />
<br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-33998277306242507802019-08-30T09:48:00.000-04:002019-09-01T16:30:39.284-04:00Investor Protection, Fund Facts, trailer commissions and the CSA <span style="font-family: "verdana" , sans-serif;"></span><br />
<span lang="EN" style="color: black; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">Kenmar have been constructively critical of the Canadian Securities Administrators (CSA)
for a number of years. In June 2018, the CSA decided, after years of consultation
and research, not to prohibit embedded trailing commissions. Despite strong investor
arguments, the CSA have resisted all attempts to move from the lowly
suitability standard towards a Best interests standard. As regards Fund Facts mutual
fund risk rating, investors strongly opposed the CSA proposed methodology but
it nevertheless prevailed leaving today’s fund investors with misleading
ratings. More recently, OSC research shows that CRM2 fee reporting is
deficient in precisely those areas where investor advocacy groups had offered suggestions that were sidelined. </span><br />
<span lang="EN" style="color: black; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;"><br /></span>
<span lang="EN" style="color: black; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">And in August, 2019 the CSA concluded that more monitoring is required before
it decides on a binding mandate for OBSI- a mandate supported by
investors, two successive reports by independent reviewers and the OBSI
Board itself. Investor reaction to that response exhibited disappointment, even anger.</span><br />
<br />
<span lang="EN" style="color: black; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">This posts deals with another aspect of the CSA - an allegation of misleading Fund
Facts disclosure. <br />
<br />
Gary Stenzler, who is lead plaintiff in a Class action involving mutual fund
trailer commissions, provides this perspective:</span><b style="mso-bidi-font-weight: normal;"><span style="color: black; font-family: "verdana" , sans-serif; mso-themecolor: text1;"></span></b><br />
<br />
<br />
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "verdana" , sans-serif;">The CSA – Out to harm the public?</span></b><br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif;">The CSA,
in its official capacity as the umbrella organization speaking on behalf of all
of Canada’s provincial securities regulators, has periodically drafted language
and made recommendations to the contents of Fund Facts disclosures.<span style="mso-spacerun: yes;"> </span>Two examples of the above recommendations are
as follows:</span><br />
<br />
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: "verdana" , sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "verdana" , sans-serif;">In
December of 2010 the CSA published amendments to National Instrument 81-101 to
create the Fund Facts documents.<span style="mso-spacerun: yes;"> </span>The CSA
stated that trailing commission disclosures made in those documents include the
statement, “it is for the services and advice your investment firm provides to
you”; and</span></div>
<br />
<br />
<div style="margin-left: 36.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: "verdana" , sans-serif; mso-bidi-font-family: Verdana; mso-fareast-font-family: Verdana;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><span style="font-family: "verdana" , sans-serif;">In
June of 2013 the CSA published “Stage 2: Notice of Amendments to National
Instrument 81-101 Mutual Fund Prospectus Disclosure and Companion Documents.”<span style="mso-spacerun: yes;"> </span>Within this document the CSA made the
following recommendation regarding the language to be used in trailing
commission disclosures:<span style="mso-spacerun: yes;"> </span>“It is for the
services and advice that your representative and their firm provide to you.”</span></div>
<br />
<span style="font-family: "verdana" , sans-serif;">The CSA’s
recommendation regarding trailing commission disclosure language (as set out in
2. above) has been incorporated verbatim for years in Fund Facts documents
representing thousands of unique mutual funds.<span style="mso-spacerun: yes;">
</span>The problem is that the CSA’s recommended language, when used by
investment fund managers, constitutes prospectus misrepresentation pursuant to
provincial securities laws – or more simply put, the Fund Facts documents that
follow the CSA’s recommendations contain a deception (a lie). </span><br />
<br />
<span lang="EN" style="color: black; font-family: "verdana" , sans-serif; line-height: 115%;">There is no evidence that trailing commissions (which
total over $6 billion annually) deducted from the investments of Canadians are
required to be used by dealers to provide unique “services and advice” to those
same Canadians or that other applications of the trailing commissions, such as a sales commission for distribution, are not also applicable </span><span lang="EN" style="color: #555555; font-family: "verdana" , sans-serif; line-height: 115%;">. </span><span style="font-family: "verdana" , sans-serif;">In fact, dealers are legally free to use trailing commission proceeds
for any purposes that they choose – including purposes that provide no benefits
to mutual fund unitholders.<span style="mso-spacerun: yes;"> </span>The $6
billion annually that are taken from the pockets of Canadians by mutual fund
trustees under the guise of “services and advice” is nothing more than a slush
fund to be divvied up Canada’s wealthiest and most powerful financial
institutions – and they have to do little to nothing in order to get their
share.<span style="mso-spacerun: yes;"> </span></span><br />
<br />
<span style="font-family: "verdana" , sans-serif;">There is
no evidence that the CSA, in making its recommendations, performed any due
diligence into how dealers actually use trailing commission proceeds.<span style="mso-spacerun: yes;"> </span>Why did the CSA tie legal representations of
trailing commissions to a specific purpose (services and advice provided to
unitholders) when it had no independent knowledge of the truth of the matter?<span style="mso-spacerun: yes;"> </span>There are only two reasonable answers to this
question – gross incompetence (possible) or, more likely, the CSA offered to
use its powerful regulatory position to provide “cover” to investment fund
managers who had been making this same lie to the public (linking trailing
commissions to services and advice dealers provide unitholders) in the Simplified prospectuses they had been disseminating for decades.</span><br />
<br />
<span style="font-family: "verdana" , sans-serif;"><span lang="EN" style="color: black; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">It is clear that the CSA knew, or ought to have known, that its recommended
language for Fund Facts disclosures was misleading and incomplete. Conflicting
statements made by mutual fund industry stakeholders coupled with the fact that
Discount brokers overtly collect advice fees despite providing no advice serves
to illuminate the falsehoods inherent in the CSA’s recommended Fund Facts language. The
fact that the CSA’s members choose to not utilize their enforcement tools to
rectify the matter only serves as further evidence of the CSA’s ongoing neglect
of investor protections.</span><span style="color: black; font-family: "verdana" , sans-serif; mso-themecolor: text1;"></span><br />
</span><br />
<span style="font-family: "verdana" , sans-serif;">Gary
Stenzler</span><br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif;"><u>Kenmar
Addendum :</u></span><span style="font-family: "verdana" , sans-serif;"><span style="font-family: "verdana" , sans-serif;"> </span><span style="font-family: "verdana" , sans-serif;"><span lang="EN"><span style="color: black;">If one looks at it from the trustees
responsibilities- they make a representation ( one recommended by the CSA) in Fund Facts but are they sufficiently
prescriptive as to how dealers should actually use trailing commission proceeds?
We don’t know but expect the Class Action will put the spotlight on the issue.
Kenmar acknowledge that some trailing commission proceeds result in some
services being provided; however, it is not evident to us that the trustees do anything
specific to cause this to happen or take affirmative action if it does not
happen.According to the Cumming empirical research report and other research , the salesperson recommendations that are made are not always in the best interests of clients, so do they qualify as personalized advice or are they just salesmanship? [ i.e. there is strong evidence that embedded commissions skew the recommendations made] </span></span></span></span><br />
<span style="font-family: "verdana" , sans-serif;">
</span><span style="font-family: "verdana" , sans-serif;"><b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><br /></span>
<span style="font-family: "verdana" , sans-serif;">For years , mutual
fund individuals were registered as "salespersons" but in 2009 the CSA registration
label was changed to “dealing representative” without a corresponding change in role/duties , thereby adding to investor confusion . In
parallel , the fund industry continued using the made up title “ advisor” for the
individuals selling and distributing mutual funds , with CSA acquiescence. Investor advocates argue that any
“advice” provided was incidental to the true nature of the trailing commission
paid i.e. distribution. </span><span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica;">The fact that the CSA did not address the title
and designations issue is directly responsible for the misunderstanding in the
minds of consumer investors. </span><br />
<span style="font-family: "verdana" , sans-serif;"><br /></span>
<span style="font-family: "verdana" , sans-serif;">Even
while Fund Facts was being made a mandatory disclosure document, the CSA knew
that Discount brokers were being paid trailing commissions for undefined
“services “ and for “advice” that it knew such dealers could not and did not
provide. </span><span style="font-family: "verdana" , sans-serif;">No
regulatory action has ever been taken for this payment which only makes sense if the trailing commissions are for distribution ,not advice. This disconnect with Fund Facts is at the core of the Class Action.</span><br />
<br />
<span lang="EN" style="color: black; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">The DSC sold mutual fund is seen as being particularly egregious because it
provides strong incentives for salespersons (hefty upfront commissions and
ongoing trailer commissions) to sell mutual funds that can lock clients into
underperforming products for years and has led to harmful fund churning. That
these commissions and trailing commissions were key elements of distributing (as opposed to providing advice) mutual funds was well known in the late 1980's. Yet the CSA Fund Facts
document never actually requires dealers to characterize these commissions as a compensatory reward for selling mutual funds. Fund Facts does however
provide a convoluted clue that the trailing commission isn’t just about providing service
and personalized advice viz “</span><br />
<span lang="EN" style="color: black; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">
<i style="mso-bidi-font-style: normal;">The fees and expenses - including any
commissions - can vary among series of a fund and among funds. Higher
commissions can influence representatives to recommend one investment over another.
Ask about other funds and investments that may be suitable for you at a lower
cost.”</i></span><br />
<span lang="EN" style="color: black; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;"><i style="mso-bidi-font-style: normal;"><br /></i></span><span lang="EN" style="color: black; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;"><span lang="EN" style="color: black; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-themecolor: text1;">We conclude this blog with the results of a recenly released OSC investor Advisory
Panel Report </span><i><span lang="EN" style="color: #555555; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica;"><a href="https://www.osc.gov.on.ca/en/iap_20190729_survey-findings-on-how-much-advice-investors-receive.htm" target="_blank">A Measure of Advice: How much of it do investors with small and
medium-sized portfolios receive?</a> </span></i><span lang="EN" style="color: #555555; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica;"> </span><span lang="EN" style="color: #555555; font-family: "helvetica" , sans-serif;">
<br />
<br />
</span><span lang="EN" style="color: black; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-themecolor: text1;">It concluded that (1) <i>60%
of mass-market investors and 75% of investors with small portfolios reported
that their advisor communicated with them in the past year only “once or twice”
or did not communicate at all;(2) Nearly half (49%) of mass-market investors
said their advisor spent less than an hour, in total, communicating with them
during the past year or didn’t communicate at all. Two-thirds (68%) of small
investors and 44% of mass-affluent investors said the same thing; (3) Only
a small minority reported they’d received advice about budgeting, debt
management, tax and estate planning, or planning for the future needs of a
family member; (4) 43% of advised investors did not agree that their advisor had
provided them with educational advice about financial concepts and (5)</i> <i>31%
were unable to say their advisor had ever spoken to them about planning for
financial goals such as retirement, education or buying a home . </i>In our opinion, these statistics hardly
support the strong Fund Facts claim of personalized advice being provided to owners of
mutual funds.</span><br />
<br />It should be noted that while section 3.2 of National Instrument NI 81-105 <i>Mutual Fund Sales Practices</i> permits a fund organization to pay a “trailing commission” to a participating dealer, the Instrument currently does not define precisely what comprises such payment. It is therefore unclear why the CSA chose to be so precise in their recommended Fund Facts language.<br />
<br />
<span lang="EN" style="color: black; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-themecolor: text1;">While we would hesitate to say that the CSA was part of a regulator-industry
complex, it is fair to say that (a) the CSA has failed the retail investor; (b)
the CSA has not listened to retail investors and (c) the influence of industry
has not been matched by investor influence on CSA decisions. There is now a
great opportunity for the CSA to be proactive with some solid investor
protection reforms and a heightened determination to listen to the voice of the
retail investor.We would strongly recommend that the CSA review Fund Facts for improvement opportunities including changing the " services and advice" language and breaking out trailing commissions as an isolable cost for greater client visibility. </span></span><br />
<br />
<b style="mso-bidi-font-weight: normal;"><span style="color: red; font-family: "verdana" , sans-serif; font-size: 12.0pt;">DISCLAIMER</span></b><br />
<span style="font-family: "verdana" , sans-serif;"></span><br />
<span style="font-family: "verdana" , sans-serif;"><b style="mso-bidi-font-weight: normal;"><span style="color: red; font-size: 12.0pt;">I</span></b><span style="color: red; font-size: 12.0pt;">nformation
contained herein is obtained from sources believed to be reliable, but the
accuracy is not guaranteed. The material does not constitute a recommendation
to buy, hold or sell. The purpose of this Document and others in the series is
to educate investors by bringing together personal finance information from a
variety of sources. It is not intended to provide legal, investment, accounting
or tax advice and should not be relied upon in that regard. If legal or
investment advice or other professional assistance is needed, the services of a
competent professional should be obtained. <span style="mso-spacerun: yes;"> </span></span></span><br />
<span style="font-family: "verdana" , sans-serif;"></span><br />
<br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-31128334642154523442019-07-28T23:40:00.002-04:002019-07-29T14:58:43.551-04:00Case study: Excessive leveraged trading in IPO’s in fee based account generated huge trading commissions while supervisor watched <br />
<u><span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">Kevin Frederick Price (Settlement)</span></u><span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;"> – Toronto,
Ontario</span><br />
<br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">Over a two-year period, Price recommended to a client that she use
significant margin, which was unsuitable. Price also earned significant
compensation by engaging in a short-term trading strategy for the client. This
short-term trading was not within the bounds of good practice.</span><br />
<br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">The client was retired [born in 1948] with limited investment knowledge
and just under $1 million in assets. She opened four accounts with Price, all
of which were fee-based and required the client to pay a percentage fee based on
the market value of the securities held. The client required regular income
from her portfolio for living expenses. Since inception, Price purchased
securities on margin, which increased the income generated but also increased
the risk, which eventually exceeded her risk tolerance.</span><br />
<br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">Price recommended a significant number of trades in new securities. Over
a two-year period, he purchased $4.1 million of new issues, representing
approximately 71 percent of all securities bought. These purchases were also
part of a short-term trading strategy that, overall, was not profitable for the
client. However, the new issue purchases generated additional commissions,
which were paid by the issuers, for the firm and Price. Over the same period,
he earned approximately $40,000 from the new issues, in addition to the account
fees paid directly by the client. The underlying new issues were not unsuitable
and consistent with her investment objectives.</span><br />
<br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">The client lost approximately $369,000 in her accounts.</span><br />
<br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">Price paid an internal discipline fine of $21,000 to his employer,
completed the Conduct and Practices Examination, and was subject to strict
supervision for six months. He also contributed $55,000 towards compensating
the client for her losses. Price agreed to pay a fine of $15,000 and costs of
$5,000</span><br />
<br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">Source: <u><span style="color: #4472c4; mso-themecolor: accent5;"><a href="https://www.iiroc.ca/news/Documents/IIROC2017EnforcementReport_en.pd"><u><span style="color: #4472c4; mso-themecolor: accent5;">https://www.iiroc.ca/news/Documents/IIROC2017EnforcementReport_en</span></u></a></span></u><span style="color: #4472c4; mso-themecolor: accent5;"> </span></span><br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">2017 IIROC Enforcement report. </span><br />
<br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">Questions: Does anyone believe Supervision was robust, that the fine was
fair and proportionate and that general deterrence has been achieved? The
really good news? Mr. Price is now registered as a Dealing representative in Ontario,
BC and Alberta with Mackie Research with no terms or conditions on his
registration.This case demonstrates the value of checking IIROC
registration (?}.<span style="mso-no-proof: yes;"><img alt="😉" border="0" height="1" src="file:///C:/Users/OwneHome/AppData/Local/Temp/msohtmlclip1/01/clip_image001.png" v:shapes="Picture_x0020_1" width="1" /></span> It might be wiser
for clients to assess their trade confirmations, account statements and
performance reports. Note the elegance of the IPO strategy is that the
commissions won’t show up in the fee based account statement. We urge IIROC to
provide rules and guidance re fee based accounts/ reverse churning and sanction
deficient supervisors, branch managers, compliance staff and firms with
uncharacteristic vigour. </span><br />
<br />
<br />
<br />
<br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;">IIROC Settlement Agreement <u><span style="color: #4472c4; mso-themecolor: accent5;"><a href="https://www.newswire.ca/news-releases/enforcement-notice---decision---iiroc-fines-toronto-investment-advisor-kevin-frederick-price-667877493.html"><u><span style="color: #4472c4; mso-themecolor: accent5;">https://www.newswire.ca/news-releases/enforcement-notice---decision---iiroc-fines-toronto-investment-advisor-kevin-frederick-price-667877493.html</span></u></a></span></u><span style="color: #4472c4; mso-themecolor: accent5;"> </span></span><br />
<br />
<span style="font-family: "verdana" , sans-serif; mso-fareast-language: EN-CA;"><br />
</span><br />
<br />
<br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-77479571992399994532019-07-27T23:30:00.002-04:002019-07-27T23:30:59.604-04:00Reverse Churning | IIROC is watching ( we hope)
<br />
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">According to the 2018 PriceMetirx report, revenues from fee accounts
grew by 17% in 2018 over 2017, while revenues from transactional accounts
declined by 5% year over year. Revenue growth was further propelled by the fact
that fee assets are more productive than transactional assets. Average revenue
yield (revenue over assets) for fee accounts was 0.91% in 2018 compared to
0.37% for transactional accounts. The (asset-weighted) average client age
stands at 67.6 years. For the household segment (those with $1 million to $1.5
million in assets), the top 10% of clients (based on rate paid) pay 1.40%,
while the bottom 10% pay 0.73%, or half as much as the top 10%. For those
households, fee account pricing dropped 2 bps (from average 1.08% in 2017 to
1.06% in 2018), compared to a drop of 5 bps the previous year.</span><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">The PriceMetrix report further shows that 52% of advisor-client
relationships included a fee-based account in 2018, up from 31 % in 2015.
Investment dealers value fee-based accounts because they are much more
predictable and reliable as a revenue generator than charging clients sales
commissions. In a fee-based account, clients pay roughly 1 % to 2 % or more of
their total invested assets (including cash, GIC’s and bonds) per annum
depending on account size.<br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span><br />
<br />
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">When you consider these statistics, it is abundantly clear that
conflicts-of-interest will come into play and seniors / retirees will be prime
targets. Fee-based accounts are very lucrative arrangements for salespersons (aka
“advisors”). There is a very real danger that reverse churning will rear its
ugly head particularly under the low suitability standard for advice
giving. </span><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Given the rapid rise of fee- based accounts, regulators should take
action to address reverse churning. First, firms should be required to
ensure that there is an adequate supervision system in place to guarantee that
accounts are handled properly. IIROC should make it clear that it will
hold firms accountable if there is no system in place for supervision.
Second, salespersons should take care to monitor their client’s accounts.
Advisory service going beyond the provision of statements, such as
fulsome conversations confirming the client’s goals and objectives (and
appropriate documentation of such conversations), is both prudent and
necessary. Finally, decisions to hold or stand pat in any account, and
decisions to move from commission-based accounts to fee-based accounts, should
be documented carefully with an eye towards avoiding claims that the move was
reverse churning.</span><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">We expect and hope that IIROC is particularly concerned with : (1)
accounts in which securities are purchased and portfolios are designed in
commission paying brokerage accounts and then transferred to a fee-based
account in which the same trades could have been initiated without paying
commissions; (2) accounts that consist primarily of cash or bonds that are
transferred to fee-based wrap accounts in which the fees are higher but the
investments do not materially change; and (3) accounts that are fee-based
accounts in which few if any transactions are made.</span><br />
<br />
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;"><br /></span>
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Additional concerns include including embedded commission funds in these
accounts (double billing) as well as defining how IPO’s are to be treated.</span><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">IIROC should not depend on general principles to regulate the choice of
proper account type. Rules and guidance are required to give dealers the IIROC
perspective on reverse churning. The controversial IIROC principle that
conflicts -of-interest are to be resolved in the best interests of clients is
too vague for operational application.</span><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Kenmar look forward to regulatory actions to protect retail investors from
the latest threat to their retirement income security.</span><br />
<br />
<br />
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<div style="line-height: 15.0pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="color: black; font-family: "Helvetica Neue"; font-size: 10.5pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"><br />
</span></div>
<br />
<br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-22976995104042902932019-07-03T23:13:00.000-04:002019-07-04T09:36:09.189-04:00Why are financial advisors reluctant to speak freely about the industry?<span style="font-family: "Verdana",sans-serif;"></span><br />
<span style="font-family: "verdana" , sans-serif;">We’ve always wondered why so many IIROC regulated professionals have remained
silent on how to improve the industry. It is extremely rare to read an article
or a Comment letter to a Consultation that points out what needs to be done to
fix the wealth management industry .After reading John DeGoey’s latest book, <b style="mso-bidi-font-weight: normal;">STANDUP to the financial services industry</b>
, we now know why. From his book we quote:<br />
<span style="mso-spacerun: yes;"> </span><br />
<i style="mso-bidi-font-style: normal;">Speaking personally, I have never once
agreed with the interpretation of IIROC Rule 29.7 (1) that allows compliance
departments to vet legitimate STANDUP advisors' ideas regarding how the
industry might be improved, as a form of corporate censorship disguised as
maintaining a level of decorum. That interpretation is also a direct
contravention of section 2 of the Canadian Charter of Rights and Freedoms,
where "freedom of thought, belief, opinion and expression" are
expressly enshrined as basic rights that all Canadian citizens enjoy.<br />
<span style="mso-spacerun: yes;"> </span><br />
According to compliance departments, if one were to point out that things are
not being done in the best possible manner, that would be seen as
"contrary to the interests of the industry." In My Life and Work,
Henry Ford recalled that he'd once said, "Any customer can have a car
painted any colour that he wants so long as it is black." Securities firms
in Canada effectively say, "You can say whatever you want about the
industry as long as it is not critical-even [especially?] if it is demonstrably
true."</i><br />
<br />
So now you know why. Advisors (“Registered Representative’s”) are constrained on what they can say just
like investors who settle a complaint with a dealer. (John’s Book is available
at Amazon.ca)</span><br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-88498520605090738882019-05-03T23:37:00.000-04:002019-05-04T00:28:35.486-04:00Misinformed Consent <span style="font-family: "Verdana",sans-serif;"></span><br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">There are some phrases that
are used in all manner of contexts that are widely understood with a wry smile,
but seldom contemplated with the serious effort leading to some sort of
metaphysical mega-truth. One of my favourites is: “It ain’t what you don’t know
that gets you into trouble, it’s what you know for sure that just ain’t so.”
That little observation about the human condition has been mis-attributed to
several humourists, including Mark Twain. The truth is that no one knows for
sure who said it first. That’s especially ironic because there are lots of
people out there who purport to know very well who said it, thereby
demonstrating just how universal and applicable the phrase is. </span><br />
<br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">There’s a second quip that I
like almost as much. Given that it is more serious, I suspect fewer people have
heard it. It is this: “No reasonable person would consent to being given bad
advice.” In the world of personal finance, so much of what is covered by
industry regulation revolves around the notion of informed consent. The problem
here is that investor acquiescence is seen as a proxy for proper disclosure and
conduct.</span><br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">Now, let’s combine the two
concepts to see where that takes us. How should we react to a situation where
there are people who give advice based on concepts that they believe to be
true, but are, in fact, not true? What happens when good intentions give way to
bad advice? If I give you advice based on misinformation and you accept and act
on that advice, does that constitute <span style="mso-spacerun: yes;"> </span>“informed
consent”? </span><br />
<br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">I am a lifelong proponent of
informed consent, but I also believe that there should be a recognition of a
necessary premise. That premise is that the options under consideration should
be presented fairly and accurately. I consulted Wikipedia for a
readily-accessible definition and here’s what I found: permission granted in
the knowledge of the possible consequences, typically that which is given by a
patient to a doctor for treatment with full knowledge of the possible risks and
benefits. The write-up after the definition goes on to say that: an informed
consent can be said to have been given based upon a clear appreciation and
understanding of the facts, implications, and consequences of an action. </span><br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">People who know me would also
know that I have long yearned for financial advisors to be thought of (and held
to the same standards) as doctors, dentists, lawyers and accountants. Given the
definition, there are a few questions that might follow: </span><br />
<br />
<div style="mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: #555555; font-family: "symbol"; font-size: 13.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";"> </span></span></span><span lang="EN" style="color: #555555; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">(a)If people don’t
really understand their options, can informed consent ever truly be provided? </span><span lang="EN" style="color: #555555; font-family: "helvetica" , sans-serif; font-size: 13.0pt; line-height: 107%;"></span></div>
<br />
<div style="mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span lang="EN" style="color: #555555; font-family: "symbol"; font-size: 13.0pt; line-height: 107%;"><span style="mso-list: Ignore;">·</span></span><span lang="EN" style="color: #555555; font-size: 13.0pt; line-height: 107%;"><span style="font-family: "times new roman"; font-size: xx-small; mso-list: Ignore;"> </span></span><span lang="EN" style="color: #555555; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"> (b) If the people
providing options don’t properly understand the salient details of what they
are recommending (i.e., if they are unwittingly giving bad</span><span lang="EN" style="color: #555555; font-family: "helvetica" , sans-serif; font-size: 13.0pt; line-height: 107%;"> </span><span lang="EN" style="color: #555555; font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">advice), does
the acceptance of that advice constitute “informed consent”? Wouldn’t the term
“misinformed consent” be more appropriate?</span><span lang="EN" style="color: #555555; font-family: "helvetica" , sans-serif; font-size: 13.0pt; line-height: 107%;"> </span></div>
<br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">Stated differently, is
informed consent even possible if the options being forwarded for consideration
are incomplete, inappropriate or downright incorrect? Sure, you might consent.
You might have been ‘informed’ about your options from someone who has good
intentions (i.e., who is not trying to mislead you). However, if the person
making the recommendations is misinformed and is making the recommendations
based on misguided beliefs, we have a moral dilemma. If the intentions are
good, but the advice is nonetheless bad, how do we characterize the acceptance
and implementation of that advice? Would your opinion change if the person
giving the unwittingly bad advice refused to change the advice once the error
in her ways was pointed out to her? </span><br />
<br />
<br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">In May, I released my
book <i>STANDUP to the Financial Services Industry.</i> What you’ve
read so far constitutes a summary of the problem it explores. In late 2016, an
academic paper entitled The Misguided Beliefs of Financial Advisors was
released that showed beyond any reasonable doubt that advisors believe certain
things that are untrue. The question most people will ask themselves is: “How
could this be?” The question most people should be asking themselves, however,
is: “What should I do about it?” Irrespective of why advisors believe things
that they shouldn’t, the most pressing challenge is to find specific,
actionable ways to overcome the associated risks.</span><br />
<br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">You should be terrified.
Imagine if you went into a doctor’s office and told him you were a pack-a-day
cigarette smoker and he just kept on talking as though you had told him you
were an Ottawa Senators fan. If the information was interpreted as being
essentially irrelevant (despite being highly unfortunate), you’d be well within
your rights to be concerned. We’re now at the point where it is pretty much
impossible to imagine a doctor (or anyone else, for that matter) being
oblivious to the harmful impact of cigarette smoke. The same cannot be said
regarding the investing public, or even financial advisors, regarding mutual
funds these days. It seems many advisors do not have a clear appreciation and
understanding of the facts, implications and consequences of their
recommendations. Specifically, the paper showed that advisors, while
well-intended, frequently chase past performance, pay insufficient attention to
product cost and are prone to recommend concentrated positions. </span><br />
<br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">Regulators have been told
about this problem repeatedly and have done absolutely nothing about it. Far
too many advisors believe things that simply are not true, yet no one seems
inclined to do anything to disabuse them of their unsubstantiated viewpoints.
By way of illustration, I’d like to draw on passages from the transcript for
the roundtable discussion associated with comments on paper 81-401 regarding
mutual fund fees held on Friday, June 7, 2013 at the Ontario Securities
Commission office. I was delighted to be asked to serve as one of the
presenters that day. </span><br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"><br /></span>
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">One of the other presenters
for the panel I was on was Peter Intraligi, the CEO of Invesco. Mr. Intraligi
spoke in favour of maintaining embedded compensation structures. In fact, his
comments included the passage: “While we acknowledge that compensation can play
a minor role in the advice channel, the fact is the main driver of flows is a
fund’s performance and its ability to preserve capital.” This still strikes me
as an acknowledgement that recommendations are made based on past performance,
even though there have been about a dozen studies that have shown conclusively
that past performance does not persist and should not be relied upon when
choosing investment products. Indeed, every prospectus under the sun has
carried a disclaimer to that effect for the past quarter century.</span><span lang="EN" style="mso-ansi-language: EN; mso-fareast-language: EN-CA;"> </span><br />
<br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">Mr. Intraligi went on to say
that: “Since the market downturn in 2008, new money flows shifted sharply
towards funds with 4- and 5-star Morningstar ratings, which represent less than
20 percent of all funds in Canada. Yet, this limited number of funds accounts
for 100 percent of the industry’s net flows each of the past five years.
Clearly, assets migrate to products with a demonstrated long-term track record
of exceptional performance, as they should.” I was gobsmacked. Beside the fact
that he did nothing to explain what he meant by “long-term” (I’ve seen mutual
fund rating books referencing the term and applying it to timeframes as short
as three years), the presumptuousness was astonishing. If someone said choosing
investment products based on the reading of their tea leaves was acting “as
they should”, surely regulators would have questioned the speaker. Nonetheless,
there is no evidence that past performance is any more reliable than tea leaves
regarding product selection. No one questioned him. </span><br />
<br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">When my turn came, I
referenced one of the giants in modern finance, Nobel laureate and professor
Bill Sharpe of Stanford University. I used a quote from Mr. Sharpe, who said
that: “Extensive, undeniable data show that identifying in advance any one
particular investment manager who will, after costs, taxes and fees, achieve
the Holy Grail of beating the market is highly improbable.” </span><br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">The problem is simple: many
(most?) advisors believe things that are simply not true. Meanwhile, we have
corporate leaders making submissions to regulators by telling bald-faced lies
and positioning them as matters of fact without being challenged by the
regulators. The problem is that no one (including the regulators themselves, it
seems) recognizes that they’re lying in the first place. As a result, the
misinformation persists indefinitely, and no amount of traditional regulatory reform
will get us any closer to a sensible world where advisors make recommendations
based on evidence instead of wives’ tales. The abstract to the misguided
beliefs paper concluded with the ominous warning that: “policies aimed at
resolving conflicts of interest between advisors and clients do not address
this problem.” </span><br />
<br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">The solution, I believe, does
not come from improved disclosure or the elimination of embedded compensation
or better investor education. None of those things will cause advisors to think
differently. Because of that, none of those things will cause advisors to make
more appropriate product recommendations to their clients. For nearly a
generation, I’ve been trying to get advisors to recognize their own biases and
to make recommendations based on evidence. The crickets are chirping louder
than ever. If regulators cannot compel advisors to think and act differently
and no amount of logic can persuade advisors to think and act differently, it
may very well be up to investors to lead the revolution. </span><br />
<br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">My experience is that advisors
have been defiant in the face of evidence that refutes so many of their
presumptive value propositions and product recommendations. These same advisors
unapologetically make recommendations that have little or no basis in fact
while simultaneously insisting that they are looking out for their clients’
best interests. </span><br />
<br />
<br />
<i><span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">STANDUP to the Financial
Services Industry</span></i><span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"> arms investors with
facts. It explains what advisors believe and how they think, but more
importantly, it also offers dozens of specific questions to help readers
determine just how blinkered their advisor might be, along with the sourced
material “answers” from some of the world’s leading financial economists and
research houses that emphatically refute the answers that many advisors are
likely to give. Those resources (research papers, real time performance data,
etc.) are also available on my website: <a href="http://www.standup.today/" target="_blank"><span style="color: #0066a4; text-decoration: none;">www.standup.today</span></a> .</span><br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">This is NOT a conflict-o- interest problem. This is a situation where advisors believe things that are
not reliable and make recommendations to unsuspecting investors based on those
unreliable (read: misguided) beliefs. In other words, this is a behaviour problem.
To date, advisors have stubbornly resisted evidence because they seem to prefer
happy lies over inconvenient truths. The sincerest apology is changed
behaviour. If your advisor is unwittingly giving you bad advice yet will not
acknowledge as much even after you demonstrate that to be the case, then it’s
time to switch advisors. </span><br />
<br />
<br />
<b><span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">John J. De Goey</span></b><span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">, CIM, CFP, FELLOW OF FPSCTM is a registrant with
Wellington-Altus Private Wealth Inc. (WAPW). WAPW is a member of the Canadian
Investor Protection Fund (CIPF) and the Investment Industry Regulatory
Organization of Canada (IIROC). </span><br />
<br />
<br />
<br />
<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;">The opinions expressed herein
are those of the author alone and do not necessarily reflect those of WAPW,
CIPF or IIROC. Investors should seek professional financial advice regarding
the appropriateness of investing in any investment strategy or security and no
financial decisions should be made solely on the basis of the information and
opinions contained herein. The information and opinions contained herein are
subject to change without notice.</span><br />
<br />
<br />
<br />
This<span lang="EN" style="font-family: "verdana" , sans-serif; mso-ansi-language: EN; mso-fareast-language: EN-CA;"> article appeared in the May, 2019 Canadian MoneySaver </span><br />
<br />
<br />
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-61651501633635121072019-02-27T11:52:00.000-05:002019-02-27T11:52:18.553-05:00CSA- please make complaint handling tolerable for retail investors
<br />
<strong><span style="color: black; font-family: "Verdana",sans-serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi;">Eliminating Step 3 (internal Ombudsman) in the investment dealer
complaint process - the rationale and request for action </span></strong><br />
<br />
<br />
<br />
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-themecolor: text1;">This past year has not been kind to retail investors. The CSA, defying
both evidence and reason, has decided to retain embedded commissions and
abandon an overarching Best interest standard. Even the welcome CSA proposal to
ban the DSC option has been derailed by the Ontario government’s unilateral
intervention. At the same time, the CSA has allowed risky alternative mutual
funds to be sold to retail investors. </span><br />
<br />
<br />
<br />
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-themecolor: text1;">As of Nov. 1 , 2018 less than 30% of bank assets will be with OBSI -the recent
departure by the Bank of Nova Scotia sent a clear message: The
banks do not support an independent dispute resolution provider. As a
result, retail investors are even more vulnerable to industry mis-selling
and unfair complaint handling.</span><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Bank-owned and insurance company owned dealers usually have a three step
process. The first step is with the branch, the second step is at the dealer's
Care center (or equivalent) with escalation to their internal
"ombudsman “if the client remains unsatisfied as step 3. A 4th step would
be to OBSI if the client still remain unsatisfied. Four steps can wear already
stressed clients down to the point they lose their resolve to achieve a fair
result. This should not be the outcome of a contemporary complaint resolution system
in the wealth management industry.<br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span><br />
<br />
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-themecolor: text1;">The CSA has not yet acted on Kenmar recommendations or those of PIAC and
FAIR Canada to fix obvious flaws in the complaint handling system. </span><span lang="EN" style="color: #555555; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial;">In Oct. 2017, PIAC and FAIR Canada sent a
letter to the CSA </span><br />
<br />
<span><span lang="EN" style="font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial;"><a href="https://faircanada.ca/submissions/letter-obsi-joint-regulators-committee-re-use-internal-ombudsman-registered-firms-responding-investment-complaints/" target="_blank">https://faircanada.ca/submissions/letter-obsi-joint-regulators-committee-re-use-internal-ombudsman-registered-firms-responding-investment-complaints/</a></span></span><span lang="EN" style="color: #555555; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial;"> identifying numerous complaint
handling issues .The letter strongly recommended <strong><span style="font-family: "Verdana",sans-serif; mso-bidi-font-family: Arial;">that OBSI’s
Terms of Reference and the internal complaint handling rules (be they policies
or rules) of IIROC and the MFDA be amended to conform with NI 31-103.</span></strong> OBSI’s
Terms of Reference and the SRO complaint handling rules should be revised to
require firms to provide a substantive response to a complaint within 90 days,
whether they use a second review process (an “internal ombudsman”) or not. The
letter stated that “Within the 90 days, firms may choose to provide a second
level of review. However, they should not be permitted to take more than 90
days to do so.”. </span><br />
<br />
<br />
<br />
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial; mso-themecolor: text1;">The lack of CSA action on these recommendations has left complainants
exposed to diversion.</span><span lang="EN" style="color: black; font-family: "Helvetica",sans-serif; font-size: 10.5pt; mso-ansi-language: EN; mso-bidi-font-family: Arial; mso-themecolor: text1;"> </span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial; mso-themecolor: text1;">Investors are being channeled to “internal ombudsman” while critical
OBSI-related time periods and civil action limitation periods continue to run
to the prejudice of investor complainants.</span><span lang="EN" style="color: black; font-family: "Helvetica",sans-serif; font-size: 10.5pt; mso-ansi-language: EN; mso-bidi-font-family: Arial; mso-themecolor: text1;"> </span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial; mso-themecolor: text1;">The use of “internal
ombudsman” services is detrimental and prejudicial to investor complainants and
is contrary to sections 13.16 (3) and (4) of NI 31-103.</span><span style="color: black; font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA; mso-themecolor: text1;"></span><br />
<br />
<br />
<br />
<span style="color: black; font-family: "Verdana",sans-serif; mso-themecolor: text1;">It is emotionally and physically draining for a retail
investor to file a complaint. It is also highly intimidating for most people.
To have a complaint dismissed even once, let alone multiple times is a very
debilitating experience. Many people give up as they feel they have no chance
of prevailing against the big bank-owned dealers. </span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">Other consumers opt to
not file complaints about their dealers because they are intimidated by the
complaints process, do not understand their rights or how to navigate the
process itself, are afraid of the possible negative consequences of complaining
about their dealer and do not possess the written or oral skills to effectively
advocate for themselves. </span><span style="color: black; font-family: "Verdana",sans-serif; mso-themecolor: text1;">This process can also impact physical,
emotional health and family relationships. For many, sustaining undue losses is
life-altering. One major reason that the current system isn’t working for
investors is the banks insertion of an internal “ombudsman”. </span><br />
<br />
<br />
<br />
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">An unsatisfactory response at the first step results in escalating the
complaint further - this necessitates a complainant to redraft a cover
letter and resubmit the complaint with supporting records as if nothing had
occurred prior to this step having taken place. An appeal to the internal
ombudsman also requires the signing of a Consent Agreement which may prejudice
future proceedings. Among other items, the Agreement contains a confidentiality
clause and in at least one case, gives the right of the ombudsman to access all
of the complainant’s accounts with the bank.</span><br />
<br />
<br />
<br />
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">Complainants can legitimately conclude that the dealers’ complaints process
is designed to wear them out. Does this repeating of steps, as mandated by the
process and placed on the shoulders of the complainants, contribute in any way
to a fair and reasonable complaint resolution process? Does the internal
ombudsman add value or risk? The CSA surely knows the answer. In 2011, the UK
FCA eliminated the internal “ombudsman “step in order to streamline the
complaints process. The CSA should do the same.</span><span style="color: black; font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA; mso-themecolor: text1;"></span><br />
<br />
<br />
<br />
<span style="color: black; font-family: "Verdana",sans-serif;">Securities
regulators have tried to improve the process by requiring that dealers provide
a substantive response within 90 days of filing a complaint. Prior to that,
dealers would drag out complaints to the point where complaints just threw in
the towel. This was followed up by a CSA/IIROC/MFDA Staff Notice in Dec., 2017</span>
<span><span style="font-family: "Verdana",sans-serif;"><a href="http://www.osc.gov.on.ca/en/SecuritiesLaw_csa_20171207_31-351_ombudsman-banking-services-investments.htm">http://www.osc.gov.on.ca/en/SecuritiesLaw_csa_20171207_31-351_ombudsman-banking-services-investments.htm</a></span></span><span style="color: black; font-family: "Verdana",sans-serif;"><span style="mso-spacerun: yes;"> </span>attempting to deal with several system
failures.</span><br />
<br />
<span style="color: black; font-family: "Verdana",sans-serif;"><br /></span>
<span style="color: black; font-family: "Verdana",sans-serif;">That
has not been effective as banks continue to deceive complainants. For example,
the TD Bank website states “</span><i style="mso-bidi-font-style: normal;"><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial; mso-themecolor: text1;">If you require further
assistance <b style="mso-bidi-font-weight: normal;"><u>after</u> the decision of
the TD Ombudsman</b>, the following independent services may provide you with
information and a further review of your complaint. These agencies may contact
TD to facilitate their investigation and work toward a resolution”. </span></i><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial; mso-themecolor: text1;">The independent service referred
to is the OBSI option.<i style="mso-bidi-font-style: normal;"><br />
</i></span><u><span lang="EN" style="color: #4472c4; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Arial; mso-themecolor: accent5;"><a href="https://www.td.com/to-our-customers/resolving-your-problems/comments.jsp" target="_blank"><span style="color: #4472c4; mso-themecolor: accent5;">https://www.td.com/to-our-customers/resolving-your-problems/comments.jsp</span></a></span></u><span style="color: black; font-family: "Verdana",sans-serif;"></span><br />
<br />
<br />
<br />
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-themecolor: text1;">Section 13.16 of NI31-103 specifies that a firm must make available the
services of OBSI at the earlier of when the firm informs the client of its
decision with regard to the complaint or 90 days after receiving the complaint.
Companion Policy 31-103 <i>Registration Requirements, Exemptions and
Ongoing Registrant Obligations</i> concerning compliance with the
requirements under section 13.16, provides that a registered firm should not
make an alternative independent dispute resolution or mediation service
available to a client at the same time as it makes OBSI available. </span><br />
<br />
<br />
<br />
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-themecolor: text1;">But </span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-themecolor: text1;">Section 13.16 of NI 31-103 does not prohibit the
use of an internal “ombudsman”.</span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;"> As a result, for investment dealers, the 90-day timeline, which is
supposed to apply to all internal complaint-handling processes, doesn’t include
the use of an affiliate’s internal ombudsman. These dealers are able to divert
hundreds of complaints each year from OBSI to their own “ombudsman” without
fear of sanctions.</span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA; mso-themecolor: text1;"></span><br />
<br />
<br />
<br />
<span style="color: black; font-family: "Verdana",sans-serif; mso-themecolor: text1;">Bank-owned dealers have cleverly subverted CSA intentions
by offering the <i style="mso-bidi-font-style: normal;">optional</i> (sometimes
not) third step choice- their own internal “ombudsman”. Complainants
sidetracked there are entering a no man’s land with an entity that is neither
an ombudsman nor independent of the dealer, nor under CSA/IIROC/MFDA jurisdiction.
Trusting and gullible complainants, to their detriment, assume that this entity
is a real ombudsman and voluntarily agree to subject themselves to this entity
instead of the regulated, independent ombudsman service-OBSI. It should be
noted that proposed Federal Bill C-86 would not permit these
internal ombudsman to assert they are independent or use the misleading nomenclature
“ombudsman”. This is a clear recognition by lawmakers that these internal
“ombudsman” are merely an artifice to mislead clients and add a completely
unnecessary step in resolving complaints.</span><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif;">How can an
investigator from the bank’s ombudsman’s office be impartial given that he/she
is an employee of the bank, may have existing relationships with parties being
complained about and is ultimately accountable to the legal team of the bank?
The use of the descriptor <span style="color: black; mso-themecolor: text1;">“Ombudsman”
is not being made in good faith by the banks as the banks know that the
ombudsman’s true purpose is to protect the bank at the expense of the consumer
(in some countries such misrepresentation is illegal). In contrast to its true
purpose, the bank internal ombudsman is marketed to the consumer as that of a
fair, impartial and independent investigator.</span> Most clients do not
realize they are in an adversarial relationship. </span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">The inclusion of an
internal ombudsman in the dispute resolution process is solely for the benefit
of the dealer/banks and most definitely not in the complainant’s best interests.</span><span style="font-family: "Verdana",sans-serif;"></span><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Kenmar have therefore concluded that, while some dealers may use
the three-step complaint process appropriately, it is inherently prone to
misuse and abuse, in particular because it gives investment dealers an
incentive to reject complaints at the first two steps on the basis that only a
relatively small number of complainants will persevere and the dealer then
has a third chance to rectify any shortcomings or, more likely,
again provide an unsatisfactory offer.</span><br />
<br />
<br />
<br />
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;">Unlike OBSI, internal Ombudsman are not transparent - their
loss-calculation methodology is not publicly disclosed</span><span style="color: black; font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA; mso-themecolor: text1;">. Kenmar argue that any</span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;"> interaction with the
internal ombudsman helps the Dealer as part of its risk reduction and
defence-building processes. Complainants are not cognizant of the fact that any
information provided can later be used by the Dealer to defend itself if an external
complaint process is commenced. In other words, complainants are in harm’s way.</span><span lang="EN" style="color: black; font-family: "Helvetica",sans-serif; font-size: 10.5pt; mso-ansi-language: EN; mso-themecolor: text1;"></span><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">The reason OBSI was purposefully created was to deal fairly and
expeditiously with cases where clients are not satisfied with the dealer's
substantive response letter delivered within 90 calendar days. There is no need
for a third step involving a non-independent, unregulated internal
"ombudsman". It unduly increases the complaint cycle time beyond 90
days, eats into precious statute of limitation time , exposes complainants to
conflict-of-interests and legal risks and adds to complainant stress and disillusionment. </span><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">We have found that if a complainant is rejected 3 times, it is highly
unlikely he/she will proceed further. This may explain the relatively small
number of investor complaints that reach OBSI. Therefore, we recommend that the
CSA abolish the three-step process. The new rules would mean that the firm’s step
2 response would be its definitive ‘Final response’. </span><br />
<br />
<br />
<br />
<span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Complainants would then be given a crystal clear message that they can
escalate their complaint to OBSI (where the limitation time clock is stopped),
must do so within 180 calendar days or pursue litigation/IIROC arbitration. We
believe that this will lead to investment dealers focusing their attention on
providing robust responses to complaints at the first two points of contact. This
should lead to fairer, higher quality complaint <span style="color: black; mso-themecolor: text1;">decisions. It</span></span><span style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-bidi-font-family: Helvetica; mso-themecolor: text1;"> <span lang="EN">would put an end to consumers having to restate their
complaints twice or more, something that stops many people taking their cases
further.</span></span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA; mso-themecolor: text1;"> </span><span style="color: black; font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA; mso-themecolor: text1;">This would also reduce the complexity of the
process for retail investors therefore reducing the abandonment rate of valid complaints.
</span><br />
<br />
<br />
<br />
<span style="color: black; font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA; mso-themecolor: text1;">Kenmar believe this is a major
socio-economic issue, aggravated by an increase in complaints by seniors/ vulnerable
investors, a rapidly growing demographic.</span><br />
<br />
<br />
<br />
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN; mso-themecolor: text1;">A fair and effective
independent dispute resolution service is important for investor protection in
Canada and is vital to the integrity and confidence of the capital markets</span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; mso-themecolor: text1;"> </span><span style="color: black; font-family: "Verdana",sans-serif; mso-themecolor: text1;">OBSI is the last line of defence in a Caveat Emptor
investing environment.</span><span style="color: black; font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA; mso-themecolor: text1;"> Accordingly, we
are of the firm conviction that an elimination of step 3 (internal ombudsman)
is in the Public interest. Kenmar urge the CSA to act given the overwhelming
evidence of investor harm we have provided.</span><br />
<br />
<br />
<br />
<br />
<span style="color: black; font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA; mso-themecolor: text1;">Ken Kivenko, President </span><br />
<br />
<span style="color: black; font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA; mso-themecolor: text1;">Kenmar Associates </span><br />
<br />
<br />
<br />
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Verdana",sans-serif; mso-fareast-language: EN-CA;">Reference </span></b><br />
<br />
<div style="line-height: 15.0pt; margin-bottom: .0001pt; margin-bottom: 0cm; mso-hyphenate: none; mso-pagination: none;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN-US; mso-bidi-font-family: Mangal; mso-bidi-language: HI; mso-fareast-font-family: SimSun; mso-fareast-language: HI; mso-font-kerning: .5pt;">Complaint
Handbook</span></b><span lang="EN-US" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN-US; mso-bidi-font-family: Mangal; mso-bidi-language: HI; mso-fareast-font-family: SimSun; mso-fareast-language: HI; mso-font-kerning: .5pt;">: MBC Law, author H. Geller <br />
</span><u><span lang="EN-US" style="color: blue; font-family: "Verdana",sans-serif; mso-ansi-language: EN-US; mso-bidi-font-family: Mangal; mso-bidi-language: HI; mso-fareast-font-family: SimSun; mso-fareast-language: HI; mso-font-kerning: .5pt;"><a href="https://static1.squarespace.com/static/58350df5b3db2bbc30614fbf/t/5b2444c86d2a734942edff91/1529103562413/Complaints+Process+for+Retail+Investments+in+Canada.Handbook.MBC+FLAG+2018.pdf"><span style="color: blue;">https://static1.squarespace.com/static/58350df5b3db2bbc30614fbf/t/5b2444c86d2a734942edff91/1529103562413/Complaints+Process+for+Retail+Investments+in+Canada.Handbook.MBC+FLAG+2018.pdf</span></a></span></u><span lang="EN-US" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN-US; mso-bidi-font-family: Mangal; mso-bidi-language: HI; mso-fareast-font-family: SimSun; mso-fareast-language: HI; mso-font-kerning: .5pt;"> </span><span lang="EN-US" style="color: black; font-family: "Verdana",sans-serif; mso-ansi-language: EN-US; mso-bidi-font-family: Mangal; mso-bidi-language: HI; mso-fareast-font-family: SimSun; mso-fareast-language: HI; mso-font-kerning: 1.0pt;"></span></div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-44369261442786420032019-02-11T11:37:00.002-05:002019-02-11T11:37:59.636-05:00Root Cause Analysis: Increasing the utility of IIROC Hearing Panels
<div style="margin: 0px;">
<span lang="EN" style="color: #555555; font-family: "Verdana",sans-serif; margin: 0px;">IIROC
investigates and initiates disciplinary proceedings to determine whether there
has been a breach of IIROC Rules , securities legislation, or other
requirements relating to trading or advising in respect of securities,
commodities contracts or derivatives.</span><span style="color: #333333; font-family: "Verdana",sans-serif; margin: 0px;"> Enforcement staff review the
findings of the investigation and recommend an appropriate course of action. </span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span style="color: #333333; font-family: "Verdana",sans-serif; margin: 0px;">If the evidence establishes a contravention of IIROC
requirements, Enforcement staff may initiate a disciplinary proceeding in order
to resolve the matter before an IIROC Hearing panel. </span><span style="color: #333333; font-family: "Verdana",sans-serif; margin: 0px;">The
Rules require that the Hearing Panel be made up of one public chair (generally
a retired judge or lawyer) and two industry members (either active or
retired).Hearing Panels decide the case based only on the evidence that is put
before them. This limitation is a barrier to corrective action as we discuss in
this document.</span><span lang="EN" style="color: #555555; font-family: "Verdana",sans-serif; margin: 0px;"></span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">The stated
purpose of IIROC disciplinary proceedings is to maintain high standards of
conduct in the securities industry and to protect market integrity. Sanction
Guidelines are intended to promote consistency, fairness and transparency by
providing a framework to guide the exercise of discretion in determining
sanctions which meet the general sanctioning objectives. IIROC <span style="margin: 0px;">Sanction Guidelines<i> </i></span>assist
Hearing panels in determining whether to accept settlement agreements. </span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">The Hearing Panel is responsible for the hearing process, determining
whether any misconduct occurred and if so, whether any sanctions should be
imposed on the Respondent. At the conclusion of a hearing, the Hearing Panel
issues written reasons for its decisions concerning misconduct and sanctions.</span><span lang="EN" style="font-family: "Verdana",sans-serif; margin: 0px;"> </span><span style="font-family: "Verdana",sans-serif; margin: 0px;"></span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">The declared
purpose of sanctions in a regulatory proceeding is to protect the public
interest by restraining future conduct that may harm the capital markets. In
order to achieve this, sanctions should be significant enough to prevent and
discourage future misconduct by the respondent (specific deterrence), and to
deter others from engaging in similar misconduct (general deterrence). We note
that investor compensation is not on the Panel radar- something that needs to
be addressed because client restitution is in the public interest.<span style="margin: 0px;"> </span></span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">Deterrence
is a key component of any effective enforcement strategy. Deterrence is
credible when would-be wrongdoers perceive that the risks of engaging in
misconduct outweigh the rewards and when non-compliant attitudes and behaviors
are discouraged. Deterrence occurs when persons who are contemplating engaging
in misconduct are dissuaded from doing so because they have an expectation of
detection and that detection will be rigorously investigated, vigorously prosecuted
and punished with robust and proportionate sanctions.</span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">Misconduct is defined as unacceptable or improper
behavior by a dealer and/ or Dealing Rep. However, not all rule breaches are a
result of deliberate registrant misconduct. We could include </span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">negligence / errors of
omission, </span><span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">inadvertent error, </span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">ineffective disclosure processes and </span><span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">honest
misunderstandings. Other more likely <span style="margin: 0px;"> </span>potential causes include but are not limited
to poorly framed rules, deficient prospectuses, outdated policies and procedures,
weak business / IT control systems, unqualified staff, deficient KYC process, inadequate
staff training, lax supervisory processes , an ineffective compliance function
and poor complaint handling. </span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">Consider poor client
complaint handling- it is a recurring issue. If client complaints were handled
more effectively, much investor grief could be avoided. It is our firm
conviction that IIROC rule 2500B is a root cause. The rule lacks depth, favors
dealers, allows diversions to internal “ombudsman” and is open loop as regards
systemic issues. See <i style="mso-bidi-font-style: normal;">More issues with
IIROC complaint handling Rules</i> </span><span style="margin: 0px;"><u><span lang="EN" style="color: #4472c4; font-family: "Verdana",sans-serif; margin: 0px;"><a href="http://www.canadianfundwatch.com/2018/04/mre-issues-with-iiroc-client-complaint.html"><u><span style="color: #4472c4; margin: 0px;">http://www.canadianfundwatch.com/2018/04/mre-issues-with-iiroc-client-complaint.html</span></u></a></span></u></span><u><span lang="EN" style="color: #4472c4; font-family: "Verdana",sans-serif; margin: 0px;"> </span></u><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; margin: 0px;"><span style="margin: 0px;"> </span>and </span><i style="mso-bidi-font-style: normal;"><span style="border-image: none; border: 1pt windowtext; color: black; font-family: "Verdana",sans-serif; margin: 0px; padding: 0cm;"><a href="http://blog.moneymanagedproperly.com/?p=5846" title="Permalink to Fairness and balance in the complaint process where interests of the dealer and registered representative must be considered!"><span style="color: black; margin: 0px;">Fairness and balance in the complaint
process where interests of the dealer and registered representative must be
considered!</span></a></span></i><span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;"> <u><span lang="EN" style="margin: 0px;"><span style="margin: 0px;"> </span><span style="margin: 0px;"> </span></span></u></span><u><span lang="EN" style="color: #4472c4; font-family: "Verdana",sans-serif; margin: 0px;">http://blog.moneymanagedproperly.com/</span></u><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; margin: 0px;"></span></div>
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<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">Leveraged
ETF’s are another example .LETF’s may be mis-sold to a buy-and-hold investor
because the Rep did not understand the mechanics of LETF’s. The reason
for the mis-selling could be that he/ she did not fully understand the product because
the dealer did not ensure Reps were adequately trained to recommend such
complex products. The root cause of the breach then is a deficient dealer
training program for Reps coupled with lax dealer supervision. Another example
might be weak risk profiling tools provided by the dealer. Any Rep using such
tools might conclude with an improper client risk profile which could in turn result
in unsuitable recommendations. In such a case, the root cause of the rule
contravention is dealer management which had provided Reps with inadequate
tools of the trade.</span></div>
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<br /></div>
<div style="margin: 0px;">
<span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">A root cause is defined as a
factor that caused a non-conformance/ Rule breach and should be permanently
eliminated through process improvement. Root cause analysis (RCA) is a
collective term that describes a wide range of approaches, tools, and </span><span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">techniques
used to uncover causes of problems. The highest-level cause of a
problem is called the root cause. </span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">Root
cause analysis is part of a more general</span><span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;"> problem solving</span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; margin: 0px;"> process and an integral part of</span><span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">
continuous improvement.</span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">Because of this, root
cause analysis is one of the core building blocks in an organization’s
continuous improvement efforts.</span></div>
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<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Verdana",sans-serif; margin: 0px;">Root Cause Analysis (RCA) </span></b></div>
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<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhESZk7S422edY2whiCgE7GIamt8AZdPyh1fUebAz5JnFApBwa9MoHypeO5r4HXgyTwwm3uBHw9yBZCsHz1DNYclnL6eDLOSo7iQsFwjAPwVkINhQStjGwjtlJCrOXhbl55l6AJd3_FiJLL/s1600/root-cause-diagram2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="295" data-original-width="247" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhESZk7S422edY2whiCgE7GIamt8AZdPyh1fUebAz5JnFApBwa9MoHypeO5r4HXgyTwwm3uBHw9yBZCsHz1DNYclnL6eDLOSo7iQsFwjAPwVkINhQStjGwjtlJCrOXhbl55l6AJd3_FiJLL/s1600/root-cause-diagram2.jpg" /></a></div>
<div style="margin: 0px;">
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<div style="margin: 0px;">
<span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">Many rule breaches have their root cause in dealer
compensation models. Compensation drives Rep behaviour which leads to misconduct
if the design is defective and dealer monitoring is sporadic .For instance:
supervisors</span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; margin: 0px;"> obtaining commission over-rides on staff supervised, branch managers
compensated solely based on branch profitability, commission grids biased
towards proprietary products and conflicts-of-interest associated with
recommending a fee -based account. Unless Hearing Panels dig deep, such
systemic issues may not be identified or dealt with. In fact, we now know via
the IIROC compensation survey that such investor-unfriendly practices have been
alive and well for years. They were there in full sight but not dealt with by
Hearing Panels.</span><span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;"></span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">Hearing
Panels are structured to decide cases where there had been a breach of IIROC
rules /securities laws -misconduct. A critical role to be sure, but breaches can
also provide invaluable information about how the regulatory control system is
functioning (or not). <br />
<br />
While it is necessary to sanction Dealers /individuals for breaches, it is also
necessary to drill down further. Is the Rep proficient in dealing with
de-accumulating accounts? Is the compensation and reward system designed to
incent individuals to cross the line? Are sales quotas unrealistic and/or
inappropriate? Have Reps been provided the tools they need to do their job? Are
supervisory control systems robust? Are dealing representative recruitment
criteria matched up with the ethical and conduct standards to comply with
securities regulations /laws and the provision of trustworthy personalized
financial advice? Are controls and information systems designed to promptly
detect system breaches? It is only by addressing root causes that we can
improve the system , reduce breaches and improve the fairness of decisions.</span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">It is well
known that discount brokers have been improperly collecting trailer commissions
for services and personalized advice that was not and could not be provided.
Yet until this was recently challenged via several Class Actions, the dealers
did nothing to stop the investor abuse.<span style="color: black; margin: 0px;"> In a very
real sense this was organized theft. Discounters could have easily set
parameters to exclude the purchase of funds that have a fee for personalized
advice or services just like the parameter to reject a stock or fund purchase
if there is not enough cash in the account to pay for the purchase. Over
all these years, were there not hearings where this could have been dealt with
before hundreds of millions of investor retirement savings were transferred to
dealers? This abuse is clearly a management responsibility- tone at the top. </span></span><span lang="EN" style="font-family: "Verdana",sans-serif; margin: 0px;"></span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">Since we
believe that management is responsible for 80-90 % of problems, Hearing Panels
should be checking to identify root causes rather than just deal with symptoms
of episodic misconduct. In that way the overall system can be corrected and
failure mechanisms eliminated. This is called continuous improvement and it is
missing from the current Hearing process design.</span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">Too many
Panel hearings fail to establish corrective actions based on Root Cause analysis.
Kenmar have observed that dealers with sound supervisory practices for
suitability generally identified risks, developed policies, and implemented
controls tailored to the specific features of the products they offered and
their client base. These controls help identify any bad practices by Dealing Reps
long before they become big problems. These controls include, for example,
restricting or prohibiting recommendations of products for certain investors (
e.g. seniors) , as well as establishing systems- based controls (or “hard
blocks”) for recommendations of certain products to retail investors to ensure
that representatives adhered to those restrictions or prohibitions. Technology
and specialized software ( e.g. security risk-rating ) can greatly assist
supervision and compliance. These are the kind of corrective actions we’d like
to see considered on every case. </span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">Some dealers
also implement methods to verify the source of funds for leveraged transactions.
In addition, certain dealers require representatives, including principals with
supervisory responsibilities, to receive training on specific complex or
high-risk products before the representatives recommend them so the representatives
fully understood the products’ risks and performance characteristics, as well
as the types of investors for whom the product might not be suitable. Control System
issues should always be part of Panel decision making as they are often the
best form of lasting corrective action.</span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span lang="EN" style="font-family: "Verdana",sans-serif; margin: 0px;">We’ve also observed some Dealers facing challenges with
their supervisory control systems and other operational issues relating to
quantitative suitability. For example, as concluded by PlanPlus Research (<span style="margin: 0px;"><u><span style="color: #4472c4; margin: 0px;"><a href="http://www.osc.gov.on.ca/documents/en/Investors/iap_20151112_risk-profiling-report.pdf"><u><span style="color: #4472c4; margin: 0px;">http://www.osc.gov.on.ca/documents/en/Investors/iap_20151112_risk-profiling-report.pdf</span></u></a></span></u></span><u><span style="color: #4472c4; margin: 0px;"> },</span></u><span style="color: #4472c4; margin: 0px;"> </span>most risk profiling
processes in use today are unfit for use. Deficient risk profiling processes
were never explicitly flagged by Panels as a systemic root cause – the belief
was that it was always the individual that was responsible.<span style="margin: 0px;"> </span>“Misconduct” and unsuitable recommendations
will continue until core KYC processes are corrected. See SIPA report <span style="margin: 0px;"> </span></span><i style="mso-bidi-font-style: normal;"><span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">Improving the KYC process</span></i><span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;"> <br />
</span><span style="margin: 0px;"><u><span style="color: #4472c4; font-family: "Verdana",sans-serif; margin: 0px;"><a href="https://www.sipa.ca/library/SIPAsubmissions/500%20SIPA%20REPORT%20-%20KYC%20Process%20Needs%20Overhaul%20-%20201607.pdf"><u><span style="color: #4472c4; margin: 0px;">https://www.sipa.ca/library/SIPAsubmissions/500%20SIPA%20REPORT%20-%20KYC%20Process%20Needs%20Overhaul%20-%20201607.pdf</span></u></a></span></u></span><span lang="EN" style="font-family: "Verdana",sans-serif; margin: 0px;"></span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span lang="EN" style="font-family: "Verdana",sans-serif; margin: 0px;">The scandal involving double billing is a prime example
of a breakdown in control systems. The inability to correctly assign fees and
promptly detect the mischarging was a systemic issue within firms and across
the industry. It is clear from the no –contest Settlement agreements that the
wealth management industry needs to beef up the quality assurance of its
systems and controls. This requires ongoing system audits, periodic system
testing and review of client complaints/ feedback. Process owners need to be
held accountable. Root cause analysis was not employed by securities regulators.
Hearing Panels should have enumerated a corrective action plan in addition to
fines and other sanctions. Merely consenting to fix the systems for fee
calculation robustness does not explain the poor initial design and failure to
uncover fundamental system flaws, in some cases, for over a decade. CRM2
reporting was instrumental in bringing the internal control issue to light.</span><span lang="EN" style="margin: 0px;"><br />
<span style="font-family: Calibri;"><br /></span>
</span><span lang="EN" style="font-family: "Verdana",sans-serif; margin: 0px;">When a Dealer or Rep has “actual or de facto control” over a client’s
account, there must be a reasonable basis that a series of recommended
securities transactions are not excessive and unsuitable in light of the client’s
investment profile. DSC mutual fund manipulations and fund churning are a classic
example that should not be permitted to happen. Some progressive dealers have
developed parameters for trading volume and cost to identify and prevent
excessive trading/fund churning as well as restrictions on frequency or
patterns of clustered or single product exchanges. In some cases, clients whose
accounts breached the firm’s thresholds should receive telephone calls from
principals or detailed activity letters setting forth the frequency and cost of
trading over specific periods. These are the kind of learnings and action plans
we’d like to see integral to Panel Decisions.</span><span lang="EN" style="margin: 0px;"><br />
<span style="font-family: Calibri;"><br /></span>
</span><span lang="EN" style="font-family: "Verdana",sans-serif; margin: 0px;">The best dealers have an organized, validated risk profiling process.
System triggers should kick in when certain KYC criteria are incongruent or
suspicious. Too many dealers do not have controls in place to validate changes
in risk profile. All too often we see risk tolerance increased simply to
justify what has been sold to clients. Better supervisory controls should be
applied to risk profile changes increasing the client’s risk tolerance. </span><span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">Our
review of numerous Panel cases suggests that Seniors/ retirees should not
be put through the same KYC processes as clients of other age groups and the
frequency of KYC updates /type of KYC information gathered should vary with
age. </span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">We would like to see IIROC formally build corrective
action into its Panel Decision objectives. IIROC </span><span lang="EN" style="font-family: "Verdana",sans-serif; margin: 0px;">should summarize
these observations for industry action and/or a change in Rules.</span><span lang="EN" style="margin: 0px;"><br />
<span style="font-family: Calibri;"><br /></span>
</span><b style="mso-bidi-font-weight: normal;"><span lang="EN" style="font-family: "Verdana",sans-serif; margin: 0px;">The bottom line</span></b><span lang="EN" style="margin: 0px;"><span style="font-family: Calibri;"> </span></span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span lang="EN" style="font-family: "Verdana",sans-serif; margin: 0px;">IIROC has worked on improving the efficiency of enforcement
/Hearing Panels and the collection of fines , primarily from individuals. This
may improve investor protection at the margin. A true corrective action program
would yield much more substantive, lasting effects and thereby less need for
Hearings and fine collection. As professor Peter Drucker has said “<span style="margin: 0px;"> </span>Doing the right thing is more important
than<span style="margin: 0px;"> </span>doing things right”. When tactics
and strategy balance, regulation is enhanced.</span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span lang="EN" style="color: black; font-family: "Verdana",sans-serif; margin: 0px;">Obviously, individuals should be sanctioned for misrepresentation, unauthorized
trading, Off book sales, signature forgery / document adulteration and
fraudulent acts. But even in these cases, the Dealer should be jointly held
accountable for the actions of its representatives. It is therefore our view
that the Hearings process should be reviewed and updated to reflect prevailing
thinking on securities regulation, dealer accountability and enhanced investor protection
expectations.</span><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; margin: 0px;"></span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">We’ve
found that currently dealers and Dealing Reps are not doing enough to uphold
the suitability standard for their clients, .They must be able to demonstrate
why their recommendations are a good fit for the client’s unique needs/goals,
risk profile, personal and financial circumstances – in other words, to
practise KYP ,KYC and responsible supervision. One solution might be a
recommendation that Investment Policy Statements be employed as industry standard
practice. That is the kind of deliverable we’d expect if Panel decisions were analyzed
with a corrective action perspective rather than on case by case basis limited
to sanctions. As currently structured , such a recommendation from a Panel is
unlikely .</span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span lang="EN" style="font-family: "Verdana",sans-serif; margin: 0px;">Each Panel decision should, as a Best practice, look not
only at sanctions/deterrence but also at underlying management control and
supervisory systems. Every breach of the rules is an opportunity for
improvement. An ounce of prevention is worth a pound of cure.</span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span lang="EN" style="font-family: "Verdana",sans-serif; margin: 0px;">The Panels can be given a form of score sheet or
checklist that could be used to help Panel members test for common weaknesses;
the information from these can be entered and analyzed for even broader
value.<span style="margin: 0px;"> </span>FAIR Canada and others have
called for considerably stronger analytics and publicly accessible, relational,
searchable databases that will better focus regulatory action. 2019 is the year
to get this initiative under way. </span></div>
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span lang="EN" style="font-family: "Verdana",sans-serif; margin: 0px;">Ken Kivenko </span></div>
<div style="margin: 0px;">
<br /></div>
kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-5689528282106279592019-01-05T23:44:00.002-05:002019-01-05T23:44:26.636-05:00Canadians and Investment complaints
<br />
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">Canadians
are provided investment advice under the lowly suitability standard by people
that are operating with numerous conflicts-of-interest . As a result, the
likelihood of being sold unsuitable investments, overcharged or sold expensive
products is not insignificant. In addition, there is the usual assortment of
wrongdoing including account churning, undue leveraging, , unauthorized
trading, reverse churning and fraud. This means that the likelihood of having a
complaint against your dealer is to be expected. There are many issues related
to filing a complaint including not knowing your rights, a complex process and
dealers who view a complaint in an adversarial manner rather than an
opportunity to create client satisfaction and process improvements. This
<a href="https://drive.google.com/file/d/1UMmI7s1K_1B5EKsTiQMPrAm_1ueaAzdq/view?usp=sharing">article</a> details the challenges and offers some constructive changes for reform.</span></div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-90878682485716731752019-01-05T23:34:00.001-05:002019-01-07T23:02:50.706-05:00The illusion of independent supervision <span style="font-family: "verdana" , sans-serif;"></span><br />
<div style="margin: 0px;">
<br /></div>
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN" style="color: #555555; font-family: "verdana" , sans-serif; margin: 0px;">“It's best that the king's food taster
reporst to the king rather than the chef”</span></b><span lang="EN" style="color: #555555; font-family: "verdana" , sans-serif; margin: 0px;"> – Machiavelli , the Prince</span><b style="mso-bidi-font-weight: normal;"><span style="font-family: "verdana" , sans-serif; margin: 0px;"></span></b></div>
<br />
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;">For years
we’ve been complaining about lax supervision of Dealing Reps (aka “advisors”,
salespersons). It has been a mystery how so much wrong-doing was effected in
plain sight of supervisors and branch managers for extended periods of time.
A number of White Hat Reps have gotten the courage to clue us in. Here is
what they tell us:</span></div>
<br />
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px 0px 0px 48px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "verdana" , sans-serif; margin: 0px;">Branch
managers may obtain over-rides of sales commissions received by those they
supervise. </span></div>
<br />
<div style="margin: 0px 0px 0px 48px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "verdana" , sans-serif; margin: 0px;">Branch
managers may receive a bonus based solely on the revenue/profitability of
the branch </span></div>
<br />
<div style="margin: 0px 0px 0px 48px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "verdana" , sans-serif; margin: 0px;">Some
Branch managers also double as Reps so in effect they are part time managers. </span><span style="font-family: "verdana" , sans-serif; margin: 0px;">Some
Branch managers have actually purchased the client “book “from those they are
supposed to supervise. </span></div>
<br />
<div style="margin: 0px 0px 0px 48px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "verdana" , sans-serif; margin: 0px;">Branch
managers may be rewarded based on the number of new Reps brought on and on AUM
growth <span style="margin: 0px;"> </span></span></div>
<br />
<div style="margin: 0px 0px 0px 48px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span lang="EN" style="font-family: "verdana" , sans-serif; margin: 0px;">Branch managers are
tolerant of signature forgery, document adulteration and pre-signed blank forms</span><span style="font-family: "verdana" , sans-serif; margin: 0px;"></span></div>
<br />
<div style="margin: 0px 0px 0px 48px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "verdana" , sans-serif; margin: 0px;">Titles
such as VP can be awarded solely on the basis of sales production </span></div>
<br />
<div style="margin: 0px 0px 0px 48px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "verdana" , sans-serif; margin: 0px;">Dealers
provide greater incentives for fee-based accounts <br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span></div>
<br />
<div style="margin: 0px;">
<span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">We’ve also been told that at some firms when a Rep under a
manager quits or is fired ,the Branch manager hand picks the largest accounts
for himself and passes on the small ones to other registered Reps.</span></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;"><span style="font-family: "verdana" , sans-serif; margin: 0px;">The
conflicts -of-interest here are enormous so it should come as no surprise that
supervisory controls are lax. In effect, we have conflicted Reps overseen by
conflicted supervisors (gatekeepers).</span><br />
</span><span style="font-family: "verdana" , sans-serif; margin: 0px;"><span lang="EN" style="font-family: "verdana" , sans-serif; margin: 0px;">Branch Manager duties
typically include the review and approval of new client application forms
(NCAF’s) and client account updates, as well as the review of daily and monthly
trading summary reports. <span lang="EN" style="font-family: "verdana" , sans-serif; margin: 0px;">They are there to ensure
that Reps under their supervision do not engage in improper or unlawful
behaviour e.g. suitability, discretionary trading, leveraging, excessive
trading (churning) violations or fraud.</span><span style="font-family: "verdana" , sans-serif; margin: 0px;"></span></span></span><br />
<span style="font-family: "verdana" , sans-serif; margin: 0px;"><span lang="EN" style="font-family: "verdana" , sans-serif; margin: 0px;"></span></span><br />
<div style="margin: 0px;">
</div>
<span style="font-family: "verdana" , sans-serif; margin: 0px;"><span lang="EN" style="font-family: "verdana" , sans-serif; margin: 0px;">
</span></span>
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;"><span style="font-family: "verdana" , sans-serif; margin: 0px;"></span></span></div>
<span style="font-family: "verdana" , sans-serif; margin: 0px;">
</span><b></b><i></i><u></u><sub></sub><sup></sup><strike></strike></div>
<div style="margin: 0px;">
<span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">In
a 2017 Guidance NOTE </span><u><span style="color: #4472c4; font-family: "verdana" , sans-serif; margin: 0px;"><a href="http://www.iiroc.ca/Documents/2017/5365cb5b-e384-477f-8fc0-8c2b9450424a_en.pdf"><span style="color: #4472c4; margin: 0px;">http://www.iiroc.ca/Documents/2017/5365cb5b-e384-477f-8fc0-8c2b9450424a_en.pdf</span></a>
<span style="margin: 0px;"> </span></span></u><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">IIROC noted that in most Dealers .reviewed,
they saw supervisors compensated partly (to varying degrees) on revenue
generated by registrants subject to the supervisor’s oversight.</span></div>
<br />
<div style="margin: 0px;">
<span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">IIROC
Dealer Member Rule 2500 III.A.3 requires that:</span></div>
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">“A Dealer Member should
ensure <u>independent</u> supervision of all retail accounts.”<span style="margin: 0px;"> </span></span></b><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">IIROC <span style="margin: 0px;"> </span>adds "<i style="mso-bidi-font-style: normal;">While this rule is more frequently cited to
ensure a producing supervisor does not have supervisory oversight over his or
her own accounts, the spirit of the rule speaks to the need for genuinely
independent supervision. </i></span><i style="mso-bidi-font-style: normal;"><span style="color: red; font-family: "verdana" , sans-serif; margin: 0px;">It is understandable that
the compensation of a supervisor who is also a branch manager is based partly
on the overall profitability of his or her branch</span></i><i style="mso-bidi-font-style: normal;"><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">. However, the Dealer should consider other factors in determining
supervisor compensation that would offset any undue bias towards branch
profitability at the expense of client best interest</span></i><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">.”. </span></div>
<br />
<div style="margin: 0px;">
<span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">IIROC finds it acceptable that Branch Managers can be partly
compensated based on branch profits and can also be dealing Reps,
supposedly supervised by someone else. More importantly, IIROC believes that the non--independence
can be negated by other, albeit unspecified, factors. IIROC’s </span><span style="font-family: "verdana" , sans-serif; margin: 0px;">guidance is pretty vague and leaves it
entirely up to dealers to resolve the conflict-of-interest- the very dealers
who have created the conflict-of-interests. Apparently <i style="mso-bidi-font-style: normal;">independen</i>t doesn’t really mean <u>independent</u> in the commonly understood
use of the word. </span><span lang="EN" style="font-family: "verdana" , sans-serif; margin: 0px;">There really is a good
reason why external auditors report to the Board and not management-
independence.</span><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;"></span></div>
<br />
<div style="margin: 0px;">
<span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">For
example, without a rule regarding fee -based accounts, we do not see how,
except in the most abusive cases, IIROC can give operational meaning to its
guidance on independent supervision. IIROC have not created criteria that would
enable them to robustly enforce certain issues e.g. wrong account type.</span></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;">We think
these conflicts must and can be avoided. There are numerous ways to measure how
well a manager is supervising staff. Dealers should be required to prove to
regulators that managers’ performance is evaluated based on many factors so
that branch profitability isn’t a factor. This can be done by investment
dealers just as it is done in retail, manufacturing, etc. companies. </span></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;">Here are
some ideas for rewarding Branch managers/ supervisors:</span></div>
<br />
<div style="margin: 0px 0px 0px 48px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "verdana" , sans-serif; margin: 0px;">The
manager/branch office supervisor should be evaluated on her/his performance in
implementing corporate standards of behaviour. This assumes, of course, that
the firm expects employees to behave as well trained professionals compliant
with regulatory requirements. </span></div>
<br />
<div style="margin: 0px 0px 0px 48px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "verdana" , sans-serif; margin: 0px;">Measuring
the number of client complaints at the branch </span></div>
<br />
<div style="margin: 0px 0px 0px 48px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;">
</span></span></span><span style="font-family: "verdana" , sans-serif; margin: 0px;">How
well the manager is supervising his staff’s compliance with the regulations. There
should be a review of supervisor’s performance from the firm’s compliance
department certifying how many regulatory violations the supervisor’s advisers
have had. So a branch manager’s performance includes how well he is
managing staff from a regulatory perspective. If dealers are required to
explicitly approve a supervisor’s performance, this will raise the bar, putting
Compliance staff on the line... Example: if a Branch manager has many staff
faking client signatures or if he allows big producers to get away with
discretionary trades... compliance department will be aware of this. </span></div>
<br />
<div style="margin: 0px 0px 0px 48px; text-indent: -18pt;">
<span style="font-family: "symbol"; margin: 0px;"><span style="margin: 0px;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt "Times New Roman"; margin: 0px;"> </span></span></span><span style="font-family: "verdana" , sans-serif; margin: 0px;">His/her
Reps are fully compliant and up to date with professional training and CE.
Supervisor gets rewarded if Reps are seeking more product knowledge training,
more professional upgrading, improving their professionalism <br style="mso-special-character: line-break;" />
<br style="mso-special-character: line-break;" />
</span></div>
<span style="font-family: "verdana" , sans-serif; font-size: 11pt; line-height: 107%; margin: 0px;"><span lang="EN" style="color: black; font-family: "Verdana",sans-serif; font-size: 12pt; line-height: 107%; margin: 0px;">We appreciate that the
conversion from a sales culture to a client focus will be challenging but the
journey must begin.</span>IIROC
as a Public interest regulator must address these fundamental conflicts-of-interest
in the supervision of Reps. </span><b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-60554227327502889492018-12-12T15:27:00.002-05:002019-07-04T09:43:50.072-04:00Checklist for the DSC mutual fund investor<span style="font-size: large;"><br /></span>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3yjZKqriwAPUJb8bSY_9wjxiTvRKdhMDZhwtsN7NKqFZGB8kaguC3Yx2fnqlJlFqJ2OpnSq0d_Y5VvLZ-EU5jIjFEKoJb_5sucsyaDG93JYQYmM-dNVYLCOv-8Gt0aO2QvFcBtZzuDexc/s1600/DSC+owner+sentenced.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1080" data-original-width="955" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3yjZKqriwAPUJb8bSY_9wjxiTvRKdhMDZhwtsN7NKqFZGB8kaguC3Yx2fnqlJlFqJ2OpnSq0d_Y5VvLZ-EU5jIjFEKoJb_5sucsyaDG93JYQYmM-dNVYLCOv-8Gt0aO2QvFcBtZzuDexc/s320/DSC+owner+sentenced.jpg" width="282" /></a><span style="font-size: large;"><br /></span></div>
<span style="font-size: large;">Thanks to D. McFadden </span><br />
<span style="font-size: large;"><br /></span>
<span style="font-size: large;"></span><br />
<span style="font-size: large;">
</span><br />
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;"><b>For mutual
fund investors, deferred sales charges (also known as “back-end fees”) can
cause a lot of headaches when investors come to realize that their investments
are essentially locked-in by deferred sales charge (DSC). The DSC is a fee that
gets charged to a client (5-6% in year 1, declining to 0% in years 6-7) if they
sell a mutual fund without transferring it to another mutual fund from the same
company. There is no penalty fee if you switch funds within the same fund
family but the dealer may charge a switch fee varying between 0-2%.</b></span></div>
<b></b><b></b><b></b><br />
<span style="font-size: large;">Investor advocates have warned investors for years about the DSC sold mutual fund. Securities regulators are proposing to ban them outright. If your fund salesperson attempts to sell you a DSC fund we suggest you ask Questions like:</span><br />
<span style="font-size: large;"><br /></span>
<span style="font-size: large;">1. Why are the MER’s of DSC funds identical to front load funds?
Answer should be: The MER’s are identical because the fund companies have decided not to create a separate DSC series; this means that other fund investors are unknowingly subsidizing DSC unitholders.</span><br />
<span style="font-size: large;">2. What happens if I need access to cash during the redemption period due to a family or other emergency?
Answer should be: A penalty must be paid per redemption schedule. No exceptions. </span><br />
<span style="font-size: large;">3. Does the redemption penalty apply to original cost or current price of fund units?
Answer should be: It varies by firm. Best to check with the firm. </span><br />
<span style="font-size: large;"><br /></span>
<span style="font-size: large;">4. What happens if I take distributions in cash?
Answer should be: If distributions are paid in cash they go toward the 10% of units that can be redeemed each year without attracting a redemption charge. </span><br />
<span style="font-size: large;">5. Does the penalty still apply if I die?
Answer should be: The penalty must be paid by the estate if the fund is redeemed. </span><br />
<span style="font-size: large;">6. Can I redeem some units for free?
Answer should be: Yes, 10% are free redemption units each year but privilege is not cumulative. Use it or lose it. </span><br />
<span style="font-size: large;"><br /></span>
<span style="font-size: large;">7. Do I have to reinvest distributions?
Answer should be: No, reinvestment is at option of unitholder.</span><br />
<span style="font-size: large;">8. What happens to my DSC units after the redemption period has expired?
Answer should be: They remain as DSC units but with no redemption schedule ( at least one firm auto converts to Front load with lower MER). </span><br />
<span style="font-size: large;">9. What commissions do you receive on this sale?
Answer should be: The dealer and salesperson share a 5% upfront payment+ trailer commissions (typically 0.50% p.a.) for as long as you own the fund. </span><br />
<span style="font-size: large;"><br /></span>
<span style="font-size: large;">10. Is there a cost to switch funds? How much?
Answer should be: Yes. Cost can be up to 2%. Switch fees can be negotiated.</span><br />
<span style="font-size: large;">11. Is the redemption penalty tax deductible?
Answer should be: Yes, in open account as it reduces returns; No in registered accounts where capital losses cannot offset gains.</span><br />
<span style="font-size: large;">12. Does it make sense to buy a money market fund on a DSC basis?
Answer should be : No, since a money market fund is a temporary parking spot for cash, liquidity is key. </span><br />
<span style="font-size: large;"><br /></span>
<span style="font-size: large;">13. What if the fund is merged with another fund I don’t like?
Answer should be: A redemption from the merged fund will still involve an early redemption penalty fee. </span><br />
<span style="font-size: large;">14. Can the MER be increased during the hold period?
Answer should be: Yes, it could happen .</span><br />
<span style="font-size: large;">15. Why are regulators proposing to ban the DSC?
Answer should be: There is a massive mis-alignment of investor-representative interests. </span><br />
<br />
<span style="font-size: large;">16. Are reinvested distributions subject to a new redemption schedule?
Answer should be: No . </span><br />
<span style="font-size: large;">17. Do you sell other lower cost products?
Answer should be: YES – Index funds, ETF’s among others. </span><br />
<span style="font-size: large;">18. Are there other versions of the fund with shorter hold periods?
Answer should be: Yes, no- load, front load (typically 0%) with no constraint on holding period and low-load funds are available with shorter redemption periods. Check with your fund salesperson. </span><br />
<span style="font-size: large;"><br /></span>
<span style="font-size: large;">NOTE: In a number of well documented cases , unethical advisors will recommend redeeming a mutual fund as soon as the redemption schedule expires and buy a new fund, starting the dreaded redemption schedule all over again. A lack of liquidity is exactly the opposite of what investors need.</span><br />
<span style="font-size: large;"><b></b><i></i><u></u><sub></sub><sup></sup><strike></strike><br /></span>
<span style="font-size: large;">If after you receive honest answers, and you still want to buy a DSC fund, we wish you the very best of luck. DSC sold funds have been abused by salespersons. For example, when the redemption period expires, the salesperson will recommend selling the DSC fund and purchasing a new fund, thereby starting the redemption schedule all over again. In some cases, DSC funds have also been sold to clients with time horizons less than the redemption schedule. DSC investors, especially seniors, need to be wary of numerous shenanigans. Professional advisors do not recommend DSC series funds as they are not in your best interests. Be ALERT.
</span>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-44712931549888195322018-11-28T11:57:00.000-05:002018-11-28T11:57:02.466-05:00Simple Do’s and Don’ts for Investors by advisor Bruce Loeppky
<br />
<div style="margin: 0px;">
<b><span style="font-family: "Verdana",sans-serif;"></span></b><br /></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">I am in
contact with some investor advocates and am shocked that things are still
happening that I hoped would disappear or at the very least be very infrequent
events by this point in time. Investors are still being ripped off by rogue
financial advisors; clients are still buying DSC mutual funds and still
borrowing to invest when they shouldn’t. These are three of the most common
problems plaguing the financial services sector.</span></div>
<br />
<div style="margin: 0px;">
<br /></div>
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Verdana",sans-serif; margin: 0px;">1. Rogue ‘Financial Advisors’ </span></b></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">There are a
number of things you can do (or look for) to ensure that you never get put in
the position of losing your nest egg to an unscrupulous ‘financial advisor’;</span></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;"><br /></span></div>
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">Don’t EVER
sign a cheque to your ‘financial advisor’. Always to the firm or fund company.
That way you will have the company’s protection if things go sideways. If you
sign a cheque to your ‘financial advisor ‘he will deposit it into his own bank
and it won’t go through the companies normal processing so they will be unaware
of its existence. If it goes through their system they have a record of it and
can probably rectify the situation. Is he living an extravagant lifestyle? That
can be a sign. Sometimes where people get too successful. they feel they are
untouchable.</span></div>
<br />
<div style="margin: 0px;">
<br /></div>
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Verdana",sans-serif; margin: 0px;">2. To DSC or NOT DSC?</span></b></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">Why are
people still buying DSC mutual funds when they essentially lock you into a fund
company for 6-7 years, unless you pay the penalties for early redemption? Don’t
invest with a Front End (FE/or ISC) Option that takes away 1-5% of your
investment before the starting line either. ONLY invest FE 0% to give you full
flexibility.</span></div>
<br />
<div style="margin: 0px;">
<br /></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">There is
NO advantage to purchasing mutual fund with the DSC option. It limits your
flexibility and costs you money if you redeem early or move to another fund
company.</span></div>
<br />
<div style="margin: 0px;">
<br /></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">If your
Financial Advisor forces you to decide between DSC and FE 3-5% for example,
look for somebody else or go to the bank until you find somebody that offers
that option. Banks and credit unions always offer FE 0%.</span></div>
<br />
<div style="margin: 0px;">
<br /></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">The DSC
option should go the way of the dinosaurs in my opinion. The ONLY time I would
OK its use is if you are working with a newly licenced advisor and he needs to
use it to stay in business while he build his practice. The option does provide
more immediate income to the financial advisor.</span></div>
<br />
<div style="margin: 0px;">
<br /></div>
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Verdana",sans-serif; margin: 0px;">3. Borrowing to Invest (Leveraging</span></b><span style="font-family: "Verdana",sans-serif; margin: 0px;">) </span></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">This is
the most over used strategy in the industry and I saw it abused many times
while at investors Group where the use of it was promoted frequently as a
method of earning more money and growing your book of assets faster, but at
whose expense?</span></div>
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Verdana",sans-serif; margin: 0px;">Only examine this strategy IF</span></b><span style="font-family: "Verdana",sans-serif; margin: 0px;">; you have a good/steady job, you
maximize your RRSP’s every year, your home is paid off or you have a very low
small mortgage, high income(s) and you have no debt. I have seen too many
people come to me who borrowed $100,000 only to have it sitting at $65000 after
a correction and are upset about the method in which the leverage was sold to them.
</span></div>
<br />
<div style="margin: 0px;">
<br /></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">Most
people can deal with a loss IF one of your potential scenarios showed a 30%-40%
loss one year. The problem is that most projections show a steady 7% growth
rate and the numbers all look very rosy <b style="mso-bidi-font-weight: normal;">and
unrealistic</b>.NO markets or investments rise as a steady 7% year after year. Every
10 years you will see a major correction and illustrations should reflect that
reality.</span></div>
<br />
<div style="margin: 0px;">
<br /></div>
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "Verdana",sans-serif; margin: 0px;">Trust your Gut</span></b></div>
<br />
<div style="margin: 0px;">
<br /></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">If your
gut is telling you something, listen to it.If the numbers sound too good to be
true they likely are. If you have had investments work well (or not) for many
years and somebody (often a new financial advisor but not always) advises a
drastic change, check with your accountant or another financial planner/advisor
to get a second opinion. Don’t put everything in the same investment. Stay
diversified with different bonds, and both Canadian and foreign equities. Don’t
rush into anything. </span></div>
<br />
<div style="margin: 0px;">
<br /></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">Don’t move
forward if you feel pressured or must make a quick decision. I read recently
about a gentleman who owned a business and had about 2 million invested and
made a change (Exempt Market product I think) and within’ 3 months lost
everything and was forced to sell his cottage to stay afloat. He was coasting
along wanting for nothing after a successful career and ONE mistake changed his
position dramatically and it will never go back to where it was.</span></div>
<br />
<div style="margin: 0px;">
<br /></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">All it
takes is ONE big error and you’re in trouble. Make sure you (or your
parents/grandparents) don’t make it.Nobody needs that stress, especially when
you’re retired.</span></div>
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;"><br /></span></div>
<div style="margin: 0px;">
<span style="font-family: "Verdana",sans-serif; margin: 0px;">NOTE: The views expressed here represent the views of Mr. Loeppky and do not necessarily coincide with our position. We thought it important to allow advisors to let their voice be heard.</span></div>
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<br /></div>
<br />
<div style="margin: 0px;">
<br /></div>
<br />
<div align="center" style="margin: 0px 0px 13.33px; text-align: center;">
<br /></div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0tag:blogger.com,1999:blog-4766585986003571384.post-42200802353367866902018-10-16T23:38:00.002-04:002018-10-17T13:36:18.453-04:00DSC sold fund doomed in IIROC channel - if IIROC rules followed and enforced<br />
<div style="margin: 0px;">
<br /></div>
<span style="font-family: "verdana" , sans-serif; margin: 0px;">Information
asymmetries and investors’ assumption that those providing them personalized
advice must act in their best interest means unsophisticated investors too
often rely heavily on their Reps, which leaves retail investors vulnerable to
exploitation. Numerous surveys confirm this unchallenged reliance on Rep
recommendations. But rules and regulations exist to prevent mis-selling. As
long as they are enforced by IIROC dealers, most retail investors should be safe.</span><br />
<br />
<div style="margin: 0px;">
<span lang="EN" style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">DSC funds pay 5% upfront commission to the dealer .Five per cent is a big
chunk of change for a fund company to pay up front. In order to make the money
back, the fund company needs clients in the fund for 6-7 years. It is difficult
to see how responsible IIROC dealer supervisors or compliance staff would ever
consider this bondage to be in the best interests of the client</span><span lang="EN" style="color: #555555; font-family: "verdana" , sans-serif; margin: 0px;">. </span><span lang="EN" style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">Reps should not recommend DSC funds if clients plan
to invest for only a short time, if they have little money and can't afford to
lose any of it, or if they have a low tolerance for market/price volatility. A well-documented
compliant KYC process should help keep such clients away from DSC sold mutual
funds.</span></div>
<div style="margin: 0px;">
<span lang="EN" style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">
<br style="mso-special-character: line-break;" />
</span><span style="font-family: "verdana" , sans-serif; margin: 0px;"></span></div>
<span style="font-family: "verdana" , sans-serif; margin: 0px;">Existing
IIROC rules require a Dealing representative to resolve conflicts -of -interest
in the best interests of clients ( Rule 42). Other rules require Reps to only make
recommendations which are suitable for clients based on KYC. Mutual funds with
embedded commissions create a conflict-of-interests with DSC sold funds dramatically amplifying that conflict with the outsized 5% upfront payment. So a Rep faced
with deciding to sell a DSC vs. FEL (0%*) fund would have to recommend FEL to
address the conflicts between compensation schemes. In addition, it can be
argued that the liquidity of the FEL series vs. the locked in nature of DSC funds
is itself a conflict-of- interest since decreased liquidity is not in the best
interests of clients. </span><br />
* an IIROC dealer could subvert this by not offering 0% front load funds<br />
<div style="margin: 0px;">
<br /></div>
<span style="font-family: "verdana" , sans-serif; margin: 0px;">Also, even
under a lowly suitability regime product cost enters into the picture. In the
case of say, Fidelity funds, the MER of the FEL series of funds is less than
the identical DSC series so the FEL should win again IF Reps are truly resolving
conflicts in the best interests of clients.</span><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;"> <span lang="EN" style="margin: 0px;">While clients can switch into money
market funds at no cost (except for 0-2% switch fees), because DSC funds allow
switches within the same family without triggering redemption fees, the DSC
redemption schedule still remains. Any attempt to redeem for cash will result in a penalty.
Directly recommending a DSC money market fund would have to be considered abusive
selling as a m/m fund is intended to act as a temporary parking spot for cash
and should not therefore be bound with illiquidity chains.</span></span><br />
<div style="margin: 0px;">
<span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;"><span lang="EN" style="margin: 0px;">
<br style="mso-special-character: line-break;" />
</span></span><span style="font-family: "verdana" , sans-serif; margin: 0px;"></span></div>
<span lang="EN" style="font-family: "verdana" , sans-serif; margin: 0px;">Furthermore, it is
imprudent for Reps acting in a client’s best interests to recommend actively-managed
mutual fund unless the reasonably expected return from such fund will cover the
extra costs and risks typically associated with such funds. This is key, as
most actively-managed funds simply are not cost-efficient if analyzed properly.
If the potential closet indexing factor is considered by analyzing a fund's
incremental costs in terms of Ross Miller's Active Expense Metric (see
Reference), the number of cost-efficient actively-managed mutual funds is very low.</span><br />
<br />
<div style="margin: 0px;">
<span lang="EN" style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">Before processing any order, Reps. must disclose the charges the client
will incur for the purchase, sell, switch or transfer, or a reasonable estimate
if the actual amount is not known at the time of the disclosure. We expect that
such disclosure may be inadequate unless the Rep. informs the client of the FEL
series or other alternatives. If the disclosure is balanced and fair, we would however
expect a rational investor to reject the DSC series.</span></div>
<br />
<div style="margin: 0px;">
<span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">The
accurate collection of the client’s time horizon is an essential component of
the KYC process and it is imperative that Reps/supervisors consider this
information when assessing suitability .</span><span style="font-family: "verdana" , sans-serif; margin: 0px;">If
time horizon is less than 7 years or client is older than say 65 then it may not
be suitable to lock a client into a fund for up to 7 years. Regardless of age,
there is no logical justification for exposing a client to early redemption
penalties when equal or better alternatives are readily available. </span><span style="color: black; font-family: "helvetica neue"; font-size: 10.5pt; margin: 0px;"><br /></span><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;"><br /></span><br />
<span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">Additionally,
Reps should consider the suitability of DSC purchases for accounts in a
de-accumulation stage e.g. the suitability of DSC purchases in RRIF accounts. In
most cases, suitability will be almost impossible to justify when FEL is an
available alternative.</span><span style="font-family: "verdana" , sans-serif; margin: 0px;"></span></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;">Further
,when product and account cost becomes a formal suitability factor when/if
proposed client-focussed reforms see the light of day, the Rep would have to
look at a spectrum of products that are suitable including index funds , ETF’s
and actively- managed ETF’s. Given empirical research on actively - managed
funds that shows chronic underperformance vs. Benchmarks, indexing would most
likely be the optimum solution, especially for investors with modest account sizes. Any other
Rep recommendation would be subject to scrutiny from compliance and likely eligible
for a client complaint.</span></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;">Of course,
if the Rep has not met disclosure obligations, that too would be a basis for a
complaint. It is inconceivable that any informed investor faced between being
locked in and not, would ever choose to be locked in. An informed investor
would likely also object to the 5% advance payment for advice if the
alternative was pay as you go.<span style="color: black; margin: 0px;"> </span><span style="color: black; margin: 0px;">Rep recommendations should not be
limited as to whether the redemption schedule was disclosed to the client but
rather a consideration as to the suitability of the recommendation to purchase
the DSC fund. For example, investors who do not have an adequate
emergency fund should not be sold a DSC fund.</span></span><span lang="EN" style="color: black; font-family: "verdana" , sans-serif; font-size: 10.5pt; margin: 0px;"><br style="mso-special-character: line-break;" /></span></div>
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif;"></span><br /></div>
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;">So there
you have it, with so many hurdles, there is no future for the DSC actively-managed
mutual fund in the IIROC distribution channel. One BIG assumption –IIROC Dealer Reps care about their
clients financial wellbeing AND supervision and compliance interpret and
enforce the rules as intended.</span></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;">Some argue
that it is impossible for an SRO (junior regulator) to say that DSC is wholly
unsuitable for everyone when it is allowed by the CSA. IIROC can (and does)
certainly say that DSC is not suitable for certain clients by interpreting their
suitability rules but they are not able to ban it entirely (as it is allowed by
the CSA). According to one source ,just over 30% of DSC sold fund assets are with IIROC dealers. There is no doubt, an outright ban on this toxic product is in the
Public interest. </span><span style="color: red; font-family: "verdana" , sans-serif; margin: 0px;">Caveat Emptor.</span></div>
<span style="color: red;"></span><br />
<div style="margin: 0px;">
Kenmar Associates </div>
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "verdana" , sans-serif; margin: 0px;">References: </span></b></div>
<br />
<div style="line-height: normal; margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "verdana" , sans-serif; margin: 0px;">Ross
Miller's Active Expense Metric and its implications</span></b><span style="font-family: "verdana" , sans-serif; margin: 0px;"> </span></div>
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;">
If the Fund fails the metric test, passive would have to be considered. The DSC
issue would automatically be resolved since low cost Index Mutual funds could
not pay the 5% upfront commission. If index fund MER’s were increased, then
ETF’s would have a field day. <br />
<u><span style="color: #4472c4; margin: 0px;"><a href="http://landryinvest.ca/documents/articles/measuring_true_cost.pdf"><u><span style="color: #4472c4; margin: 0px;">http://landryinvest.ca/documents/articles/measuring_true_cost.pdf</span></u></a></span></u><span style="color: #4472c4; margin: 0px;"> <span style="margin: 0px;"> </span></span></span></div>
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "verdana" , sans-serif; margin: 0px;">Vanguard
CEO: High-Cost Active Management is Dead - </span></b><span style="font-family: "verdana" , sans-serif; margin: 0px;">Video | Investopedia</span></div>
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;">
<a href="https://www.investopedia.com/video/play/vanguard-ceo-highcost-active-management-dead%20/"><u><span style="color: #4472c4; margin: 0px;">https://www.investopedia.com/video/play/vanguard-ceo-highcost-active-management-dead
/</span></u></a><u><span style="color: #4472c4; margin: 0px;"></span></u></span></div>
<br />
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;">Ellis,
Charles D., <b style="mso-bidi-font-weight: normal;">“The End of Active
Investing,”</b> <em><span style="font-family: "verdana" , sans-serif; font-style: normal; margin: 0px;">Financial Times</span></em>, Jan. 20, 2017</span></div>
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;">
<u><span style="color: #4472c4; margin: 0px;"><a href="https://www.ft.com/content/6b2d5490-d9bb-11e6-944b-e7eb37a6aa8e" target="_blank"><u><span style="color: #4472c4; margin: 0px;">https://www.ft.com/content/6b2d5490-d9bb-11e6-944b-e7eb37a6aa8e</span></u></a></span></u></span></div>
<br />
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">Ontario right to oppose
mutual-fund trailer bans,</span></b><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;"> says Primerica Canada CEO:WP</span></div>
<div style="margin: 0px;">
<span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">
"...Calling the proposed ban “draconian,” he warned that its approval
would leave many investors of modest means — “those without a large amount to
invest who rely on commissioned advice without an upfront fee” — unable to
receive advice from an advisor. “When this sort of drastic market intervention
is proposed, it is appropriate for the minister of finance to step in, to look
at the concerns and weigh the policy options to ensure a balanced policy
outcome.”.."<br />
</span><u><span style="color: #4472c4; font-family: "verdana" , sans-serif; margin: 0px;">https://m.wealthprofessional.ca/news/mutual-funds/ontario-right-to-oppose-mutualfund-trailer-bans-says-primerica-canada-ceo-249396.aspx?utm_source=GA&utm_medium=20181017&utm_campaign=WPCW-Newsletter-Opener&utm_content=&tu=</span></u><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">. Investor advocates argue
that clients without a large amount to invest can readily access robos , credit
unions and banks without pre- paying for conflicted advice and without being
locked in for 7 years in an actively -managed mutual fund. Such clients would
also avoid all the dirty tricks that can ( and have been) be played with DSC
sold funds. Such a product is clearly not in the best interests of families
struggling to save for retirement. Professional advisors are unlikely to
recommend DSC sold funds but fund salespersons might. The biggest beneficiary
of DSC funds is the salesperson. Caveat Emptor . NOTE: If for some reason you
change firms, you will have pre-paid the lion's share of the advice fee ,so
your new Rep may want to alter your holdings so that he / she receives
compensation related to his / her efforts. That portfolio adjustment can be expensive.</span><u><span style="color: #4472c4; font-family: "verdana" , sans-serif; margin: 0px;"></span></u></div>
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">MFDA sweep re DSC sold
Mutual Funds</span></b><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;"> <br />
<u><a href="http://mfda.ca/wp-content/legacy/bulletins/pdf/Bulletin0670-C.pdf"><u><span style="color: #0066a4;">http://mfda.ca/wp-content/legacy/bulletins/pdf/Bulletin0670-C.pdf</span></u></a></u>
</span></div>
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "verdana" , sans-serif; margin: 0px;">Deferred sales charges: Stealth wealth
killers</span></b><span style="font-family: "verdana" , sans-serif; margin: 0px;"> - The Globe
and Mail</span></div>
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;">
<u><span style="color: #4472c4; margin: 0px;"><a href="https://www.theglobeandmail.com/globe-investor/investment-ideas/deferred-sales-charges-stealth-wealth-killers/article1375562/"><u><span style="color: #4472c4; margin: 0px;">https://www.theglobeandmail.com/globe-investor/investment-ideas/deferred-sales-charges-stealth-wealth-killers/article1375562/</span></u></a></span></u><span style="color: #4472c4; margin: 0px;"> </span></span></div>
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "verdana" , sans-serif; margin: 0px;">Investor Protection Takes A Step
Backward</span></b><span style="font-family: "verdana" , sans-serif; margin: 0px;"> - High Rock
Capital Management</span></div>
<div style="margin: 0px;">
<span style="font-family: "verdana" , sans-serif; margin: 0px;">
Article shows how the DSC Mutual fund abuses Canadian families saving for
retirement.<br />
<u><span style="color: #4472c4; margin: 0px;">http://highrockcapital.ca/scotts-blog/investor-protection-takes-a-step-backward</span></u></span></div>
<br />
<div style="margin: 0px;">
<br /></div>
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: "verdana" , sans-serif; margin: 0px;">IIROC fines
Branch Manager for deficient supervision of DSC funds </span></b></div>
<span style="font-family: "verdana" , sans-serif; margin: 0px;">In this case, the Rep often sold mutual funds with deferred sales
charges (DSC) and then repurchased similar funds, requiring clients to pay
redemption fees and it reset the early redemption schedule on the newly purchased
mutual funds. ($125,402 in redemption fees ere triggered) The Rep also
unnecessarily charged switch fees for the trades, which some clients said they
weren’t told about. Clients were charged $367,459 in switch fees. </span><br />
<div style="margin: 0px;">
<u><span style="color: #4472c4; font-family: "verdana" , sans-serif; margin: 0px;"><a href="http://www.iiroc.ca/Documents/2018/3b2c182a-4e81-49c1-b900-3d9672f9565d_en.pdf#search=george%20mitchell"><u><span style="color: #4472c4; margin: 0px;">http://www.iiroc.ca/Documents/2018/3b2c182a-4e81-49c1-b900-3d9672f9565d_en.pdf#search=george%20mitchell</span></u></a></span></u></div>
<br />
<div style="margin: 0px;">
<b style="mso-bidi-font-weight: normal;"><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;">Toothless investor Protection </span></b></div>
<u><span style="color: #4472c4; font-family: "verdana" , sans-serif; margin: 0px;"><a href="https://boomerandecho.com/weekend-reading-toothless-investor-protection-edition/"><u><span style="color: #4472c4; margin: 0px;">https://boomerandecho.com/weekend-reading-toothless-investor-protection-edition/</span></u></a></span></u><u><span style="font-family: "verdana" , sans-serif; margin: 0px;"> </span></u><br />
<br />
<div style="margin: 0px;">
<span lang="EN" style="color: black; font-family: "verdana" , sans-serif; font-size: 10.5pt; margin: 0px;"><br />
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<br style="mso-special-character: line-break;" />
</span><span style="color: black; font-family: "verdana" , sans-serif; margin: 0px;"></span></div>
<b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>kenkivhttp://www.blogger.com/profile/09881327935494647534noreply@blogger.com0