A growing number of complaints from investors about the advice they are getting has Ottawa taking notice. The Financial Consumer Agency of Canada has moved up a planned review of the financial sector to this month.
That’s a big deal for an industry that prides itself on being self-regulated. At the heart of the problem is the “know-your-client” rule – a requirement for advisors to only recommend investments that are appropriate for their clients.
Many of the complaints relate to investors being sold products that compensate the advisor but have little to do with their specific investment goals or investment knowledge.
Advisors are required to abide by the know-your-client rule by providing a form for clients to fill out before advice is given, and updated each year.
According to the Investment Funds Institute of Canada (IFIC) here’s what advisors should know about their clients before making a recommendation:
Marital status
Age
Occupation
Income and net worth
Number of dependents
Risk tolerance: from low (which means you are willing to accept lower returns to ensure your money is safe) to high (which means you are looking for significant growth in your money, and you are willing to see your holdings drop in the short-term if it gives you a better chance of earning higher returns over time)
Investment objectives: for example, you would like your investments to provide some income on a regular basis, even if your capital gains are not as high. Or, you are looking for capital gains over time and you do not need the funds to generate income in the short-term.
Investment knowledge and experience: from excellent to low or nil
Investment time horizon: how long you intend to leave your money invested
If you want to work with advisor’s who get to know you, your family and your goals, and always put that at the forefront of everything, then call us TODAY!
Andrew Pereira – Financial Consultant
519-358-1115 ext. 226
Cassie Fryscok – Associate Consultant
519-358-1115 ext. 222
