Three steps to take before downloading a mobile investment app

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Investing today has never been more accessible. With the advent of electronic trading platforms in 1992, the proliferation of internet accessibility in the mid-to-late 90s and the growing adoption of mobile devices in the early 2000s, investors now have access to a variety of easy-to-use mobile investment apps.

While these technological advancements have made investing more accessible, investors need to remember to conduct thorough research on any investment app they plan to use. Specifically, investors should consider their fee expectations, service needs and most importantly, if the app is credible and registered. Below are three steps to assess if an investment app is legitimate and suitable for you.

 

1. Registration is essential, even for investment apps

Not all apps offered through the app marketplace on our mobile devices are credible and such apps can expose you to the risk of fraud. It is important to always to check the registration of any investment advisor, firm or platform to ensure they are working in compliance with regulatory requirements. Securities professionals and firms dealing in securities are required to register with securities regulators, and this requirement extends to the investment apps they offer. Checking registration enables investors to validate that the investment app they plan to use is qualified and permitted to sell securities. Ignoring or skipping this step and using an investment app offered by an unregistered firm may not provide you with any of the typical investor protections that may exist with a registered one.

For those interested in investing in crypto-assets, check the registration of any crypto investment app that will hold custody of your funds or crypto-assets. Not all crypto-assets are deemed securities, but if an investment app holds your financial assets, it’s strongly recommended you only use one that is registered. To verify the registration of an investment app, visit CheckFirst.ca/check-registration brought to you by the Alberta Securities Commission.

 

2. Avoid the telltale signs of fraudulent or suspicious investment apps

Unfortunately, the ease and widespread appeal of mobile banking and investment apps is not lost on fraudsters looking to capitalize on eager investors. Fraudsters often create investment apps that imitate legitimate financial institutions and registered investment firms and promote them through online advertising or one-on-one interactions with targets. You can visit the CheckFirst Spotthespoof.ca website to learn more about these imitation websites and platforms.  Fraudsters also leverage the considerable market interest in crypto-assets to position their fraudulent investment apps as an easy way to invest in digital coins and crypto projects.

Remember these tips to avoid fraudulent investment apps:

  • Avoid unsolicited offers to download an investment app from those you meet online, like self-promoted experts, new acquaintances or love interests.
  • Check that the investment app you plan to download and use is the correct one offered by a registered financial institution or firm.
  • Be wary of investment apps with limited or broken functionality, spelling mistakes and odd in-app requests like wire transfers.
  • Conduct research online to see what others say about the investment app and if any red flags of fraud are found. Visit Checkfirst.ca/red-flags to learn what to look for.

 

3. Understand if the investment app is right for you.

Once you have conducted these steps, it’s important to review the fees and charges of your chosen investment app. Investment apps and platforms offered by financial institutions and firms do not have the same costs or services. Often the fees associated with trading, currency conversions and account maintenance will vary between them. Review the fee structures and the services offered and choose one that best fits your investing style, needs and expectations.

Investment apps have ushered in a new era of convenience for investors but you should still take your time to review which option is the best for you. Before you hit the download button, remember these steps to help you find a suitable and registered app for you.

Achieving your short-term goals with high-interest savings accounts and guaranteed investment certificates

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Thoughtful financial planning is what will determine your success as an investor. A good rule of thumb when planning is to organize your financial goals into three planning time horizons. These horizons typically include short-term goals that you want to achieve in the next six months to five years, medium-term goals that you want to achieve in the next five to ten years and long-term goals that you want to achieve in ten years or more. Investors often use a variety of different investments for medium and long-term goals because they have a longer period of time to recover from potential downturns before needing their money. When looking at short-term goals, where you may need to withdraw sooner and cannot afford to lose money on riskier investments, there are a couple of options to consider.

Understanding high-interest savings accounts (HISA) and Guaranteed Investment Certificates (GICs)

Short-term goals might include saving for a down payment on a new car you want in a few years, an exciting trip to Hawaii or even establishing an emergency fund. Regardless of your short-term goals, HISAs and GICs enable you to generate returns on your principal without exposing your money to the risk of loss.

As the name implies, HISAs are savings accounts that generally offer higher interest rates than traditional savings accounts. Whereas a normal savings account may have an interest rate of approximately 0.5-0.8 per cent, a HISA may have an interest rate of 1.5 to 2.25 per cent. This may not sound like much of a difference, but if you saved $10,000 in a savings account with a 0.8 per cent return and another $10,000 in a HISA offering 2.25 per cent, after five years your HISA would have generated a whopping $770 more than the traditional savings account.

GICs are another avenue for investors to save for short-term goals. By purchasing a GIC, you are locking away your money for a set amount of time to receive either a fixed or variable interest rate. While these rates can range from approximately 1.5-5.00 per cent, depending on how long of a term you select, the money becomes inaccessible until the term finishes. If you need the money sooner, you will often need to give advance notice and pay a penalty that can severely negate any returns you would have made.

What should you consider before using a HISA or GIC?

With guaranteed returns, it may seem like HISAs and GICs are the perfect investment, but there are things to consider:

1) Open vs Locked-in: HISAs allow you to access your money when needed, whereas GICs have your money locked in. Make sure you assess whether the liquidity of your money is important. For something like an emergency fund, you want to make sure you have immediate access.

2) Fluctuating interest rates: During times of high inflation like we are currently seeing, the Bank of Canada increases interest rates financial institutions can offer to incentivize Canadians to spend less and save more. If inflation decreases in the market, you can expect interest rates to lower on GICs and HISAs.

3) Neither are ideal for medium to long-term goals: While they are less risky than other types of investments, HISAs and GICs interest rates rarely surpass inflation (the yearly increase in the cost of goods and services). So while they are ideal for short-term goals, the purchasing power of your money will diminish over the medium and long term by using HISAs or GICs exclusively.

HISAs and GICs can be powerful tools in helping you reach your short-term goals. By considering when you need to utilize the money and how readily you will need access to it, you can choose the suitable one for you.

 

Investing during uncertain times and high inflation

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For the past few decades the Canadian economy has experienced exceptionally low inflation rates ranging from one to three per cent. Unfortunately, Canadians today are challenged with a 30-year high inflation rate of 6.8%, with expectations that it will remain high through 2023. With rising inflation rates, how does this impact your income and investments? And what should you do?

What is inflation?

Inflation is a measurement of the increase in the cost of goods and services over time, which in turn impacts the purchasing power of your money. For example, an apple today could cost you $1, but the following year it could be priced at $1.07. In Canada, inflation is measured using the Consumer Price Index, which tracks the increase in the prices of goods and services across eight major categories. From April 2021 to April 2022, gasoline, food and shelter have all seen inflated prices that are more than double the Bank of Canada’s (BoC) benchmark goal of three per cent maximum. These rising prices mean that the quality of life for those with low, stagnant and fixed incomes will be significantly impacted, consumers will afford less goods and services, and businesses may generate lower profits. To learn more about inflation, please visit the Bank of Canada.

Why is inflation rising in Canada?

Inflation in Canada has been greatly impacted by both national and international pressures, such as:

  • record low-interest rates
  • government’s pandemic response to stimulate the economy
  • massive disruptions in the global supply chain
  • and the ongoing war in Ukraine driving up commodity prices

To slow down and reduce inflation, the BoC has begun increasing interest rates in phases, which discourages consumers and businesses from borrowing money and spending. While these increases put added pressure on businesses and families in the short term, if implemented correctly these can bring down inflation and stabilize markets too.

Investing during high inflation

During times of high inflation and uncertain global markets, it is not uncommon to feel anxious as you watch interest rates rise and some or all of your investments fall. Investors who have more experience and can tolerate more risk with their money may look for opportunities to capitalize on certain industries or investments that have outperformed during periods of high inflation. It is worth noting that the past performance of any investment is not an indicator of future performance. By attempting to change your portfolio to capitalize on different economic situations, you are exposing yourself to the risk of trying to time the market, which more often than not will have you underperform average market returns.

During bear markets (when markets decline by more than 20%), it is important to recognize how you may be feeling about your portfolio and revisit your financial plan and investments. If you work with a financial advisor, you may want to arrange a meeting with them to discuss the long-term view of your investments and how they are tracking towards your financial goals for peace of mind. For those without an advisor, remember that periods of high inflation may be temporary. Higher interest rates and recovering global economies may lessen the severity of inflation quicker than you think. Before you take any action, consider the time horizon of your investments and their underlying fundamentals. If you need more help assessing the long-term suitability of your investment portfolio and financial plan, you may want to talk to a financial planner or a registered financial advisor.

Without question, Canadians are facing challenging times. When it comes to your investments, stay focused on your financial goals and avoid the noise in the news and media. By maintaining a long-term view and a diversified investment portfolio aligned to your risk tolerance and goals, you can weather the storms of uncertain markets.

A trusted contact person: Enhancing your financial protection as you age

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For those that invest with a financial institution or firm, you now have the ability to provide your registered advisor with a contact person that you trust. This person can play an important role in protecting your financial assets in certain circumstances.

As of December 31, 2021, advisors are required to take reasonable steps to obtain the name of someone you would like to have as your Trusted Contact Person (TCP), should they suspect you are experiencing financial exploitation or diminished mental capacity.

What is a Trusted Contact Person?

As you age, you may experience a decline in your health and cognitive abilities due to medical issues, pre-existing conditions or the natural aging process. In these circumstances, you may become more reliant on others in making financial decisions, potentially exposing you to financial abuse and fraud by those who do not have your best interests at heart.

To help safeguard potentially vulnerable clients from financial abuse and exploitation, the Canadian Securities Administrators, of which the Alberta Securities Commission is a member, introduced the TCP. A TCP is someone you can have listed on your account informing your advisor of who you trust and who they can contact in limited circumstances. This could include:

  • If you are unable to be reached
  • If your advisor has concerns you are vulnerable and being financially exploited
  • If you are having a health issue and your advisor needs to confirm your wellbeing
  • If your advisor needs confirmation of your legal representative

For example, your advisor may contact your TCP when they cannot reach you because you have taken an extended vacation and forgot to inform them. Or, in more sensitive situations, your advisor may contact your TCP to ensure the validity of a request that they believe is out of character.

What can and can’t my Trusted Contact Person do?

A TCP’s sole purpose is to help safeguard your financial assets by being an additional resource to help your advisor make decisions that best protect your account. Your TCP:

  • cannot authorize transactions on your behalf
  • cannot make decisions on your behalf
  • will not be given access to your detailed account information

Who should be your Trusted Contact Person?

A TCP should be a mature family member or friend who you trust, and you should feel comfortable that they can handle difficult conversations about your personal situation if they arise. Consider choosing someone you know will protect your interests, is familiar with your support network, and is not typically involved in your financial decisions. You should also ensure the person you select agrees to take on the role and is comfortable talking to your advisor.

In recognition of June Senior’s Month and World Elder Abuse Awareness Day (June 15), the Alberta Securities Commission (ASC) reminds older Albertans to work with your advisor to put a TCP in place. In a recent study conducted by the ASC, nearly 60% of Albertans aged 65 and over were approached with what they felt was a possibly fraudulent investment. While naming a TCP on your account is optional and not a legal process, it can provide you valuable peace of mind knowing that your advisor has someone you trust to help safeguard your financial assets now and in the future.

Developing the right mindset and processes to invest wisely and avoid fraud

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For any investor, novice or experienced alike, there can be pitfalls and challenges that potentially lead you to making unsuitable investments.  These pitfalls include cognitive biases, poor planning, and even missing the red flags of fraud. To help you recognize these pitfalls and define sound practices and behaviours that will help you improve your approach to investing, consider the following core principles.

Behaviour and mindset – Investing is not just the act of buying or selling investments. It is also about your mindset and processes. Over confidence, anxiety, and the fear of missing out can lead you to jump into inappropriate investments that are tied to hot trends and new innovations, or fall prey to fraudulent or misguided get rich quick schemes. The best way to avoid these challenges is to refine your processes.  Start by developing a financial plan and goals before you actually make that first investment. Your plan doesn’t have to be complicated, but by having your goals laid out can help you maintain your focus and avoid the noise and distractions in the market. For investors that recognize that their emotional discipline may not be strong enough to avoid these traps, the assistance of registered investment professionals may be needed. Utilizing the services of a registered financial planner or financial advisor may provide the dedicated service, and peace of mind, to help you choose the suitable investments that will help you achieve your financial goals.

Investment literacy and fraud knowledge – To invest successfully, start by developing your understanding of securities, in addition to investing principles and strategies. As you build your knowledge and your portfolio, you may want to explore more advanced investments like exempt market securities, options trading or even crypto assets. Recognize the limitations of your investment knowledge and consider taking time to talk to registered investment professionals and assess what new investment opportunities might fit best within your financial plan and risk tolerance (your ability and willingness to take risk with your money).

While knowing the inherent risks to investments is essential, understanding and recognizing the risks of fraud and scams is just as important. A recent study conducted by the Alberta Securities Commission (ASC) found that nearly half of Albertans have been approached by what they felt was possibly a fraudulent investment opportunity. Some of the key signs of fraud include promises of high return rates with little to no risk, exclusive or time-sensitive investment offers, offshore and tax-free investments, and insider tips. Understanding these signs and the situations and scenarios in which they can be presented can help you better safeguard your money and assets. To learn more about investment scams and how to recognize, avoid and report them, investors should review the red flags and scams sections of CheckFirst.ca, brought to you by the Alberta Securities Commission.

Proactive measures – By taking a few proactive steps you can help reduce the chances of your portfolio underperforming, and prevent you from taking on unsuitable investments and falling for fraud. Some suggested steps include thoroughly researching the legitimacy and suitability of investments before investing and regularly monitoring the performance of your investments and your portfolio as a whole. By taking the time to do this, you can better validate new investment opportunities and ensure your existing investments are tracking towards your goals.

In addition to these proactive measures, one of the most important steps you can take before investing with any financial advisor, firm or brokerage, is to conduct the necessary due diligence. Generally speaking, financial advisors, firms, and brokerages must be registered to offer you securities. By checking registration at CheckFirst.ca, you can ensure you are working with registered professionals and businesses that are compliant with securities law before you hand over your money.

Investing wisely may seem complicated, but following these core principles as part of your investing process will lead to a more successful and enjoyable journey and help you avoid common mistakes and fraud.

Saving to invest: How to create and maintain an emergency fund

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Emergency funds are one of the most important accounts you should have to establish long-term financial security. Also known as a slush or rainy day fund, an emergency fund is a dedicated account for life’s unexpected costs and emergencies. As the ongoing pandemic has shown all Canadians, having an emergency fund is not just optional, it’s critical. In general, the Financial Consumer Agency of Canada recommends having an emergency fund with the equivalent of 3-6 months of regular expenses saved.

What do emergency funds have to do with investing?

Investing for success requires thinking long-term and maximizing the compounding interest of your investments over time. Compound interest is simply the money you earn on reinvested interest from a previous period. If you contribute consistently, and do not withdraw funds early, it can grow rapidly.

A common mistake many investors make is disregarding an emergency fund to dedicate more money towards their investments. This leaves them in a precarious position in which they can’t afford to pay for an unexpected cost (like a car repair) without cashing out investments early. It can also significantly impact their wealth building and financial goals. If you haven’t started an emergency fund or have trouble building and keeping an emergency fund, consider the following:

  1. Automate contributions to your emergency fund
    The more you can make dedicating a small portion of your income towards your slush fund a habit, the easier it becomes. One of the easiest ways is to review your budget, establish a figure you can comfortably tuck away, and then set up automatic deposits with your bank.
  2. Keep your emergency fund separate from your regular accounts
    To avoid inadvertently spending your emergency fund on non-essential purchases, a common practice is to hold your emergency funds in a separate high-interest savings account or even another bank. This ensures the money is still accessible when needed, but not readily available for daily or online purchases.
  3. Pause your investment contributions
    If you have no emergency savings, you should pause the money you direct towards your investments for enough time to build up some emergency savings. While it may feel underwhelming to stop your contributions, you are establishing a safety net that can help you maintain your investments and weather the unexpected in your daily life.
  4. Replenish your emergency fund
    One of the most important things you can do to maintain your emergency fund is to replenish it when it’s depleted. After using the fund, establish ongoing contributions to build it back. This way, you ensure it’s ready for the next unforeseen cost.

By establishing an emergency fund and maintaining it throughout your life, you can confidently invest for the long term and rely on a solid foundation of financial security to support you through life’s many challenges.

Four steps to take before jumping into crypto investments

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The increasing popularity of crypto assets and the ongoing media coverage of coins like Bitcoin and Ethereum have piqued the interest of many new and experienced investors alike. Whether you’re interested in investing in crypto assets or simply learning more, consider the following before jumping in:

1) Understand your risk tolerance
Crypto assets are high-risk alternative investments that have the potential for high returns. Judging the inherent value in any crypto asset can be difficult, with its values largely determined by its evolving utility, public interest and the current levels of supply and demand. Before investing in any security, a crucial first step is to weigh the risk of the investment against your risk tolerance. Risk tolerance is your ability and willingness to take risks with your money. By recognizing the amount you can afford and are comfortable with potentially losing in a crypto investment, the more likely you are to invest suitably. If you are unsure of your risk tolerance, you can take the risk tolerance quiz at CheckFirst.ca.

2) Be mindful of the crypto asset trading platform you choose to use
The popular way for many investors to buy or trade crypto assets is through a crypto asset trading platform. If you are considering using a trading platform to buy and sell crypto assets, it is strongly advised that you use one that is registered with the Alberta Securities Commission (ASC). If a crypto asset trading platform is not registered, there are no assurances that any of the typical investor protections may exist, including secure handling of client funds, safekeeping of client assets, protection of personal information, pre-trade disclosures, and measures against market manipulation and/or unfair trading. To check the registration of any crypto asset platform, use the check registration tool on CheckFirst.ca or the list of registered crypto asset trading platforms across Canada on the Canadian Securities Administrators website.

3) Be cautious of crypto scams and frauds
Fraudsters are always looking for the next big trend or buzzworthy event to leverage. As crypto assets continue to generate excitement with new and potential investors, fraudsters will continue to take advantage of people’s interest to promote crypto scams. Be mindful that many crypto scams involve one or more of the following:

  • Unusual requests for payment like wire transfers or the transferring of crypto assets from one platform to another.
  • High-pressure sales tactics, confusing jargon and complex documentation regarding an investment opportunity.
  • New initial coin offerings with limited or no documentation like whitepapers on the coin or the coin’s founders.
  • Promises of high returns with little to no risk.
  • Unsolicited crypto investment offers online, over social media and in dating apps.

4) Strengthen your investment literacy and conduct thorough research
Investing wisely in new alternative investments like crypto assets requires you to strengthen your knowledge to ensure that you fully understand the investment opportunity before you hand over your hard-earned money. Before investing in a crypto asset, visit the Innovation in Finance section of the Alberta Securities Commission’s website for important questions you should consider asking.

Crypto assets are high-risk investments that are not suitable for all investors. The nature, longevity and future application of crypto assets are largely unknown and evolving. While the excitement can be overwhelming, taking the time to learn about crypto assets before investing can help you invest suitably and avoid scams. Learn more about crypto assets at CheckFirst.ca.

Four reasons to consider opening or contributing to your RRSP or Group RRSP

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March 1, 2022 marks the deadline for Albertans to contribute to a Registered Retirement Savings Plan (RRSP) for the 2021 tax year. RRSPs are a retirement savings vehicle that allows you to put away up to 18% of your last year’s income and any carry forward room from prior years. The real benefit is that you defer tax on the amount you contribute, until you withdraw the funds in retirement. If you don’t yet have an RRSP account or feel you have underutilized your existing plan or Group RRSP through your employer, here are four reasons to reconsider and contribute to an RRSP consistently.

1. RRSPs are not just for saving

A common misconception is that RRSPs are just glorified savings accounts. While it may say “savings” in the name, you can also invest in an RRSP and rely on the compound growth of your investments within the plan. RRSPs also discourage you from withdrawing your funds until retirement, which maximizes the compound interest you can generate. RRSPs do this by charging both income tax and a withdrawal tax on any funds removed prior to retirement, and permanently removing contribution room in the amount you take out before age 71. For example, if you invested $100 a month at age 35 into your RRSP in an investment fund that generated an annual 6% return and did not touch it till maturity, you could expect your plan to be worth nearly $143,000.

2. Tax-deferred growth

One of the most significant benefits of the RRSP is that any contributions made to your plan in your working years are deducted from your taxable income and, if invested, can grow tax-free while the funds stay in the account. The longer the time horizon before you retire, the more time you have for compound growth to accelerate and grow your retirement nest egg. Once in retirement, withdrawals from your RRSP will be taxed at your retirement income bracket, which should be less than in your working years.

3. Lifelong Learners Plan (LLP) and the Home Buyer’s Plan (HBP)

RRSPs are generally restricted to retirement savings, but they do include unique benefits to help you pay for significant expenditures in your life, like going back to school or buying a first home. The LLP allows you to withdraw up to $10,000 in a calendar year from your RRSP to finance full-time training or education for you or your spouse or common-law partner. Once withdrawn, you have to make annual payments to your RRSP over a ten-year period until the balance is zero. The HBP allows you to withdraw up to $35,000 from your RRSP to buy or build a qualifying home for yourself or a related person with a disability. The repayment period starts the second year after the year you withdrew the funds, with 15 years to repay the funds in your RRSP. It is worth noting that if you fail to repay the funds from either plan in the allotted time, you will lose that contribution room from your RRSP and any missed annual payments will be added to your annual taxable income.

4. Group RRSPS

A Group RRSP is administered by employers as part of its compensation package to employees and can be a powerful savings vehicle for your retirement. One of the biggest benefits of a group RRSP is contribution matching. Employers will define a contribution level as either a fixed dollar amount or a percentage deducted from the employee’s paycheque automatically each pay period. Whatever amount the employee chooses to allocate to the Group RRSP, the employer will match the contribution, effectively doubling the savings rate for the employee. Funds contributed to a group RRSP are invested in securities offered by the financial institution administering the Group RRSP. Most Group RRSP providers offer a selection of funds for varying retirement dates, asset allocations and risk tolerances. If you do not utilize a Group RRSP from your employer or do not contribute the total amount allowed, you may be leaving a significant amount of money out of your possible retirement savings.

With tax time nearing, consider the benefits of opening or contributing more routinely to an RRSP or Group RRSP. Not only will you defer some of your income tax payments throughout your working years, but you will also be creating a nest egg that your future self will appreciate.

How to successfully approach your new year’s resolution to invest

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Now more than ever, investing has become top of mind for many, with new investors ready to jump in and start their investment journey in 2022. While investing can be a core component to growing your wealth, approaching it wisely will help you reach your goals and avoid costly mistakes and fraud. If your new year’s resolution is to start investing, consider the following steps to hit the ground running and invest wisely in 2022 and beyond.

1) Map out your financial goals first
While you may be raring to go with starting your investing journey and building out your investment portfolio, remember that success relies on planning your goals and utilizing the appropriate investments to get you there. By understanding the time horizon (the length of time you expect to hold an investment before needing the funds), you can assign suitable investments with varying levels of risk to drive the best returns over time. Before you consider any investment, first map out your short (6 months to 5 years), medium (5-10 years) and long-term goals (10 years or more).

2) Learn about the registered and unregistered accounts available to you
As a Canadian citizen, registered accounts are available to you with unique properties to help you reach your financial goals. A registered retirement savings plan (RRSP) is an account designed to reduce the income tax you pay on the money you contribute towards your retirement. A tax-free savings account (TFSA) is an account allowing you to save or invest a defined amount tax-free each year throughout your life. These are examples, and you have access to a variety of accounts that can help you achieve your goals. Learn more about the different accounts and how you can leverage them.

3) Understand your risk tolerance
Investments carry a level of risk in line with their potential for return. One of the most common mistakes investors make is exposing themselves to a level of risk far outside what’s appropriate for them. This is called investment risk tolerance, and ignoring or not knowing your ability and willingness to take risk can expose you to dramatic losses. If you are unsure what your risk tolerance is, you can take the Check your risk tolerance quiz. By answering these questions openly and honestly, you can get a better sense of the level of risk you are comfortable taking with your investments, before you start.

4) Improve your investment literacy
If you feel like you still need to learn more about investing before starting, that’s great. It’s important and worthwhile to enhance your knowledge and learn how to invest your hard-earned money wisely. The Alberta Securities Commission offers free, unbiased investment literacy programs with partners across Alberta, covering everything from starting your investing journey to recognizing and avoiding scams and investing in cryptocurrency. If you are interested in attending a virtual program, visit Investing 101 classes and events page to learn more.

Client-focused reforms: Addressing material conflicts of interest in adviser-client relationships

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Many Albertans work with a registered adviser to grow and maintain their wealth. To achieve the best results, clients must be open and transparent about their finances and goals and in turn, registered advisers must align investment portfolios and products to meet their client’s time horizons and risk tolerance.

To further enhance investor protection, improve the foundation of adviser-client relationships and standardize services of investment firms and advisers, the Canadian Securities Administrators, which includes the Alberta Securities Commission, published a comprehensive set of rules known as client-focused reforms on October 3, 2019. Under these reforms, conflict of interests provisions were partially implemented on June 30, 2021 with the remaining rules coming into effect on December 31, 2021.

What does client-focused reforms do?

Under client-focused reforms, registered firms and advisers are required to put the interest of the client first when recommending or choosing investments and resolve and avoid material conflicts of interests. Material conflicts of interests are factors that could influence the impartiality adviser’s should have when recommending investments. If there are any material conflicts, the adviser or firm must inform the client of the conflict in a timely fashion and detail how they are being resolved in their best interest.

What are the material conflicts that may occur with your registered adviser?

There are situations in which a registered adviser may have a material conflict of interest with clients. For example, there may be situations in which a registered adviser may be paid a higher commission for selling a certain type of investment, which may influence their decision on what to offer their client.
Alternatively, a firm or registered adviser could offer that client a similar product that is more cost-effective and suitable.

How to talk with your registered adviser about client-focused reforms and material conflicts of interest?

Talking with your registered adviser routinely is not only recommended for ensuring your investments are tracking towards your goals, but is an important step in taking an active role in understanding what you are investing in. Follow these key steps to strengthen your relationship with your registered adviser and address conflicts of interest as they arise:

  1. Ask questions and get satisfactory answers: If you are confused with what has been communicated, be sure to ask questions and only move forward when you have what you need to make an informed decision. Do not feel intimidated to ask questions, remember an adviser works for you after all.
  2. Discuss any conflicts of interests: Registered advisers should work on your behalf and in your best interest, so take the time when you meet or talk with them to understand if the investment products they are proposing, or you are already invested in, are right for you. If you feel there may be a product that is better suited for your goals, bring it to your registered adviser’s attention and request answers before you agree to move forward.
  3. Get information in writing: Getting all information in writing, especially information about any areas in which you are concerned, can help you better assess the investments offered to you and enable you to do it at your own pace, outside of the meeting.

By taking these steps to identify and address material conflicts of interest, you can better understand the investment products available to you and ensure that your registered adviser continues to offer you the investment products best aligned to your needs and suitability.