Chapter 1 Flashcards
In Canada, the primary legislation governing privacy issues.
Personal Information Protection and Electronic Documents Act (PIPEDA)
The main purpose of this guideline, which was established in March 2012, was to provide greater transparency regarding the relationship between advisors and their clients and between advisors and their clients’ dealers.
Client Relationship Model 1 (CRM1)
Requirements for this guideline include communicating in plain language, disclosing conflicts of interest, and taking greater care to assess suitability before making or accepting portfolio recommendations.
Client Relationship Model 1 (CRM1)
The IIROC CRM Guidelines govern three main areas of client relationships:
- Relationship disclosure
- Enhanced suitability
- Management and disclosure of conflicts of interest
This guideline, that was implemented in 2017, was designed to increase investor protection and raise transparency standards.
Client Relationship Model 2 (CRM2)
The guidelines also require additional information to be disclosed about all fees and charges associated with a purchase or sale of a security before the transaction takes place.
CRM2
The most significant change in this guideline is the requirement to provide two new reports relating to client accounts: a fee statement and a performance report. Each of these reports must be provided to the clients once a year.
CRM2
_____ _____ documents for mutual funds are designed to give investors information about a fund they are considering in a clear and easy-to-understand format.
Fund Facts
Where once this document was delivered just after the purchase of a mutual fund, it must now be provided to the client prior to you accepting instructions to purchase the mutual fund.
Fund Facts
The goal of the Canadian Securities Administrators
To protect Canadian investors and promote efficient capital markets.
How does the wealth management process start?
With establishing a strong relationship with the client that is built on trust.
What are the 4 steps of the wealth management process?
- Understanding the client
- Formulating the plan
- Formalizing and implementing the plan
- Reporting, reviewing, and rebalancing
Outside professionals are often referred to as:
Centers of Influence (COIs)
Integrated services consisting of private banking, investment counsel and personal trust services offered by the banks and other deposit-taking organizations.
private wealth management (PWM)
These are online, automated, algorithm-based investment management services that are of particular concern to traditional advisors.
robo-advisors
This body brings together securities regulators from all ten provinces and the three territories with the goal of developing a harmonized approach to securities regulation across Canada.
Canadian Securities Administrators (CSA)
Mainly appealing to customers in the whole market is a significant small- and medium-size financial advice segment with almost four times the advisors serving the larger, integrated companies.
competition in mass market
Most such firms are mono-line firms offering only investment management. Others have broadened their offering to include financial planning, along with trust and estate services.
private investment counsel (PIC)
An advisor who helps clients in understanding major issues faced in later years. Each life passage has a financial consequence, so money discussions should closely relate to life meaning.
transition specialist
It is the national self-regulatory organization that oversees mutual fund dealers in Canada. It is for the distribution side of the Canadian mutual fund industry.
Mutual Fund Dealers Association of Canada (MFDA)
Refers to the rivalry that has increased, in response to demographic trends, between the three main channels - private wealth management, full service brokerage and private investment counsel.
competition between channels
Such firms include the major banks and some other large financial institutions that offer a comprehensive range of private wealth services.
fully integrated firms
Mutual funds have lowered their management expense ratios (MERs) to be more competitive. Lower MERs will lead to reduced compensation for advisors.
competitive pricing
These firms offer a single set of services, such as discretionary management. This group includes most private investment counsel firms, family offices offering advice only, and other foreign banks.
mono-line firms
Legislation enacted by the United States to reduce tax evasion by U.S. taxpayers holding financial accounts outside the country. It affects all foreign financial institutions globally.
Foreign Account Tax Compliance Act (FATCA)
U.S. is FAT
This channel is dominated by the large, bank-owned dealers, which increasingly focus their product and service offering on the high net worth segment.
full service brokerage (FSB)
A decentralized form of digital cash that eliminates the need for intermediaries such as banks and governments when making financial transactions.
cryptocurrencies
These firms offer a limited range of high net worth services. It includes full-service brokerage and financial advisor firms, some foreign banks, and a few private investment counsel firms that provide financial planning or trust services.
semi-integrated firms
In Quebec, the mutual fund industry is regulated by this body. There is an agreement between it and Mutual Fund Dealers Association of Canada intended to avoid regulatory duplication.
Autorité des marchés financiers (AMF)
These companies help online investors create their own customized portfolios to save for specific goals. The investments typically used within robo-advisor portfolios are low-cost ETFs.
Fintech
It provides greater transparency in the relationship between advisors and clients and between advisors and dealers.
client relationship model (CRM)
________ and _______ are directly involved in regulating the activities of wealth advisors.
MFDA and IIROC
Which generation has the highest number of people in the Canadian workforce?
Millennials
A HNW client is a individual or family that owns at least __________ of investable assets. The term investable assets describes liquid assets only.
$1 million
The federal government is responsible for the banking sector in Canada, however, these two bank activities, which are carried out by bank subsidiaries, are provincially regulated.
Trustee Services & Securities Dealing
Educating the Client takes place during the what stage of the wealth management process?
The First Stage
Rebalancing and Review would be which of the four steps of the wealth management process?
The Fourth Step
