Private Investment Advice Flashcards
Individual businesses develop their operating models, which underpin their brand in the marketplace. Their models are based on the following principles:
Individual businesses develop their operating models, which underpin their brand in the marketplace. Their models are based on the following principles:
Opportunity
Capability
Client demand or acceptance
Comparative advantage
Competitive response (actual or anticipated)
Profitability
Regulation of securities sales and licensing requirements is a 20th century phenomenon. The early focus was on the conduct of securities issuers. After the 1929 stock-market crash, U.S. securities legislation set out to entrench the principle of disclosure as the foundation on registration statements for the sale of securities. It also imposed liability for omission of material information, misleading statements and other fraudulent conduct.
The Ontario Securities Act of 1945 focused on refining initial disclosure requirements.
Subsequent legislation extended the principle to ongoing disclosure requirements to support ongoing trading.
Regulation of securities sales and licensing requirements is a 20th century phenomenon. The early focus was on the conduct of securities issuers. After the 1929 stock-market crash, U.S. securities legislation set out to entrench the principle of disclosure as the foundation on registration statements for the sale of securities. It also imposed liability for omission of material information, misleading statements and other fraudulent conduct.
The Ontario Securities Act of 1945 focused on refining initial disclosure requirements.
Subsequent legislation extended the principle to ongoing disclosure requirements to support ongoing trading.
The _ _ _ _ _ _ _ _ _ focused on refining initial disclosure requirements. Subsequent legislation extended the principle to ongoing disclosure requirements to support ongoing trading.
The Ontario Securities Act of 1945 focused on refining initial disclosure requirements.
Subsequent legislation extended the principle to ongoing disclosure requirements to support ongoing trading.
In 1957, legislation was introduced to create one of Canada’s most powerful retirement savings tools: the Registered Retirement Savings Plan (RRSP). Prior to this, only people with employer plans were able to deduct pension contributions for tax purposes. The Canada Pension Plan was not yet in place. It was introduced almost ten years later, on January 1, 1966.
In 1957, legislation was introduced to create one of Canada’s most powerful retirement savings tools: the Registered Retirement Savings Plan (RRSP). Prior to this, only people with employer plans were able to deduct pension contributions for tax purposes. The Canada Pension Plan was not yet in place. It was introduced almost ten years later, on January 1, 1966.
The regulatory changes also provided the entry of Canadian banks into the securities industry, through discount brokerage subsidiaries. In 1987, legislative changes allowed Canadian banks to acquire securities dealers. Through referral activity, bank clients gained access to the services of securities dealers, who in turn, quickly broadened their client base.
In 1992, banks were permitted to purchase or establish trust companies. Together, these changes significantly changed the landscape of the investment industry.
The regulatory changes also provided the entry of Canadian banks into the securities industry, through discount brokerage subsidiaries. In 1987, legislative changes allowed Canadian banks to acquire securities dealers. Through referral activity, bank clients gained access to the services of securities dealers, who in turn, quickly broadened their client base.
In 1992, banks were permitted to purchase or establish trust companies. Together, these changes significantly changed the landscape of the investment industry.
As of 2001, legal requirements were imposed for jurisdictional
separation and the careful management of privacy issues under the _ _ _ _ _ _ _ _ _ _ _ _ _ _
As of 2001, legal requirements were imposed for jurisdictional
separation and the careful management of privacy issues under the Personal Information Protection and Electronic Documents Act (PIPEDA).
By the early 1990s, there was a rapid growth of another form of effective business relationship among dealer members: _ _ _ _ _ _ _ _ _ _ . This structure allowed for an increase in the number of independent (non-bank) dealers. Over half of IIROC members today are _ _ _ _ _ _ _ _
By the early 1990s, there was a rapid growth of another form of effective business relationship among dealer members: the introducing/carrying broker relationship. This structure allowed for an increase in the number of independent (non-bank) dealers. Over half of IIROC members today are introducing brokers.
The suitability obligation is seemingly simple and eminently sensible. Securities law requires registrants to determine whether a proposed purchase or sale of a security for a client is suitable. Now more than ever, regulators are strongly reinforcing the following principle:
The suitability obligation is seemingly simple and eminently sensible. Securities law requires registrants to determine whether a proposed purchase or sale of a security for a client is suitable. Now more than ever, regulators are strongly reinforcing the following principle:
In order to adequately satisfy the suitability requirement, advisors must have
sufficient knowledge and understanding of both their client and the available suite of product.
The Know Your Client (KYC) rule has historically anchored the due-diligence process. Many firms now require even more extensive documentation, updated regularly.
Key information about the clients means, objectives, risk tolerance, experience and time horizon are taken into account in order to satisfy their suitability obligation. Increasingly, risk tolerance reflects not only the client’s comfort level or attitude towards risk, but also their actual ability to withstand and/or recover from a financial loss.
This is particularly of concern when investment income forms a significant percentage of a client’s cash flow. The KYC process also collects specific information to protect dealers from insider trading and money laundering.
In January 2009, IIROC published guidelines regarding “Best Practices for Product Due Diligence,” also known as _ _ _ _ _ _ _ _ _ __ _ _ _ _.
In January 2009, IIROC published guidelines regarding “Best Practices for Product Due Diligence,” also known as Know Your Product (KYP).
In January 2009, IIROC published guidelines regarding “Best Practices for Product Due Diligence,” also known as Know Your Product (KYP). The wave of new product introductions over the past several years has raised questions as to whether firms were sufficiently providing advisors with the following knowledge:
In January 2009, IIROC published guidelines regarding “Best Practices for Product Due Diligence,” also known as Know Your Product (KYP). The wave of new product introductions over the past several years has raised questions as to whether firms were sufficiently providing advisors with the following knowledge:
Understand the available products
Make suitable recommendations to clients
Fully explain the products being recommended
Without doubt _______ is a critical element of due diligence. With the proliferation of complex investment products, the need to clearly identify and understand distinguishing product features is receiving greater attention.
Without doubt, KYP is a critical element of due diligence. With the proliferation of complex investment products, the need to clearly identify and understand distinguishing product features is receiving greater attention.
NOTE ONLY
Recently, the spotlight has shifted towards understanding risk first; maximizing potential return, second. Even the widely adopted principle of diversification is being re-examined.
Recent returns of asset classes that were seen as having little or no correlation (e.g., corporate bonds, equities and hedge funds) showed similar reactions to very negative market conditions. This has shown diversification as providing less benefit than expected.
Recently, the spotlight has shifted towards understanding risk first; maximizing potential return, second. Even the widely adopted principle of diversification is being re-examined.
Recent returns of asset classes that were seen as having little or no correlation (e.g., corporate bonds, equities and hedge funds) showed similar reactions to very negative market conditions. This has shown diversification as providing less benefit than expected.
Recently, the spotlight has shifted towards understanding risk first; maximizing potential return, second. Even the widely adopted principle of diversification is being re-examined.
Recent returns of asset classes that were seen as having little or no correlation (e.g., corporate bonds, equities and hedge funds) showed similar reactions to very negative market conditions. This has shown diversification as providing less benefit than expected.
Recently, the spotlight has shifted towards understanding risk first; maximizing potential return, second. Even the widely adopted principle of diversification is being re-examined.
Recent returns of asset classes that were seen as having little or no correlation (e.g., corporate bonds, equities and hedge funds) showed similar reactions to very negative market conditions. This has shown diversification as providing less benefit than expected.
Business opportunities, and the ability to leverage those opportunities, shape business model decisions in any industry. The various available structures allow a broad range of business models to co-exist and compete effectively in the market. Business models can be differentiated in many ways. The following are some examples:
Business models can be differentiated in many ways. The following are some examples:
Structure (A financial service complex under multiple regulatory jurisdictions, or a narrow product range under a single regulator, or an introducing model, or others)
Relationship and Service Delivery Model
(Individual, team, online, specialist, generalist, service desk)
Product and service suite
(Core and complementary products and services)
Pricing
Brand
