Current as of August 5, 2020
We believe that successful long-term relationships rest on a foundation where both parties clearly understand their roles, obligations and expectations. In keeping with that position, and to meet the requirements of securities legislation which requires us to make certain disclosures to you in a prescribed format, we are providing you with this relationship disclosure information. We understand that not all information presented here will apply to your personal circumstances or your relationship with WealthBar Financial Services Inc. doing business as CI Direct Investing (“CI Direct Investing”).
In this document, we refer to CI Directing Investing, as “we”, “us”, “our”, “WealthBar” or “CI Direct Investing”.
This document forms part of your Managed Investment Account Agreement ("Agreement") with CI Direct Investing.
By agreeing and maintaining an account with CI Direct Investing, you conﬁrm that you have received this document and understand its contents. It also acknowledges your consent to this disclosure of information as described herein.
If you have any questions related to the contents of this document, please contact us at 1 888 373 7674 or via email at [email protected].
About CI Direct Investing
CI Direct Investing is a robo-advisor providing online financial planning and investment advisory services. We are registered as a Portfolio Manager under the securities legislation in all provinces and territories in Canada. WealthBar is also registered as a Life Insurance Agent in the provinces of British Columbia and Ontario.
CI Direct Investing is a subsidiary of CI Financial Corp (TSX: CIX) and an affiliate of CI Investments Inc. CIX is a publicly traded corporation whose shares are traded on the Toronto Stock Exchange.
Our head office is located at #490 – 1122 Mainland Street, Vancouver, BC, V6B 5L1. You can reach us also by telephone: 888-373-7674; by fax: 888-373-7674 or by email: [email protected].
Investment Products and Services
CI Direct Investing provides online investment advice and discretionary portfolio management services to clients through separately managed accounts. CI Direct Investing provides a unique approach to wealth management through our specialized investment focus and high standard of client care.
CI Direct Investing’s investment strategy focuses on managing portfolios utilizing a low-cost, cashflow-oriented asset allocation strategy. We aim to combine low-cost, tax-efficient indexed investments with selective active management in an effort to maximize client returns at any risk level.
CI Direct Investing considers asset mix to be the primary determinant of portfolio performance and so, in an effort to lower volatility and diversify holdings, client portfolios contain multiple asset classes including equities, fixed income, real estate and alternative strategies. CI Direct Investing builds portfolios containing Exchange Traded Funds (“EFTs”) and no-load mutual funds (“F Class” funds) which means they do not charge commission when purchased. CI Direct Investing also offers private investment portfolios and the option to add “Clean Tech” exposure to your account.
We act as a portfolio manager for your separately managed account—the only type of account we offer. This means that we manage your account for you. Investment decisions are made by CI Direct Investing’s portfolio managers, who are registered advising representatives with the applicable securities regulators. We recommend one of CI Direct Investing’s portfolios based on the personal information you provide. A portfolio manager may contact you for additional information. You can choose to receive a personalized financial plan and can speak to a portfolio manager.
We obtain discretionary investment authority for the assets under our management pursuant to a Managed Investment Account Agreement (“MIAA”). Each portfolio is recommended to meet your individual needs based on the “know your client” (“KYC”) information you provide during the online account opening process (“Application”). CI Direct Investing manages your account within the parameters of that information.
Deposits to your CI Direct Investing account may be held for up to 30 days before they can be withdrawn in order to prevent fraud and identity theft. Since we are an investment management firm not meant for short term trading, our clients do not typically withdraw funds within this window.
CI Direct Investing offers you portfolio management and life insurance in provinces where it is registered to do so. Activities relating to portfolio management and insurance is regulated by Provincial Securities Regulators and Provincial Insurance Councils respectively. Your account information relating to portfolio management and insurance is separated.
Know Your Client Information
We act as a portfolio manager on your behalf and prior to executing any transactions we assess whether investments are suitable for you. To assess suitability, we are required to obtain certain KYC information from you which includes: information to establish your identity; information to establish whether you are an insider of a reporting issuer; information concerning your investment needs and objectives; your financial circumstances; and, your risk tolerance. You provide this information when you complete the online Application.
To remain in the best position to make suitable investments on your behalf, it is imperative that you keep CI Direct Investing up to date with respect to any changes to your personal information. This includes letting us know if your circumstances change or if any of the information you previously provided needs to be updated. This could include changes to your address, marital status, employment, income, attitude about risk, or investment assets or debt. If there are changes, CI Direct Investing will review the new information, assess the investment recommendation and if necessary, make changes to your portfolio. CI Direct Investing will connect with you on a periodic basis to confirm there are no changes to your information or circumstances so that your portfolio remains suitable for your needs and objectives.
CI Direct Investing must take reasonable steps to confirm that, before it makes a recommendation or accepts an instruction from you to buy or sell a security for your managed account, it is suitable for you based on the KYC information you provided. If you instruct CI Direct Investing to buy, sell or hold a security that in CI Direct Investing’s opinion would not be suitable for you, CI Direct Investing will inform you of the reasons and will not buy or sell the security unless you instruct CI Direct Investing to proceed nonetheless. The portfolio manager must pre-approve the suitability of any transaction based on the client information you provided.
Operating Charges, Transaction Charges and Compensation
Any operating charges, transaction charges or other compensation, and any other expenses you may be subject to, are set out in your Managed Investment Account Agreement (“MIAA”).
The only charges imposed by CI Direct Investing are management fees which are charged as a percentage of assets under management on a tiered basis. You do not pay any operating charges to maintain your account.
CI Direct Investing and its personnel do not collect commissions from the investments we manage. We receive a management fee calculated as a percentage of the assets from your account. This allows us to maintain objective advice. Fees are charged on a tiered basis, according to Schedule C of the MIAA.
CI Direct Investing’s management fee includes the following costs incurred by Client’s accounts: custodial fees, trading fees incurred by rebalancing, annual account administration fees, registration fees (for TFSAs and RRSP, Spousal RRSP, LIRA, RIF and LIF plans subject to account minimums), deregistration fees (for deregistration of registered plans such as TFSAs, RRSPs, etc.).
We will not impose any new charges or fees on your account unless we provide at least 60 days prior written notice to you. Any such changes may be further restricted under the MIAA, or by securities rules and regulations.
Risks of Investing
As a CI Direct Investing investor, you benefit from the expertise of portfolio managers who are dedicated to selecting investments for your specific portfolio. All investments carry some degree of risk and the following is a summary of some of these risks. The list is not exhaustive and has been provided to indicate factors that can affect the value of your investments. In addition to the risks below, each fund or ETF in a portfolio has its own specific risks detailed in the investment documentation available on the CI Direct Investing website.
Various types of risk need to be considered at your various stages of investing for each of your different goals. You should understand the nature of an investment and the effect risk may have. Depending on the investment, the type of investment risk will vary.
Investment risks may include, but are not limited to:
Business risk – the risk inherent in the operations of an entity or industry that you invest in; for example, risks may involve political and/or economic developments, changes in competitive landscapes, and changes in commodities prices due to changes in supply and demand.
Capital risk – the risk that you may lose money on your investments.
Cash flow risk – the risk that future cash flows associated with a monetary financial instrument will fluctuate in amount, such as a debt security held with a floating interest rate.
Concentration risk – the risk in holding a relatively limited number of investments or market sectors. A relatively high concentration of assets in, or exposure to, a single or small number of issuers may reduce the diversification and/or liquidity of an account and increase its volatility.
Credit risk – the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. It is the risk that the government or company that issued the bond will run into financial difficulties and will not be able to pay the interest or repay the principal at maturity. Credit risk applies to debt investments such as bonds. Accounts that invest in or have exposure to companies or markets with high credit risk tend to be more volatile in the short term. However, they may offer the potential of higher returns over the long term.
Currency risk – is the risk of losing money because of a movement in the exchange rate. It applies when you own foreign investments. Changes in the value of the Canadian dollar compared to a foreign currency or the imposition of foreign exchange controls will affect the value, in Canadian dollars, of any securities with foreign currency exposure.
Derivatives Risk – the risk that the value of an investment will decline or be less than the principal amount invested due to the use of derivative products. Derivative products are highly specialized instruments that require investment techniques and risk analyses different from those associated with traditional securities such as stocks and bonds. They are subject to a number of risks and, may be highly illiquid.
Exchange Traded Funds Risks – the risk of loss due to not understanding the unique nature of “ETFs” which are securities that closely resemble index funds but can be bought and sold like common stocks. They are not mutual funds. ETFs come with many of the same risks as stocks and mutual fund investing, plus specific risks such as not understanding their tax structure (tax efficiency is one of the most promoted advantages of an ETF).
Financing risk – the risk associated with the amount of leverage or debt used by an entity to finance its assets.
Foreign investment risk – the risk of loss when investing in foreign countries. Investments in securities of foreign issuers are subject to additional risks as compared to domestic securities. Investing in foreign and emerging markets involve risks that do not exist in Canada, including geo-political risks, higher transaction costs, and currency volatility risks. Foreign markets may be less regulated than in Canada and the U.S., and place restrictions on the movement of capital.
Fund risks – the risk of loss resulting from the specific risks associated with an investment in units of a particular fund, which are detailed in its simplified prospectus or other disclosure documents which are available on the CI Direct Investing website.
Inflation risk – the risk of a loss in your purchasing power because the value of your investments does not keep up with inflation. Inflation risk is relevant if you own cash or debt investments such as bonds.
Interest rate risk – the risk that the value of debt securities will fluctuate due to changes in prevailing interest rates. The value of investments in, or that have exposure to bonds, mortgages and other income-producing securities is primarily affected by changes in the general level of interest rates.
Liquidity risk – the risk that an investment may not be readily saleable at close to its fair value, or at all. Difficulty in selling securities may result in a loss or reduced return. Reduced liquidity, in the case of a fund, may reduce a fund’s ability to satisfy redemption requests.
Leverage risk – the risk of loss if the value of the securities purchased declines more than the amount of money borrowed to purchase the securities. Using borrowed money involves greater risk than using cash resources only. Leverage increases both the possibilities for profit and the risk of loss. In addition, there is the cost of borrowing which may reduce the potential return. See the Leverage Disclosure Statement below. CI Direct Investing does not administer or help you borrow money to invest. We do not use leverage or short selling directly in your account; however, the funds held in your account may use these strategies.
Market risk – the risk that the value of an investment will decline as a result of changes in market prices, whether the factors are specific to the investment or the overall market. The price of equity securities of certain companies or companies within a particular industry sector may fluctuate differently than the value of the overall stock market because of changes in outlook for those individual companies or the particular industry.
Short Selling Risk –the risk that that securities will not sufficiently decline in value during the period of the short sale to offset the interest paid by the investor and make a profit for the investor. Securities sold short may instead increase in value and losses for the short seller can be unlimited. Short selling has the risk of skewed payoff which is contrary to long term trends. In addition, shorting involves costs which include margin interest, borrowing costs, dividend payments and other payments. The investor also may experience difficulties repurchasing and returning the borrowed securities.
Volatility – the risk that the value of securities in a portfolio may be negatively affected by unpredictable market fluctuation due to factors affecting markets generally or specific industries. Securities in a portfolio may be subject to price volatility. Fluctuations affecting individual securities may increase the volatility of a portfolio.
Leverage Disclosure Statement
Using borrowed money to finance the purchase of securities involves greater risk than using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines.
CI Direct Investing does not administer or help you attain borrowed money for investing.
Conflicts of Interest
A conflict of interest, real or perceived, and a potential for a conflict of interest, exists where the interests of a client and those of CI Direct Investing compete and where serving one interest provides a benefit to one at the expense of the other.
CI Direct Investing takes reasonable steps to identify and respond to existing material conﬂicts of interest, and material conﬂicts of interest that, in our opinion, could arise. Types of conflicts of interest which could arise include: conflicts of interest between you as our client and CI Direct Investing; conflicts of interest between you and other CI Direct Investing clients; and conflicts of interest between CI Direct Investing and our related and associated companies and issuers.
CI Direct Investing and its employees do not accept gifts, beneﬁts, compensation, or consideration that competes with or might reasonably be expected to create a conﬂict of interest.
CI Direct Investing’s personal trading policy puts the interest of our clients ahead of our personnel’s self-interests. We do not take unfair advantage of our position, knowledge or relationship with our clients, or engage in any conduct that is not in the best interests of our clients.
CI Direct Investing manages conflicts of interest using avoidance, controls and disclosure.
Avoidance: This includes avoiding conflicts that are prohibited by law as well as conflicts that cannot effectively be addressed.
Controls: We manage acceptable conflicts through means such as physically separating different business functions and limiting the internal exchange of information.
Disclosure: By providing you with information about conflicts, so that you are able to assess independently their signiﬁcance.
Our goal is to address conflicts of interest in a fair, equitable and transparent manner, consistent with the best interest of our clients. We avoid conflicts deemed too significant to be addressed through controls or disclosure, and in all other cases will disclose the conflict and manage it through internal controls and policies. Disclosures will be made in a timely, meaningful and prominent manner.
Content and Frequency of Reporting
CI Direct Investing provides clients with a summary of their account(s) in accordance with regulatory delivery and content requirements.
You have access to your current and past statements online at any point in time by logging in to the CI Direct Investing website or app. Every month you will receive a notification from us informing you when your current statements will be available on the website. Statements include details of securities holdings, including original cost, transactions, performance and fees during the period. Your monthly and annual fees statement also is available through the website. In addition to statements, you will have access to view current holdings, activities, portfolio values as at the last date of valuation, and fee statements. We also make any tax documentation provided to us in relation to your account available in the document section of the website or app.
If there were any commissions paid to CI Direct Investing as a result of products held in your name, they are credited to your account on a pro-rata basis, based on the holdings in the account and the time the security was held during the billing period. This credit will show on your statement.
You should review all account information provided, and regularly review your portfolio holdings and performance. Please contact us if you have any questions or concerns about your account, about transactions or investments, or if you have any questions a about a portfolio manager. Please review your statements and notify us of any discrepancies within 45 days of its distribution.
You may assess the performance of your investments by comparing them to an investment performance benchmark. Benchmarks show the performance over time of a select group of securities. There are many different benchmarks. When choosing a benchmark, you should pick one that reflects your investments. For example, the S&P/TSX Composite Index follows the share prices of the largest companies listed on the Toronto Stock Exchange. This index would be a good benchmark for assessing performance of a Canadian equity fund that invests only in large Canadian companies. It would be a poor benchmark if investments are diversified in other products, sectors or geographic areas. Due to the individual customization of client portfolios, CI Direct Investing does not provide benchmark comparisons. You should speak with a CI Direct Investing portfolio manager if you have any questions about the performance of your portfolio or which benchmark(s) might be appropriate for your account.
Custody of Client Assets
CI Direct Investing does not act as custodian with respect to client assets or accounts; all CI Direct Investing client accounts are held in client name by an external custodian or carrying broker. CI Direct Investing does not have access to client assets held at the Custodian. This is the primary benefit of having a third-party custodian and minimizes the risk of loss. You have provided us with the authority to instruct the Custodian to buy and sell securities in your account(s) and debit your account management fees.
In selecting a custodian, CI Direct Investing considered such factors as i) ease and cost of trade execution; ii) the size, financial stability and strength of the custodians; iii) the reduction of risk of loss to the client assets through the selection of more than one custodian; and iv) the laws and regulations to which each custodian is subject. CI Direct Investing believes the selection of large, financially sound and regulated custodians substantially reduces the risk of loss or misappropriation of client assets and is in the best interest of our clients.
CI Direct Investing has a written agreement in place with each Custodian which outlines the roles and obligations of CI Direct Investing and the Custodian. In addition to holding your assets, the Custodian is responsible for providing services including acting as a dealer to trade securities as directed by CI Direct Investing, completing tax reporting, providing confirmations and statements and deducting the CI Direct Investing management fee.
CI Direct Investing has selected one or more of the following companies to act as your Custodian: CI Investment Services Inc., Credential Qtrade Securities Inc., and National Bank Independent Network. The Custodians are members of the Canadian Investor Protection Fund (“CIPF”) which provides you with coverage for a customer account at a CIPF member, as outlined by CIPF.
CI Direct Investing monitors its custodial arrangements and may in the future make changes to or appoint additional custodians should CI Direct Investing determine it would be in the best interest of its clients.
Providing a high level of service is our commitment to you. Should you have a complaint related to your account, contact the Chief Compliance Officer, CI Direct Investing by mail at #490 – 1122 Mainland Street, Vancouver, BC, V6B 5L1; by telephone by calling 1-888-373-7674; by faxing 1-888-373-7674; or by emailing [email protected].
CI Direct Investing will endeavour to resolve the matter as quickly as possible and to your satisfaction. Recognizing that investors may not be satisfied with CI Direct Investing’s response or remediation, independent dispute resolution services are available free of charge and coordinated by CI Direct Investing’s Chief Compliance Officer.
In filing a complaint, you should detail what went wrong, when it happened, and what your expectations are. CI Direct Investing will acknowledge receipt of a complaint formally within five business days of its receipt. As soon as practically possible within 90 days of receiving a complaint, CI Direct Investing will provide a written assessment detailing the results of its investigation, how we have or propose to remedy the situation (or confirmation of no issue) and an explanation of our position and decision. If not satisfied, you may seek independent dispute resolution services from the Ombudsman for Banking Services and Investments (OBSI) or from the Autoritè des Marchès Financiers if you live in Quebec.
Alternatively, you may direct your complaint to the OBSI (www.obsi.ca) by email at [email protected], by phone at 1-888-451-4519 or by fax at 1-888-422-2865. OBSI’s recommendations are not binding on you or us. OBSI can recommend compensation of up to $350,000. If you agree to their recommendation, you agree to that limit. OBSI services are available within 6 years from the time you first knew, or ought to have known, about an event causing the compliant. You may only file with OBSI following the expiry of 90 days from the time the complaint was first raised with CI Direct Investing directly and within 180 days following CI Direct Investing’s response to your complaint. If you want to recover more than $350,000, you may wish to consider alternatives to resolve your complaint. You have the option to use your own resolution service at your own expense.
In Quebec, if you are dissatisfied with how your complaint was handled, you may request your complaint file at CI Direct Investing be forwarded to the Autoritè des Marchès Financiers, 333 Grande Allée E, Quebec QC G1R 5W3, for examination. The Autoritè des Marchès Financiers may act as a mediator only where it determines it is appropriate to do so.
Outside Business Activities
Directors, officers and registered advisors may engage in business activities that are outside CI Direct Investing’s securities related business activities only if they have received approval to do so. They may also be employees, officers and/or directors of affiliates, or may also be officers or directors of public companies.
CI Direct Investing may enter into referral arrangements with affiliated or non-affiliated registrants and non-registrants, some of which are related registrants to CI Direct Investing, so that we may provide portfolio management services to referred clients. CI Direct Investing may pay a referral fee to the referrer. The percentage referral fee is a negotiated amount between the referrer and CI Direct Investing. Any investment management fee paid by the client remains the same regardless of any referral amount paid by CI Direct Investing to the referrer. CI Direct Investing will inform all clients under a referral arrangement.
CI Direct Investing may also receive a fee for referring its clients to other service providers.
In the course of providing services to you, we may from time to time advise you with respect to the purchase or sale of securities from or to, or issued by, persons or companies which are related or connected to us. CI Direct Investing will carry out such services in the ordinary course of its business in accordance with its usual practices and procedures and with all applicable regulatory requirements.
These transactions and arrangements may give rise to conflicts of interest; however, we have adopted policies and procedures to identify and manage these conflicts. We will only enter into transactions or arrangements where they are permitted under securities laws, where they are consistent with your investment objectives, and where we consider they are in your best interest in the applicable circumstances.
A “related issuer” means a person or company that influences, or is influenced by, another person or company.
A “connected issuer” is a company that has a business relationship with CI Direct Investing that, in connection with a distribution of securities of the issuer, is material to a prospective purchaser of the securities.
CI Direct Investing is a subsidiary of CI Financial Corp. ("CI Financial"), a public company whose shares are traded on the Toronto Stock Exchange. A number of shares of CI Financial may be held by employees and agents who work within CI Direct Investing and other members of the CI Financial organization.
CI Financial is also a direct or indirect principal shareholder of the following dealers or advisers which makes them CI Direct Investing affiliates: Assante Capital Management Ltd., Assante Financial Management Ltd., CI Investment Services Inc., CI Investments Inc., CI Global Investments Inc., CI Private Counsel LP, Grant Samuel Funds Management PTY Limited and Marret Asset Management Inc.
You can find the list of related and connected issuers of CI Financial Corp. available online from the CI Financial Corp. website at: https://www.cifinancial.com/about-us - our-businesses.
CI Direct Investing directors also may act as directors and officers of CI Financial and/ or its related registrants noted above.
CI Direct Investing may enter into or have service arrangements with its affiliates to utilize their back-office support, product, distribution services and client referrals. Each of CI Direct Investing and the related registrants is a separate legal entity that carries on its business independently.
Conflicts of interest resulting from these service relationships are managed in a number of ways. Regulations and the CI Direct Investing and related entities’ policies and procedures restrict and regulate the relationships.
This relationship disclosure document is written confirmation of CI Direct Investing’s relationship with CI Financial and the products and services offered through its subsidiaries, including CI Investments Inc. (“CII”) and the funds managed by these firms.
CI Direct Investing may from time to time trade in units of a related issuer. By maintaining an account with us, you consent that CI Direct Investing may advise a client and/or trade a client account in securities of a related issuer.
For these purposes, your personal information is made available to the employees, agents, related entities and third party service providers of CI Direct Investing and/or agents, and in some cases, to credit reporting agencies and to government, regulatory or tax authorities as required by any domestic or foreign law or as required under the rules and regulations of any regulatory authority of which CI Direct Investing, or a related/connected entity, is a member, or as otherwise permitted by law. CI Direct Investing may store client personal information (“information”) via third party entities that reside in foreign jurisdictions. Information may be transferred to, accessed and/or retained by third parties pursuant to data storage agreements that are necessary to provide services to you. CI Direct Investing and/or a third party may be compelled, by law or otherwise, to provide information to a third party, subject to applicable privacy law. CI Direct Investing will NOT sell your personal information to anyone.
Fair Trade Allocation Policy
CI Direct Investing has in place a “Fair Trade Allocation Policy (the “Policy”), which discusses the procedures for the fair treatment of all clients of CI Direct Investing, with respect to the allocation of investment opportunities.
CI Direct Investing manages client accounts in accordance to speciﬁed investment models. CI Direct Investing will allocate investment opportunities that are suitable for client accounts. In determining the suitability of each investment opportunity to a client account, consideration will be given to factors, which include but are not limited to: the client’s stated investment objectives and strategies; investment merits; the client account’s existing portfolio composition; the client account’s existing portfolio composition; and, the target allocations of the models.
When an investment opportunity is suitable for two or more client accounts, CI Direct Investing will allocate the investment opportunity on a pro rata basis. Each account involved will receive a percentage of the executed portion of the order based upon the account’s percentage participation in the entire order. This procedure applies to all accounts participating in the trade falling under the same trading deals. Calculating the average price of all executions taken, as well as the expenses incurred pursuant to the particular order, will determine the security selling or purchase price, and the transaction costs incurred upon the trade.
There may be circumstances where the automatic pro rata apportionment will be inappropriate. Should such circumstances arise, an allocation will be determined by CI Direct Investing on a fair and reasonable basis.
Client accounts, which are managed in accordance to a model portfolio, will maintain the investment composition of the applicable model. CI Direct Investing will group similar client accounts based on the client’s investment objectives and strategies to be managed in line with similar models. CI Direct Investing reviews and approves all allocations.
The Policy applies to all client accounts managed by CI Direct Investing and is continuously monitored, reviewed, and updated on a periodic basis.
CI Direct Investing is responsible for selecting and retaining dealers or third parties for the execution of transactions in respect of the client investments and, when applicable, the negotiation of commissions in connection therewith. CI Direct Investing pays these commissions on the client’s behalf. These commissions do not increase the management fee paid by you.
Soft Dollar Arrangements
Soft dollar arrangements occur when brokers have agreed to provide other services (relating to research and trade execution) at no cost to CI Direct Investing in exchange for brokerage business from the company’s managed accounts. Although the brokers involved in soft dollar arrangements do not necessarily charge the lowest brokerage commissions, CI Direct Investing will nonetheless enter into such arrangements when it is of the view that such brokers provide best execution and/or the value of the research and other services exceed any incremental commission costs.
The name of any dealer or third party that provides research and/or order execution goods and services through a brokerage arrangement to CI Direct Investing will be provided to you upon request by contacting us at [email protected].
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