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Opening an Investment – What to Expect

By: Natalie Thornhill Pirro, Supervisor – Wealth & Client Experience

As an investor you will, no doubt, have a lot of questions for your advisor.  How much money do I need?  How do I get started?  What are the best investment strategies? What type of investment should I open?

When you meet with your advisor, they will ask you to provide information so that they can better understand your unique situation as well as your immediate and long-term financial needs.  With this information, they will be able to come up with “a plan”, recommend investments that are suitable for you, and answer all your questions.  Securities legislation and regulations require that each recommendation your advisor makes be suitable for you in relation to your investment objectives, risk tolerance and other personal circumstances.  This is referred to as the “Know-Your-Client” (KYC) Rule under securities law. This Rule requires your firm and advisor to collect the following information from you.  Your advisor may be restricted from opening your account if you do not provide this information.

• • Annual Income – Your approximate annual income from all sources.
  • Net Worth – An estimate of the value of your assets less your liabilities.
  • Investment Objectives – The specific characteristics of investment products and how they relate to the achievement of your investment goals.
  • Time Horizon – This is the period from now to when you will need to access a significant portion of the money you invest in the account.
  • Investment Knowledge – This is your understanding of investing, investment products, and their associated risks.
  • Risk Tolerance – This is your willingness to accept risk and your ability to withstand financial losses.
  • Full Legal Name and Date of Birth – This is required by the Proceeds of Crime (Anti-Money Laundering) and Terrorist. Financing Act. This legislation is designed to prevent the use of the financial system for hiding proceeds of criminal activity or financial terrorist activity.
  • Proof of Identity – This is required for certain accounts by Anti-Money Laundering legislation. To verify your identity, you may be asked to provide a driver’s license, citizenship card, passport, or birth certificate.
  • Residential Address and Contact Information – This is required by Anti-Money Laundering legislation. This information will allow your firm to contact you to provide investment advice or notify you of any changes with respect to your investments. This information is also required for account reporting.
  • Citizenship – This is required for tax reporting and may be used to determine if you are permitted to purchase certain types of securities.
  • Social Insurance Number – This is required for tax reporting.
  • Signature – This is required by Anti-Money Laundering legislation.
  • Employment Information – This is required by Anti-Money Laundering legislation to help your firm and advisor determine suitable investments for you.
  • Number of Dependents – This is required by regulation to help your firm and advisor determine suitable investments for you.
  • Politically Exposed Persons – This is required to meet requirements under Anti-Money Laundering legislation. Your firm will need to determine whether you or a member of your immediate family have ever held a position with a foreign government that qualifies any of you as a “Politically Exposed Person”. You can find more information on this requirement HERE.
  • Other Persons with Trading Authorization on the Account/Financial Interest in the Account – This is required by Anti-Money Laundering legislation. Your firm is required to maintain the names, dates of birth, employment information and the relationship of any individuals with trading authority or a financial interest in your account.
  • Source of Funds – This is required to meet requirements under Anti-Money Laundering legislation. (banking information will be required for Electronic Funds Transfers “EFT”)
  • Trusted Contact Person – (“TCP”). A TCP acts like an emergency contact for your account, although they cannot make financial decisions or account changes.

Important To Know

Your advisor is required to keep this information current. Depending on the type of account you have, your advisor may check in with you every one to three years to confirm your information remains accurate and update your KYC. As your circumstances may change over time, you should keep your advisor up to date on any changes to the information above, such as:

• Changes to marital status
• Relocation to another province or territory
• New job or job loss
• Long-term illness
• New debt financing
• Major increase or decrease in your financial resources (for example: due to inheritance)

In Conclusion

While this may seem like a lot of personal information, it allows your advisor to recommend investments suitable to your present circumstances and your financial goals.  Whenever you are scheduled to meet with your advisor, whether you are setting up a new investment or discussing current investments, you should always have your list of questions for the advisor; and be prepared to have a list of any, or all, of the above information.  If you use this Blog as a checklist, you will be ready-to-go!

Happy Investing!!!