I'm writing to you today on regulatory issues that impact you, our client. We often write about concepts, theories, or market activity but today's article is a bit different. All dealer organizations in Canada such as Manulife Securities require the completion of “KYC” information when opening new accounts. KYC stands for “know your client”. While we get to know most of our clients very intimately there is some basic information that must be provided to the dealer. This information includes your income, net worth, and investment knowledge for you the individual, and the risk tolerance, time horizon and objectives of each account. In addition to providing this information at the time of account opening, dealers require the information to remain current and must be updated on a regular basis; Manulife Securities requires these updates every 3 years. What's the purpose? Financial advisor recommendations must be supervised by the head office - this is appropriate for the protection of the investor. One of the mechanisms for them to supervise that advisor activity is to ensure advisors are in touch with the most current and recent information regarding a client's personal situation. Most recently, Manulife Securities has instituted a strict internal adherence to this policy, and there are negative ramifications to advisors if there are accounts not updated past the 3-year anniversary date. Needless to say, we have been busy making sure all KYC paperwork is filed and up to date; in fact, we likely completed this for you recently or will be doing so shortly 😊
There is another initiative from dealers and regulators regarding unusual or large withdrawals from client accounts. Scams and fraud have been increasing over the years – in fact, I have experienced a few situations recently where our client asked for money via email, the request seemed unusual and when we spoke with our client we learned their email had been hacked and they had not made the request. Any time a client needs money we ensure to take these instructions by phone only - to verify it is you and to confirm the amounts and the bank account the funds are to be sent to. In addition to this, some dealers (including Manulife Securities) have instituted an additional layer of protection for large or unusual withdrawals. Once the transaction is processed, they may call you directly to confirm that you made the request and to clarify the purpose of the withdrawal. While some may feel this is an invasion of privacy, the reality is our world is becoming increasingly complicated, exposing vulnerable clients to romance scams, elder abuse, phishing calls, and a host of other fraudulent practices. These practices, unfortunately, are no longer uncommon. Rest assured that dealers and advisors must make protecting clients a priority – it is one of the pillars we stand on in our service to you.