How to choose your representative What should you consider?

Choosing a representative

You’re ready to invest and are looking for advice that will help you make the right decisions. Choosing a representative is not a step to be taken lightly.

 

Here are eight rules that you and your representative must follow.

Your representative must:

1. Be authorized by the AMF

Check that the firm and individual you are dealing with are authorized to sell you the investments they are offering. Contact the AMF Information Centre or look them up in the Register of firms and individuals authorized to practise.

2. Be able to meet your needs

First, identify your investment needs and skills.

Choose a representative who will take the time to speak with you, outline their experience and explain their recommendations. A representative must be able to help you understand even the most complex information.

Don’t be afraid to ask questions. After all, you’ll be entrusting them with your assets.

The first questions you should ask your representative:

  • What general training do you have? How does your training set you apart from the competition?
  • How long has your firm been in business?
  • How long have you been with the firm?
  • How long have you worked in the industry?

Have you named a trusted contact person (TCP)?

Your representative might witness situations one day that could threaten your financial interests. These situations could raise questions in your representative’s mind such as “Are you being mistreated financially?” or “Are you showing signs of a diminished mental capacity?”  There are things that can be done to better protect you.

Read more

3. Be transparent about how they’re paid

Before doing business with your representative, ask them to explain how their fees are calculated. That way, you’ll avoid unpleasant surprises later.

Some representatives are on salary, while others are paid a commission for each product they sell. Some charge a flat fee based on an hourly rate or a percentage of the assets in your account. Representatives sometimes combine different types of compensation; for example, they are paid a salary and receive a commission.

4. Be aware of your financial situation and understand your goals

To know you better, a representative should take the time to review your financial situation with you. This will enable the representative to recommend suitable products for you.

Remember to let your representative know whenever your personal or financial situation changes so they can update your file.

A representative should ask you these questions:

  • Your knowledge of investments: How familiar are you with investing? How have you invested your money up to now?
  • Your financial goals: Are you hoping for a quiet retirement with visits to your neighbourhood public library or do you want to travel abroad twice a year? Your goals will guide your representative.
  • Your investment horizon: Do you want to invest to buy a house in two years or to pay for your children’s university education 15 years from now?
  • Your risk tolerance: How would you react if the value of your investments declined 10% in value overnight?
  • Your financial and personal situation: Do you have family responsibilities? How much money can you set aside for investments? Is your employment income stable? Do you depend on investment income for living expenses?

5. Explain the type of services you’ll receive

At the end of your first meeting with your representative, ask them what you do next and what you can expect from them.

You should feel comfortable sharing your ideas and concerns with your representative and discussing the next steps.

Here are a few questions to ask your representative:

  • How often will we meet?
  • How will you update me on the performance of my investments?
  • How quickly will my phone calls and e-mails be returned?

You must:

6. Understand the products and services your representative is proposing

Not all representatives offer the same products and services. Take the time to understand the features and risks of any proposed investment.

A representative must be attentive to your needs and explain the products they can offer you.

Ask your adviser about any aspect you don't understand. If their explanations or answers aren’t clear, turn down the recommendation. Ask for another solution.

Carefully read through the documents your representative gives you about an investment, such as the prospectus or Fund Facts, and make sure you understand them. If you’re having difficulty with some sections, ask your representative for help.

7. Assume your responsibilities as a client

Next year, will you remember what you discussed with your representative? Probably not, so don’t forget to:

  • Prepare for each meeting.
  • Ask questions and take notes (pdf - 70 KB)This link will open in a new windowUpdated on October 11, 2013 on your conversations with your representatives. Take note, for example, of what your representative recommends, how it meets your objectives, the risks, the price you paid (including fees) and the documentation you received.
  • Ask your representative to give you a detailed document of how they plan to invest your money. The more accurate the information, the clearer the situation for you.
  • Review your notes on any conversations with your representative.
  • Check and keep your transaction confirmations, account statements, annual investment performance reports, and the report on charges and other compensation.

8. Work in partnership with your representative

Remember: Your representative is your partner. You need to work together so you can achieve your financial goals. You should meet at least once a year.

Keep the lines of communication open. Ask questions if you don’t understand something. Be honest with yourself and your representative about your financial situation.

Your representative needs accurate information to recommend the best investments for your situation.

Notify your representative of any changes in your financial or personal situation.

Insight

Remember…

  • Analyze where and how your representative suggested you invest your money. Is this consistent with your profile and your needs? Is your portfolio sufficiently diversifiedDiversification is an investment strategy that consists of choosing different types of investments in order to reduce risk.?
  • What are the advantages of choosing this product or strategy? For you? For your representative?
End of the insight

In the event of a problem, you can:

Take action

Even if you follow the rules, you may not be satisfied with your representative.

Here’s what to do if there's a problem:

  • The moment you detect a problem, note it down.
  • List all the facts that suggest there's a problem.
  • Keep your account opening documents, trade confirmations, account statements and all letters and e-mails about your investments.
  • Speak with your representative about the problem. If necessary, confirm it all in writing.

If you’re not satisfied and the problem is not resolved quickly:

  • Contact an officer, a supervisor or someone with authority at the firm, preferably in writing. Some firms have their own complaints officer whom you can contact directly.

If you’re not satisfied with the results:

  • You can ask for your complaint to be transferred to the AMF. For more information, visit the Assistance and Complaints section.

Documentation and tools