How to choose your representative 9 rules

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. What should you consider?

Here are 9 rules that you and your representative must follow.

Your representative must:

You must:

And, last but not least:

  1. Be authorized by the AMF
  2. Be able to meet your needs
  3. Be transparent about how he’s paid
  4. Be aware of your financial situation and understand your goals
  5. Explain the type of services you’ll receive
  6. Understand the products and services your representative is proposing
  7. Assume your responsibilities as a client
  8. Work in partnership with your representative
  9. If there’s a problem...

1. Your representative must 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. Your representative must 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 his experience and explain his 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 him with your assets.

The first questions you should ask your representative

  • What training do you have? How does it set you apart from competitors?
  • 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?” Measures are in place to help your representative better protect you when these situations arise.

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3. Your representative must be transparent about how he’s paid

Before doing business with him, ask your representative to explain how his 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. Your representative must 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 him to recommend suitable products for you.

Remember to let your representative know whenever your personal or financial situation changes so he 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 2 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. Your representative must explain the type of services you’ll receive

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

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?

6. You must understand the products and services your representative is proposing

Not all representatives offer the same products and services.

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

7. You must 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 he plans to invest your money. The more accurate the information, the clearer the situation for you.

8. You must 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.

9. If there’s a problem...

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

Here’s what you should do in the event of a problem:

  • As soon as you run into a problem, take notes on the situation at issue.
  • Compile all the facts that lead you to believe that something is wrong.
  • 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 what you spoke about 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:

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Remember…

  • Ask your adviser about any aspect you don't understand. If his explanations or answers aren’t clear, turn down the recommendation. Ask for another solution.
  • Take the time to understand the features and risks of any proposed investment.
  • 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?
  • Carefully read through the documents your representative gives you about an investment, such as the prospectusA prospectus is a detailed information document that a company must prepare to be able to sell securities (such as shares) to the public.
    It must provide full, true and plain disclosure of all material facts likely to affect the value or market price of the security in question.       or Fund Facts, and make sure you understand them. If you’re having difficulty with some sections, ask your representative for help.
  • Check and keep your transaction confirmations, account statements, annual investment performance reports, and the report on charges and other compensation.
  • Review your notes on any conversations with your representative.
  • Notify your representative of any changes in your financial or personal situation.
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