QWM Relationship Disclosure
Questrade Wealth Management Inc. (“QWM”) believes the best way to help you meet your financial goals, and for us to serve you as a valued client, is to provide you with the investment solutions you need. Our goal is to help you invest so that you are comfortable within a constantly evolving financial climate. We can do this most successfully if we both know what to expect from each other. For this reason, we would like you to have a good understanding of:
- The products and services we offer
- Your account(s) and how it/they operate(s)
- Our responsibilities to you
This document applies to your managed account(s) only. In order to promote active client participation for a mutually successful relationship, we encourage you to:
Keep us up to date
Clients must provide full and accurate information to the firm, and the employees acting for the firm, so that your investments are in line with your goals. Clients should promptly inform us of any changes to their information, such as a change in income, employment, net worth, address, marital status or goals.
Clients should understand the potential risks and returns on investments. You should carefully review all documentation provided by the firm. Where appropriate, clients should consult professionals, such as a lawyer or an accountant, for legal or tax advice.
Ask us questions
Clients should contact us with any questions about your account(s), investments, or your relationship with us at email@example.com or 1-888-783-7866.
Stay on top of your investments
Clients should maintain the minimum balance of $750 required in their account(s) to stay invested. You should review all account documentation provided by the firm including account statements.
This relationship disclosure includes key information that we ask you to acknowledge via the checkbox to confirm that you have received this document and understand its contents.
We will update the relationship disclosure when there are material changes. If you later have any questions related to the contents of this document, or need to change any of the information we have on file for you, please contact us at firstname.lastname@example.org or 1-888-783-7866.
SECTION 1 — THE PRODUCTS AND SERVICES WE PROVIDE TO YOU
QWM provides you with managed account services. This means that we have discretion to invest, reinvest and maintain your account based on what is suitable for you. The suitability of your account investments is based on the information you have provided us.
We also offer additional systematic tools that you can use to monitor and track your goals.
We will offer you additional services as they are developed. You can find out about new services in the monthly client notice or in other communications.
SECTION 2 — THE PRODUCTS AND SERVICES WE PROVIDE TO YOU
We offer our clients:
Your account is managed by QWM. A portfolio will be recommended to you based on your suitability. Our questions are focused on obtaining information to understand and establish:
- Your identity
- Your investment needs and objectives
- Your investment knowledge and time horizon
- Your personal and financial circumstances, and
- Your risk tolerance
We ask you these questions because we have an obligation to assess whether a purchase or sale of a security is suitable for you prior to executing the transaction or at any other time.
We invest your account into one of our Exchange Traded Fund (ETF) portfolios based on your risk profile. Please refer to our website (https://www.questrade.com/questwealth-portfolios/etf-portfolios) for further details.
On a quarterly basis, or when deemed necessary, your account will be rebalanced according to the original portfolio recommended to you. Of course, when you make changes to your questions, a different portfolio may be recommended and future rebalancing will be based on the new recommendation.
The administration of your account is handled by Questrade, Inc. based on instructions from QWM. The services provided by Questrade, Inc. include trade execution, currency conversion, custodial and reporting services.
Your account documentation contains all of the information you have told us about yourself. This includes everything from your address to your investment time horizon. You agree to update your account information when material changes happen in your life including but not limited to a change in your job or income, a change of address, or a change in your financial circumstances, risk profile and/or investment objectives. If you have any questions about updating your Portfolio, please contact us at email@example.com or 1-888-783-7866.
Annual update requirement
You agree to update your information at least annually, or upon our request, so that we can remain informed of your situation and ensure our portfolio recommendation remains suitable for you. If you do not update your information, you understand that we will not be able to manage your account as we can no longer determine suitability for you and as such, will need to redeem your investments into cash.
Person to person contact
You understand that person to person contact is limited with QWM compared to traditional managed account relationships. However, you can contact us with your questions or concerns. Conversely, we will contact you whenever we have questions or concerns, or when there is inconsistency with the answers you provided. You can access your account online 24 hours a day, seven days a week to manage your account and review your transaction history and balances.
Client assets are held in a segregated account at Questrade, Inc. The custodian is an investment dealer and is regulated by the Investment Industry Regulatory Organization of Canada (IIROC). Canadian denominated securities are held with the Canadian Depository Services (CDS) in electronic form. US denominated securities are held with Depository Trust & Clearing Corporation (DTC). This allows Questrade, Inc. to facilitate clearing, settlement and entitlement payments on behalf of QWM clients.
Client assets are subject to risk of loss: (i) if the Custodian becomes bankrupt or insolvent; (ii) if there is a breakdown in the Custodian’s information technology systems; or (iii) due to the fraud, willful or reckless misconduct, negligence or error of the Custodian or its personnel. The Firm has reviewed the Custodian’s reputation, financial stability, relevant internal controls and ability to deliver custodial services and has concluded that the Custodian’s system of controls and supervision is sufficient to manage risks of loss to client assets in accordance with prudent business practice.
SECTION 3 — THE RISKS TO CONSIDER
You should be comfortable about how your money is invested and this is why we ask you questions including questions about your tolerance for risk and when you will need to spend the money. Your answers to these questions help us to make decisions about the portfolio that is suitable for you.
While we do our very best to manage your money, the markets are unpredictable and so it is important to note that the value of your portfolio is not guaranteed. Past performance is not indicative of future performance. The greatest risk to you as an investor is the risk of losing part or even all of your investment. Unlike bank accounts, term deposits and guaranteed certificates, most of the investments we will make for you will be in Exchange Traded Funds (“ETFs”). ETFs fluctuate in value on a daily basis. These investments reflect changes in the value of the underlying investments, which may fluctuate based on factors such as interest rates, economic conditions, markets, company news and political events. The net equity of your portfolio will rise and fall, which means that the value you receive when redeeming your portfolio may be more or less than its value when you bought it.
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.
SECTION 4 — THE FEES YOU WILL BE PAYING AND HOW THEY ARE CALCULATED
We offer you a tiered fee structure based on the amount of assets you hold in your managed account(s). These fees, as well as other administrative fees, are outlined on our website (https://www.questrade.com/pricing/questwealth-portfolios-fees). We will notify you of any change to the fees (including any change to the link on our website) sixty (60) days prior to the date such change will take effect.
ETF Management fees
All exchange traded funds (“ETF” or “ETFs”) include a fee that is incorporated into the total cost of the ETF. The management fee is based on a percentage of the net asset value of each of the ETFs. Consult the ETF Fact sheet for additional details.
No inactivity fees
Accounts managed by Questrade Wealth Management Inc. are exempt from inactivity fees charged by Questrade, Inc.
You may also be subject to other costs relating to services that you use with us. These costs will not appear on your statements as they are third-party charges, such as foreign exchange spreads.
All fees charged to your account will negatively impact your performance which will lower your compounded return over time.
SECTION 5 — CONFLICTS OF INTEREST
The ways we will avoid, manage or disclose conflicts of interest that may arise as we serve your and others’ interests.
Conflicts of interest
A conflict of interest is any situation when QWM, or any of its employees or related entities, has an interest that may conflict with the interests of QWM’s clients or the ability of QWM or a QWM employee to deal with clients in a fair, equitable and transparent manner, consistent with the best interests of the client or clients.
QWM has adopted policies and procedures to help identify and manage conflicts of interest that may exist between:
- You and us
- You and our other clients
- Us and your related and associated companies
Related and connected parties
Questrade Wealth Management Inc. (“QWM”) and Questrade, Inc. are wholly owned subsidiaries of Questrade Financial Group Inc. You are a client of both Questrade, Inc. and Questrade Wealth Management Inc. Questrade, Inc. is a registered investment dealer, a member of the Investment Industry Regulatory Organization of Canada (“IIROC”) and a member of the Canadian Investor Protection Fund (“CIPF”), the benefits of which are limited to the activities undertaken by Questrade, Inc. QWM, is not a member of IIROC or the CIPF. Questrade, Inc. provides administrative, trade execution, custodial and reporting services to you. QWM is a registered portfolio manager, Investment Fund Manager, and Exempt Market Dealer and is responsible for managing your account and the investment portfolios within it by providing trade instructions to Questrade, Inc. You can learn more about Questrade at www.questrade.com.
The use of sub-advisors
From time to time, QWM may engage a duly registered portfolio management firm to manage portfolios. These sub-advisors are selected for their expertise, and are monitored by us throughout the duration of the engagement.
In circumstances where QWM knows or is reasonably expected to know that the sub-advisor or portfolio manager may recommend or propose an investment in an investment fund in respect of which the sub-advisor, portfolio manager or QWM may have a conflict of interest, the investment recommendation will be reviewed by QWM in accordance with its Conflict of Interest Policies and Procedures. QWM has established due diligence policies and procedures to review the operations of the sub-advisor, including conflicts of interest. Such procedures relating to subadvisors include, as reasonably required, quarterly compliance certifications, annual compliance questionnaires, periodic onsite due diligence and investment (or model portfolio) specific due diligence as needed.
Your portfolio sub-advisor is One Capital Management LLC.
Management of conflicts of interest
In general, we deal with and manage relevant conflicts as follows:
This includes avoiding conflicts that are prohibited by law, as well as conflicts that cannot effectively be addressed.
We manage acceptable conflicts through means such as physically separating different business functions, and by restricting the internal exchange of information.
By providing you with information about conflicts, you are able to independently assess their significance when evaluating our recommendations and any actions we take.
QWM employees, officers and directors are required to immediately report any matters that they believe may be a Conflict of Interest to the Chief Compliance Officer (“CCO”), General Counsel (“GC”) or Ultimate Designated Person (“UDP”). If the CCO, GC and/or the UDP agree, an action plan to manage the conflict in accordance with QWM’s Conflict of Interest Policies and Procedures is engaged and reported to the Compliance Committee and, if necessary, the Board of Directors.
Questrade, Inc. is a member of the Investment Industry Regulatory Organization of Canada (“IIROC”) and a member of the Canadian Investor Protection Fund (“CIPF”), the benefits of which are limited to the activities undertaken by Questrade, Inc.
Questrade, Inc. accounts are protected by the Canadian Investor Protection Fund within specified limits. A brochure describing the nature and limits of coverage is available upon request. Further information is available at www.cipf.ca.
Questrade Wealth Management Inc., the portfolio manager responsible for managing the portfolios in your managed account, is not a member of IIROC or the CIPF.
Possible conflicts and how they are managed
The following information is intended to assist you in understanding and assessing material, potential and actual conflicts of interest, including how we address them.
CONFLICT OF INTEREST
PRIMARY METHODS WE USE TO MANAGE THE CONFLICT
ONGOING CONFLICT OF INTEREST
|We earn compensation by selling products and services to you for which you pay us.||
|We would like you to use more of our services and buy more of our products as shown in our marketing.||
|We would like you to use more of our services and buy more of our products, and so we partner with individuals, organizations, companies and other third parties.||
|Individuals registered with us may also be registered with another registered firm related to QWM, and may provide services to that firm.||
|We may permit certain individuals who are registered with us to be employed by, participate in, or accept compensation from other persons or firms, outside the scope of his/her relationship with us.||
|Individuals may serve on a board of directors or take on other activities that could take time and attention away from your account.||
|In some cases, transactions for a group of clients are executed partially and therefore, orders are filled at different prices. We determine how these transactions are allocated to your account.||
|Because we manage your account and you have delegated proxy voting to us, this means that we could be voting on behalf of a large number of clients.||
|Our employees, officers and directors, have access to the trading activities in a managed account prior to execution.||
|Trades for your account are executed based on our instruction through our affiliate, Questrade, Inc., registered investment dealer, member of IIROC and CIPF.||
|QWM may know or may be reasonably expected to know that the sub-advisor or portfolio manager may recommend or propose for QWM portfolios, an investment in an investment fund in respect of which the sub-advisor, portfolio manager or QWM may have a conflict of interest.||
Canada has comprehensive and extensive securities regulatory rules and regulations, many of which are directed at protecting client and investor interests, including dealing with conflicts of interest. We suggest that you refer to the websites and publications of the provincial securities commission through the Canadian Securities Administrators (“CSA”) for more information on how Canadian securities regulations address conflicts of interest in order to safeguard the investing public.
SECTION 6 — THE REPORTS WE WILL PROVIDE TO HELP YOU MONITOR YOUR FINANCIAL ASSETS AND THEIR PERFORMANCE, AS WELL AS THE COMPENSATION YOU PAY US
You will receive account statements from Questrade, Inc. on a monthly basis. Account statements may be provided quarterly if no transactions occurred during the quarter. Your account statement details all account activity, including purchases and sales of securities, contributions and withdrawals, dividends, interest earned and paid, transfers, and any other transactions that occurred in your account over the previous month.
These statements also list your current holdings and the net value of your portfolio as of the date of the statement.
You will also receive account statements from QWM on a quarterly basis. These account statements include the same detailed information but are presented based on a 3-month duration (quarter year).
Note: the value of most securities you hold is calculated generally using the last bid price for that security on the stock exchange it trades on. In the case of securities that have ceased trading, where the company is bankrupt, or in the instance of thinly traded securities and other and of Canadian Controlled Private Corporations (“CCPC”), they may be priced at $0 or marked as N/A because of the lack of availability of a valid price.
Investment performance benchmarks
You can see how your investments are doing by comparing the rate of return on the securities you hold to a performance benchmark. Your rate of return is affected by, among other things, changes in the value of your securities, dividends and the interest you earn, as well as any deposits and withdrawals.
To compare your rate of return to a benchmark, you need to find a benchmark with securities similar to the ones you hold in your account.
Example: the S&P/TSX composite is a benchmark for a broad group of Canadian stocks that trade on the Toronto Stock Exchange (TSX). It’s a good yardstick for assessing the performance of a Canadian equity mutual fund with investments in Canadian corporations. However, it would not be a good benchmark if you hold foreign investments, bonds, shares of smaller companies or shares that are limited to only one part of the economy. Instead, you would have to find a foreign equity, bond, small cap, or industry sector benchmark. If your account includes half stocks and half bonds, compare your rate or return to the average of a stock and the average of a bond index.
- Remember, benchmarks should be used as a guide only.
- Benchmarks do not factor in management fees or other costs to invest, and often do not include any cash or cash equivalents.
- Rates of return for benchmarks are calculated using a specific method. For the best comparison, ensure your account’s rate of return is calculated using the same method.
- Additionally, benchmarks are based on how a sample portfolio performs as well as on other factors, such as tax considerations, that affect your returns.
For your managed account, we provide you with comparative benchmarks that are weighted such that they are comparable to the portfolio selected for you based on your risk tolerance profile. The comparative benchmarks consist of a blend of the S&P Global 1200 Index, the S&P/TSX Composite Index, and the Bloomberg/EFFAS Canadian Government one to three-year bond index. The equity portion of the benchmarks comprises a blend of 30% S&P/TSX Index and 70% S&P Global 1200 Index. The fixed income portion of the benchmarks consists of 100% Canadian Government one to three-year bond index. These indices are unmanaged and do not include any management fees, transaction costs nor do they include any tax implications of trading and rebalancing. Past results are not indicative of future results for the composite returns or the indices.
The comparative benchmarks are defined as follows: the benchmark for all accounts consists of 45.5% S&P Global 1200 Index, 19.5% S&P/TSX Composite Index, and 35% Bloomberg/EFFAS Canadian Government one to three-year Bond Index. The benchmark for the income portfolio consists of 28% S&P Global 1200 Index, 12% S&P/TSX Composite Index, and 60% Bloomberg/EFFAS Canadian Government one to three-year Bond Index. The benchmark for the balanced portfolio consists of 42% S&P Global 1200 Index, 18% S&P/TSX Composite Index, and 40% Bloomberg/EFFAS Canadian Government one to three-year Bond Index. The benchmark for the growth portfolio consists of 56% S&P Global 1200 Index, 24% S&P/ TSX Composite Index, and 20% Bloomberg/EFFAS Canadian Government one to three-year Bond Index. The benchmark for the aggressive growth portfolio consists of 70% S&P Global 1200 Index and 30% S&P/TSX Composite Index
Note: benchmarks are unavailable for the conservative income portfolio.
Future reporting enhancements
We regularly look at ways to improve the reporting and documentation we provide to you to make it more informative, clearer, and useful for you and other clients. We are working on changes pertaining to account holdings, fees that you pay, and performance. As part of our service commitment, we will keep you informed of the timing of changes and how to understand the new report formats. For updated information at any time, please contact us.
SECTION 7 — COMPLAINT HANDLING PROCESS
QWM manages large volumes of client account activity each day, and we do our best to ensure that your business is handled in an efficient, courteous and accurate manner.
We want to know if we have not met the high level of standards that we have set for ourselves, and we have established policies and procedures for clients who want to bring a concern to our attention.
The Ombudsman for Banking Services and Investments (“OBSI”) is an independent dispute resolution service available to you. A detailed resolution process can be found in the Investment Management Agreement (“IMA”).
SECTION 8 — OTHER DISCLOSURES
You understand that it is important for you to review carefully and promptly your account statements and other documentation (as requested) to make sure that your assets are accurately reflected, the correct taxes are withheld (if applicable), and so on. If you identify any errors in your account statement, you must notify us within 30 days of receiving the statement.
Privacy and confidentiality
You consent to the sharing by QWM all of your information with Questrade, Inc., a trusted business partner responsible for the administrative, trade execution, custodial and reporting services related to your account.
You provide your consent for the disclosure of information to business partners involved in the management and administration of the account, and to the regulatory authorities as required by law or regulation.
Getting rid of paper
You understand the benefits of electronic or online receipt of statements, tax slips, etc. in terms of easier storage, retrieval, cost savings and environmental responsibility, and that you consent to the electronic delivery of such.
Electronic provision of advice
You understand that our process for providing advice and/or recommendations is largely delivered through electronic means, and you are comfortable with this approach. You confirm that you have enough computer and internet experience to understand sophisticated applications and systems.
Unclaimed intangible property
You understand that laws in a number of provinces require QWM to remit accounts and financial instruments where QWM has not heard from owners for specified amounts of time. You agree that it is your responsibility to provide QWM with your address as soon as possible after you change addresses, and to acknowledge existence of an account(s) if asked to do so to avoid holdings being transferred to government authorities in provinces with such requirements.
Questrade Wealth Management Inc. ensures all clients are treated fairly in the allocation of investment opportunities. In situations where two or more accounts participate simultaneously in a trade order involving the same security, executed trades are allocated among the client accounts at an average price, on a pro-rata basis, based on order size as determined at the time the trade order is made.