Compliance Memo

Compliance Memorandum 2013-10; Change of fund risk rankings: Money Market Funds

For more information, contact:

Compliance Team
compliance@gpwealth.ca

Date Issued:

October 21, 2013

In order to comply with IFIC recommendations and the CSA requirements for Point of Sale Fund Facts, a change to the Prospectus Risk Data moving from a 6 point risk scale to a 5 point risk scale has been approved and implemented. Mutual Funds will no longer use a risk rating of “Very Low”. As a result, all mutual funds previously rated with a “Very Low” risk rating have been changed to a “Low” risk ranking. The mutual funds which are affected are Money Market funds from the following fund managers:

  • AGF Investments
  • Excel Funds Management
  • Front Street Capital
  • TD Mutual Funds

As a best practice, review each client’s portfolio holding any of these funds for suitability. At a minimum, a review of the clients KYC and portfolio must occur prior to any new purchase in the affected plan.

Where the risk ranking of the existing holdings now exceed the client’s stated “Plan Risk Tolerance”, a recommendation must be made to rebalance the client’s portfolio to bring it into compliance.

We must caution financial advisors that updating a client’s risk tolerance to simply match a new risk ranking with existing holdings in an effort to maintain the affected plans onside with KYC may be inappropriate. At minimum, when faced with this circumstance, advisor notes must be maintained documenting a discussion on the amended client risk tolerance.

As always, if you have any questions or comments, contact the Compliance Department by email at compliance@gpwealth.ca.