RELATIONSHIP DISCLOSURE INFORMATION
Milestone Wealth Management Ltd., September 2023
Information about our Relationship with You.
In order to help you understand who we are and what we will be doing for you as a client of Milestone Wealth Management Ltd., we have prepared this document. It is intended to provide you with important information that you will need as we continue our relationship.
In some cases, these disclosures are things that we need to provide to you by the regulations under which we operate. But in all cases, this information will help to ensure that our relationship is based on a mutual understanding of our products and services. If we change any information in this document significantly, we will provide you with an updated copy.
This document should also be read in conjunction with the Investment Management Agreement you signed when you opened your accounts and the Investment Policy Statement (IPS) to which you and your advisor have agreed. There are a number of cross references between the three documents, so it is important that you read all of them. Important information may also be contained in other documents that we have provided to you or will provide to you in the future. If you have any questions about the contents of this document or any of the other documents, please contact your advisor or us.
Who we are
Milestone Wealth Management Ltd. is registered as a portfolio manager in Ontario, British Columbia, Alberta, Manitoba, and Saskatchewan. Our principal regulator is the Alberta Securities Commission. As a result, our services are available only for investors who are permitted to hold Canadian investment accounts in those jurisdictions.
Our business is primarily providing the management of or, advice about, the investments of individuals, corporations, trusts and other legal entities. We offer both discretionary and non-discretionary investment services. We advise the full range of investment accounts, including registered accounts, like RRSPs, TFSAs and RESPs.
In providing our services to you, we may employ or engage a number of outside service providers to facilitate service delivery. These may include distributors, brokers, depositories, electronic data processors, and lawyers, amongst others. Our selection process for these service providers is thorough and intended to ensure that they can deliver the services at a level that meets the level that we are required to provide to you. We also have oversight procedures to ensure that they continue to deliver the level of service that we have contractually established with them.
Custody of your assets
We do not hold the cash and securities of your accounts. Client assets are held in Canada in a fully disclosed, segregated account at Fidelity Clearing Canada, subject to the exceptions set out below. Fidelity Clearing Canada is an investment dealer and is regulated by the Investment Industry Regulatory Organization of Canada (IIROC). Each client account held by them is insured by the Canadian Investor Protection Fund (CIPF) up to $1,000,000.
Fidelity Clearing Canada is a qualified custodian under applicable securities laws.
We have trading authority over client assets held in discretionary managed accounts at Fidelity Clearing Canada, but do not have access to client assets held there and are not authorized to transfer securities into or out of client accounts.
Fidelity Clearing Canada is independent of Milestone Wealth Management Ltd., and is required to segregate client assets from its own assets and is subject to regulatory oversight, minimum capital and insurance requirements. They may hold securities on behalf of the client in their name, as nominees of the client.
Fidelity Clearing Canada may appoint sub-custodians to hold client assets in foreign jurisdictions or to hold client assets other than cash or securities.
Client assets are subject to risk of loss: (i) if Fidelity Clearing Canada becomes bankrupt or insolvent; (ii) if there is a breakdown in their information technology systems; or (iii) due to the fraud, willful or reckless misconduct, negligence or error of the Fidelity Clearing Canada or its personnel.
We have reviewed Fidelity Clearing Canada’s reputation, financial stability, relevant internal controls and ability to deliver custodial services and have concluded that their system of controls and supervision is designed to manage risk of loss to client assets in accordance with prudent business practice.
Assets are custodied by Fidelity Clearing Canada, whose head office is located at 483 Bay St. #200, Toronto, ON M5G 2N7
Fund Securities
Securities of investment funds or other issuers held by the client that are recorded on the books of the fund company or its transfer agent only in the name of the client are not held by Fidelity Clearing Canada. Fund securities are subject to the custody and recordkeeping arrangements applicable to the fund company and disclosed in the offering document of the relevant fund. Client assets are subject to risk of loss if the fund company or its custodian become bankrupt or insolvent, or the fund company, its custodian or transfer agent experiences a breakdown of its information systems. Milestone has reviewed the system of controls and supervision maintained by each fund company and has concluded that their systems are sufficient to manage the risk to a client of loss in accordance with prudent business practice.
More about the accounts we offer and what we will do for you
Broadly our investment services can be defined in two ways:
In determining which service is correct for you, we will discuss your financial situation, your investment goals and needs for current and future cash flow. The outcome of this discussion will be the preparation of an IPS that combines this information with key investment principles and the skills of your advisor to provide a framework for your investment portfolio. We will also recommend which of our investment services are best for you.
If you open a discretionary investment management account, we will decide what investments to purchase or sell for your account. We will make investment decisions based on your IPS and prevailing market conditions and will have complete discretion over investment decision making.
If your account is a non-discretionary one, you are the ultimate decision-maker and must provide your specific instructions for each security transaction in your account. We will provide advice to you on potential investments based on the IPS we have established together. We are required nevertheless, to ensure that any purchase or sale is suitable for you before we accept your instructions.
It is also possible that we will recommend that you open accounts that are a mix of the two types.
Suitability Assessment and Use of Information
As a portfolio manager, Milestone has an obligation to take reasonable steps to ensure that, before it makes a purchase or sale of a security for your managed account, the purchase or sale is suitable for you. Milestone must put the client’s interest first when it makes a suitability determination for a client.
To meet this suitability obligation, we collect KYC information from you at the time you open an account with us, such as: information about your personal circumstances, financial situation, investment goals and objectives, investment horizon, investment knowledge and experience, and make a determination regarding your risk profile, which includes your willingness to accept risk (risk tolerance) and ability to endure financial loss (risk capacity). For the purposes of collecting KYC on a client that is a corporation, partnership or trust, we must establish the nature of the business and collect beneficial ownership information or determine who exercises control over the affairs of the entity, as applicable. In order to satisfy our obligation to assess suitability on an ongoing basis after you open your account, as applicable, we update your KYC information on a periodic basis.
To meet our suitability obligation, we must also “know” and understand each investment we place you in. Through our “know-your-product” (“KYP”) due diligence process, Milestone analyzes every investment we place you in or recommend to you. Our KYP process is coordinated by the firm’s advising representatives. Without limitation, as part of the firm’s KYP process, we generally consider such things as the reputation and track record of the investment product, the potential for profit and loss, the associated risk level and potential for conflicts of interest, the investment’s time horizon and complexity and the specific features of any investment, including costs and fees, liquidity, redemption rights and the frequency, completeness, and accuracy of an issuer’s disclosure.
The personal information that we collect from clients is often called the Know Your Client or KYC information. It can be broken down into three broad areas:
1) Your identity
This information includes your name, address, birth date, current employment and social insurance number. It helps us verify who you are, but it is also necessary information for the creation of any registered accounts and to meet our obligations under the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and other federal laws aimed at the prevention and detection of money-laundering and terrorist financing.
2) Your financial situation
This information includes your current income level, your existing investment portfolios and other assets, and any debt you may have against these. We will also collect information about your existing banking relationships. It helps us establish the base line from which we will help you reach your financial goals.
3) Your goals, priorities, liquidity needs and risk assessment
Once we have all of the other information, we can begin to construct a plan. For this step, we need to understand what your financial goals are and when you expect to start taking money out of your accounts.
A crucial part of this analysis is to understand how comfortable you are with taking risks to achieve your goals. We have developed a multi-dimensional risk assessment tool that helps us to understand this element of who you are. Once we have determined a risk appetite score for you, we will use it to help assess the suitability of all investment advice or actions we provide to you.
We will protect your personal information to ensure that only those inside of Milestone or our service providers who need access to the information to serve you and to meet our regulatory obligations can see it. And we will protect it from external parties getting it. We have provided you our Privacy Policy to provide further details on how we deal with it and what your rights are related to the information we collect about you.
Your role in our relationship
It is important that you actively participate in our relationship. In particular we encourage you to:
Fees and other expenses
The fees and expenses that are charged to you in connection with your account are disclosed in your Investment Management Agreement.
The compensation that we receive for our services differs depending on the type of account you have opened. For discretionary accounts, we charge a flat fee that is calculated monthly based on the average daily value of your portfolios and paid monthly. Unless you indicate differently, we will deduct our fee from your investment account.
For non-discretionary accounts, you will pay a transaction charge for each transaction. Generally, these transaction charges are added to the total amount of a purchase or deducted from the proceeds of a sale. If, however, you have agreed to a pay us a fee for your non-discretionary accounts, we will not also charge you transaction charges. There is also an opportunity to implement a blended fee/transaction charge structure with reduced transaction charges and management fees. You and your advisor will determine the fee schedule that is best for your particular circumstances.
In addition to these transaction fees, there are a number of other operating and transactional charges that may apply. These may be for certain actions we undertake for you like account or cash transfers, or for special requests like paper account statements. The Fee Schedule attached to your Investment Management Agreement outlines our current operating and transactional charges. If we change this Schedule, we will provide you with notice of the changes before they come into effect.
In some cases, with investments in investment funds in a non-discretionary account, we may also receive compensation from the fund manager in the form of a sales commission or a trailing commission. If we receive compensation in this manner, we will not also charge a fee or other amount for the investment. For discretionary accounts, we will only purchase investment funds without a sales or trailing commission. We have systems in place to monitor that we are not compensated twice for the same investment.
Compounding of returns is a process by which performance returns are earned on the principal balance in an account. If these returns are retained and reinvested into the principal balance of the account, it thereby generates incremental returns on the prior returns generated in the account. That is, compounding refers to generating earnings on previous earnings. The effect of paying fees in a client account is to reduce the principal balance of the account. Therefore, the effect of paying fees is the cost of the fees themselves in addition to the fact that there is less principal in the account subject to the effects of compounding returns in the future.
Reporting
You will receive regular reports from us about your accounts. The timing and frequency of the reports will vary depending on their content. It is important that you carefully review each report that is sent to you and inform us promptly if you feel that there are any errors or discrepancies or if you have any questions or concerns.
We will generally make the reports available to you electronically through our reporting portal. You will be notified by email when the reports are available. If you would prefer to receive paper copies of any report, we will make them available to you. There will be a charge for paper statements.
Trade Confirmations
If you have a non-discretionary account, you will receive a trade confirmation promptly for each trade. The confirmation will include details about the trade including the quantity and a description of the security purchased or sold, the price paid or received and any commission or other charges you will pay in respect of the trade.
Account Statements
We will provide you with account statements on a quarterly basis, unless there has been a transaction in your account in a particular month, in which case you will receive a statement monthly. You can also request to receive account statements monthly. The account statement will include:
We may also include additional information on the statements in order to help you understand the current state of your portfolios.
Annual Statements
On an annual basis, clients will receive: (i) a report on charges and other compensation, and (ii) an investment performance report. The report on charges and other compensation shows the amount of fees and compensation we have received from you during the relevant period. The investment performance report will provide rate of return information in respect of your account(s). The rate of return is based on the specific deposits into and withdrawals out of your account, dividends and interest earned from your investments and credited to your account, and changes in the value of the securities held in your account.
The investment performance report is designed to help you see how your portfolio with us is performing and how that performance relates to your long-term financial goals. The report on charges and other compensation will provide an annual summary of all charges incurred by you and all other compensation received by the firm that relates to your account.
If we rely on the custodian or enter into a service agreement with another IIROC Dealer Member for reporting to clients, then we will take steps to verify that you receive complete, accurate and timely reporting that meets all regulatory requirements. In such event both us and the third party provider of statements are responsible for ensuring that the information on the reports is complete and accurate.
The report will also show the returns for a benchmark if you have chosen to use one for comparison (see below.)
A word about benchmarks
It is sometimes helpful to compare the performance of your investments against an external measure. While it is not the only way to assess performance, comparison of your performance against a valid benchmark can be a useful tool. A benchmark is generally a well-recognized and diversified index, like the S&P/TSX Composite index. In selecting a relevant benchmark, it is important that it represents a valid comparison with your investment objectives – you want to ensure that the comparison is apples to apples. Your advisor will be able to advise on what a relevant benchmark might be. It is likely to be a blend of a number of broad asset class specific benchmarks that matches your agreed asset mix.
If you choose to utilize a benchmark for performance validation, the agreed-upon benchmark will be include in your IPS and we will include the performance of the benchmark in our regular performance report to you.
When comparing the returns of your investment portfolio to the returns of an investment performance benchmark, you should note that:
Risks
Generally, the value of securities in which you invest will fluctuate in accordance with changes in the financial condition of the issuers of those securities or products that include the issuers of those securities, market conditions, and other factors. Some risks associated with investing include:
General Risks of Investing
You should be comfortable about where your money is invested. This requires you to think about and understand your own tolerance for losing money, even temporarily, and the risk level of your investments. It is important that you understand that your investments are not guaranteed. Therefore, the greatest risk to you as an investor is that you could lose all or part of your investment. Unlike bank accounts or guaranteed investment certificates (GICs), stocks, bonds, money market securities and funds are not covered by the Canada Deposit Insurance Corporation or any other government deposit insurer.
Accounts hold different kinds of investments depending on their investment mandate. The value of investments in any account will fluctuate on a daily basis, reflecting changes in interest rates, economic conditions and markets as well as company news. Therefore, the value of any portfolio’s securities may go up or down. As a result, the value of your investment when you sell it may be more or less than when you bought it.
Risk-Return Trade Off
Risk and return are closely related. This means that to obtain a higher return, you may have to accept a higher possibility of losing money. A higher risk portfolio is generally less stable and it goes up or down in value, or “fluctuates” more. The more a portfolio’s return fluctuates, the more risk is associated with the portfolio. High-risk investments generally offer higher long-term returns than safer ones. Since they fluctuate more, high risk investments may post more negative short-term returns, compared to lower-risk investments.
Risks of Using Borrowed Money (Leveraging) to Finance the Purchase of a Security
Using borrowed money to finance the purchase of securities involves greater risk than a purchase 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.
Securities may be purchased using available cash, or a combination of cash and borrowed money. If cash is used to pay for the security in full, the percentage gain or loss will equal the percentage increase or decrease in value of the security. The purchase of a security using borrowed money magnifies the gain or loss on the cash invested. This effect is called leveraging. For example, if $100,000 of securities are purchased and paid for with $25,000 from available cash and $75,000 from borrowings, and the value of the securities declines by 10% to $90,000, your equity interest (the difference between the value of the securities and the amount borrowed) has declined by 40% (i.e. from $25,000 to $15,000).
It is apparent that leveraging magnifies gains or losses. It is important that are aware that a leveraged purchase involves greater risk than a purchase using cash resources only if you are interested in using leverage for your accounts. The point at which the additional risk from a leverage purchase becomes excessive is a determination to be made on an individual case basis by you and will vary depending on your circumstances and the security purchased.
It is also important that you are aware of the terms of a loan secured by securities. The lender may require that the amount outstanding on the loan not fall below an agreed percentage of the market value of the securities. Should this occur, you must pay down the loan or sell some of the securities so as to return the loan to the agreed percentage. In our example above, the lender may require that the loan not exceed 75% of the market value of the securities. On a decline of value of the securities to $90,000 you must reduce the loan to $67,500 (75% of $90,000). If you do not have cash available, you would have to sell securities to provide money to reduce the loan.
Cash is, of course, also required to pay interest on the loan. If you choose to use leverage for your investments, you are advised to have adequate financial resources available both to pay interest and also to repay the loan if the borrowing arrangements require such a payment.
Risks Relating to Currency
Whenever an account buys assets in a currency other than the base currency (for Canadians this is generally Canadian dollars), there are risks relating to exchange rates. As the base currency changes in value against the other currencies, the value of the portfolio securities purchased in those other currencies will fluctuate.
Some client accounts denominate the value of their securities in Canadian dollars, but invest in different currencies. The total value of their securities will fluctuate as foreign currencies change value in relation to the Canadian dollar. Some client accounts denominate the value of their securities in both U.S. and Canadian dollars. The total value of their securities denominated in Canadian dollars will fluctuate in relation to the U.S. dollar.
Risks Relating to Interest Rate Fluctuations
Investments are affected by interest rate fluctuations. An increase in interest rates will generally result in a decrease in the value of a fixed income security. An increase in interest rates may reduce the return of accounts holding debt or fixed income securities. On the other hand, a drop in interest rates may reduce the return of money market securities.
Risk Relating to Liquidity
Liquidity refers to the speed and ease with which an asset may be sold and converted into cash. Most of the securities held by an account may be sold easily at a fair price and thus represent investments which are relatively liquid. However, an account may invest in securities which are not liquid, i.e., which may not be sold quickly or easily. Some securities may not be liquid because of legal restrictions, the nature of the investment or certain characteristics of the security. The lack of purchasers interested in a given security or market could also explain why a security may be less liquid. The difficulty of selling illiquid securities may result in a loss or a reduced return for an account.
Risks Relating to Credit
An account can lose money if the issuer of a bond or other fixed income security cannot pay interest or repay the principal when it comes due. This risk is higher if the fixed income security has a low credit rating or no rating at all. This risk also exists if there is a reduction in credit rating or changes in general economic or business conditions result in the market perceiving that the risk of a failure to meet a required payment has increased. Fixed income securities with a low credit rating usually offer a higher yield than securities with a high credit rating but they also have the potential for substantial loss. These are known as “high yield securities”.
Risks Relating to Companies Listed on Stock Markets
The value of an account will increase or decrease with the market value of the securities in it. If an account holds stocks, the value of the account will fluctuate with changes in the market value of the stocks it holds. The market value of a stock will fluctuate according to the performance of the company that issued the stock, economic conditions, interest rates, stock market tendencies and other factors. Historically, equity securities are more volatile than fixed income securities. Securities of small market capitalization companies can be more volatile than securities of large market capitalization companies.
Proxy Voting
Provided Milestone receives the proxy and related materials from an issuer or otherwise in sufficient time to cast a vote, Milestone has a policy to vote all shares or other voting securities for its clients in accordance with its best judgment and in the best interests of clients. A copy of Milestone’s proxy voting policies is available upon request. Please note that Milestone will only vote proxies with respect to an issuer where: i) Milestone owns at least 1% of all outstanding shares; or ii) there is a takeover or restructuring event.
Insider Status
Milestone is required by Canadian securities laws to take reasonable steps to establish whether a client is an insider of any reporting issuer or issuer whose securities are publicly traded. In order to comply with this requirement, Milestone will obtain confirmation from each client when the client first opens an account with Milestone as to whether the client is a director, officer or other “insider” of a reporting issuer or issuer whose securities are publicly traded. Milestone is not responsible to file insider reports on behalf of clients. If a client is an insider of any reporting issuer or issuer whose securities are publicly traded, then the client is responsible to file insider reports as applicable.
Trusted Contact Person Information
By providing Trusted Contact Person information to Milestone, you consent and authorize Milestone to contact the Trusted Contract Person and disclose information about your account if Milestone, in its discretion, has questions and/or concerns regarding your whereabouts or health status or in the event that it cannot contact you or becomes concerned that you may be a victim of fraud or exploitation, including financial exploitation.
By providing Trusted Contact Person information to Milestone, you consent to Milestone contacting the Trusted Contact Person to among other things, confirm or make inquiries about any of the following: (i) possible financial exploitation, (ii) concerns about your mental capacity as it relates to financial decision making or lack of decision making, (iii) the name and contact information of any of the following: legal guardian, executor of an estate under which you are a beneficiary, a trustee of a trust under which you are a beneficiary, any other personal or legal representative; and (iv) your current contact information.
Milestone will not take any instructions regarding the assets of the account from the Trusted Contact Person unless they are validly appointed as a power of attorney or authorized signatory. The role of the Trusted Contact Person will only be to provide Milestone with information. If the Trusted Contact Person is the person causing Milestone to have concern, Milestone will not contact that person.
Under securities laws that apply to us, we are permitted to place a temporary hold on all or a portion of the assets in your account(s) with us in certain circumstances as described below. In these circumstances, we may place a temporary hold regardless of whether or not you have designated a Trusted Contact Person. The decision to place a temporary hold will be made by our Chief Compliance Officer (CCO).
A temporary hold on the basis of financial exploitation may be appropriate in instances where the CCO reasonably believes a client has become a vulnerable client and financial exploitation in respect of its account(s) has occurred, is occurring, has been attempted or may be attempted. A “vulnerable client” is a client who might have an illness, impairment, disability or aging-process limitation that places the client at risk of financial exploitation.
A temporary hold on the basis of a lack of mental capacity may be appropriate in instances where the CCO reasonably believes that a client no longer has the mental capacity to make decisions involving financial matters.
There may be other circumstances under which a temporary hold can be placed on an account.
If a temporary hold is placed on your account, we will promptly provide you with written notice of the temporary hold and the reasons for such hold being placed on some or all of the assets of your account(s) with us. We will then notify you when the temporary hold has been terminated. Within 30 days of placing a temporary hold, and unless the hold has been previously terminated, within every subsequent 30-day period, we will be required to terminate the temporary hold or to provide you with notice of our decision to not terminate the hold and the reasons for that decision.
Complaints
We encourage you to contact your advisor on a regular basis to discuss your accounts and the services we are providing to you; raising any question you might have about them. We welcome your positive comments but more importantly we welcome any critical feedback. Critical feedback helps us to improve the quality of our products and services.
If you have a problem with your accounts, do not hesitate to contact us. While your advisor and their team will likely be the first person you contact, you should feel free to contact any member of the Milestone team. Once you have contacted us, we have established policies and procedures to ensure that your complaint is dealt with promptly.
For more information about our complaint process and your options, please refer to the “What to do if you have a compliant” appendix at the end of this document. If you require more information about our handling of complaints, you may contact our CCO directly.
Conflicts of Interest
In the course of providing services to you, there may be situations in which there is an apparent difference between our interests and yours.
A conflict of interest can include any circumstance where:
Whether a conflict is “material” or not depends on the circumstances. In determining whether a conflict is material, we will typically consider whether the conflict may be reasonably expected to affect the decisions of our clients in the circumstances, and/or the recommendations or decisions of Milestone or its registered representatives in the circumstances.
What follows below are details regarding the specific material conflicts of interest that we have identified to date. In case other material conflicts of interest arise, which may happen from time to time, we will inform you of the nature and extent of any such other conflicts of interest prior to any of your subsequent transactions with us or our advice to you.
Third Party Compensation
Milestone will typically not recommend securities products that in turn provide compensation to Milestone. However, when such products are in the best interest of the client, Milestone may make such a recommendation from time to time. Specifically, Milestone may recommend certain funds and ETFs that provide trailer fees or a commission back to Milestone.
Absent appropriate controls, clients may perceive a Milestone recommendation as being driven by third party compensation as opposed to what is appropriate for the client. Milestone takes the following steps to mitigate the actual and potential conflicts of interest described above:
Internal Compensation Arrangements
Milestone could be perceived as being motivated to encourage a client to expand its services with Milestone. Specifically, Milestone’s compensation is based on its assets under management and accordingly Milestone could incentivize its employees to increase a client’s investment portfolio to collect higher fees. Furthermore, Milestone has a service provider relationship with Purpose Advisor Solutions Inc. (“PAS”) that charges Milestone a cost for utilizing their technology platform. PAS’s service charge is incrementally reduced based on Milestone’s asset under management exceeding certain amounts. Accordingly, as Milestone’s assets under management increases, its service fees payable to PAS decrease.
Milestone takes the following steps to mitigate the actual and potential conflicts of interest described above:
Conflicts at the Supervisory Level
One of the mitigation tools that Milestone uses to control for the compensation conflicts of its employees (see Item 2 above) is a Chief Compliance Officer review of suitability recommendations. However, it may be perceived that the Chief Compliance Officer herself could be conflicted during these reviews in that she also may receive variable bonus compensation. To address this conflict, Milestone has structured the compensation of its Chief Compliance Officer such that any variable bonus compensation represents only a nominal portion of her overall compensation package.
Referral Arrangements
Milestone does not actively seek out referral arrangements. However, from time to time, Milestone may enter into referral arrangements where we refer clients to a third party for a fee.
When referring a client to a third party, Milestone must ensure that such a relationship is in the best interest of the client. Milestone should not enter into a referral arrangement solely because of the referral fee that they will receive from that party. Furthermore, if a client pays more for the same, or substantially similar, products or services as a result of a referral arrangement, Milestone would not be seen as appropriately discharging its obligations to its clients.
In order to mitigate any actual or potential conflicts, Milestone will bring the referral relationship and the terms of that referral relationship to the attention of the referred client. In addition to client disclosure, Milestone has adopted several procedures to ensure it determines that accepting a referral is in a referred client’s best interest. These procedures include: (i) requiring Chief Compliance Officer approval of any referral arrangement; (ii) conducting due diligence on potential third-party referrers; (iii) ensuring that the referred client does not pay additional fees or compensation for the same service or product provided to other Milestone clients as a result of the referral arrangement; and (iv) keeping a record of all payments related to Milestone’s referral arrangements.
Affiliated Firms Providing Other Products or Services
Certain Milestone advisers provide insurance products through Canaccord Genuity and HUB Financial. These advisers are licensed insurance agents through these firms.
The above affiliated companies operate in the financial services sector. Accordingly, it may be perceived that Milestone would be inclined to prefer these related parties over other entities or services which may be a better solution for Milestone clients. As an example, it may be perceived that a Milestone employee would recommend a Canaccord Genuity or HUB Financial product due that employee’s relationship with that firm. Furthermore, Milestone clients may become confused as to whether they are dealing with a Milestone employee in their capacity as a registered employee of Milestone or in their capacity as a broker with another firm.
Outside Activities
Milestone’s registered individuals may become involved in other activities outside of their employment with Milestone (e.g., sitting on boards of directors or providing volunteer services for a charity). These outside activities could: (i) impact the amount of time a Milestone registered individual spends on Milestone employment or registration obligation; and (ii) create a conflicting interest as to how a Milestone registered individual discharges its obligations to Milestone or its clients.
Milestone has policies and procedures to ensure that all outside activities are reported to and considered by its Chief Compliance Officer. The Chief Compliance Officer will only approve such outside activities that do not conflict with Milestone operations or obligations.
Best Execution
Milestone may hire a brokerage firm to execute trades on behalf of the Milestone mandates based on a pre-existing relationship, rather than objective qualitative or quantitative considerations. This is considered a best execution conflict of interest.
Milestone has policies and procedures to ensure that when Milestone directs brokerage transactions to brokers, the service is comparable to that which Milestone may obtain from other brokers and the fees are equivalent to or better than those that would have been normally charged by the broker. Milestone monitors the level of service provided by any broker retained on behalf of the Milestone mandates with respect to the cost and execution of trades.
When placing orders for and on behalf of clients’ accounts, we will select brokers and dealers from whom we reasonably expect to obtain the best execution (after considering all transactions costs, research or other benefits.) Some brokers and dealers will make available research and trade execution services to us at no cost in exchange for executing a trade with them. This practice is commonly known as “soft dollar” arrangements. The use of these arrangements is permitted under applicable securities laws as long as we determine that the arrangements will be beneficial to our clients. The regulations also define what type of services can be provided to us under a soft dollar arrangement. We have established a policy to assess when a proposed soft dollar arrangement would be beneficial to our clients. Any arrangement to which we agree is reviewed on an annual basis by senior management including the Chief Compliance Officer to ensure that the clients continue to receive a reasonable benefit from the services in relation to the total commission dollars paid.
Fair Allocation of Investment Opportunities
Milestone owes its clients a duty to treat each client fairly. This duty must be considered when allocating investment opportunities.
Security purchases and sales for multiple accounts may be grouped and submitted to the market together. The decision to group orders will take into consideration the investment profile of each client. When trades are grouped, each account will generally receive its pro rata share and the same blended price of each fill wherever practicable. In the event that securities are purchased for the accounts of more than one client and an insufficient number of securities are available to satisfy the purchase order, the securities available will be allocated pro rata based on the size of the accounts, to the extent reasonably possible. Trading commissions, if any, will be allocated to client account in the same manner as the security allocation. Allocations for clients will always take precedence over trading for any proprietary accounts or the accounts of our staff. The basic purpose of this policy is to ensure fair treatment of all accounts and to avoid the appearance of favoritism or discrimination. There may be times, however, where strict application of this policy would not lead to a fair, practical and reasonable allocation. In such circumstances, allocation by a method other than this policy will be permitted, provided that such allocation produces a more fair and reasonable result
Proprietary accounts of Milestone and those of any of its employees will not be allocated a pro-rata share of any partially filled block trades or initial public offering of securities.
Gifts and Entertainment
While it is recognized that conducting business may involve some modest exchange of gifts and business-related entertainment, the value of such gifts and entertainment must not create a real or perceived conflict of interest and must not impair the independence or objectivity of the recipient.
Milestone has policies and procedures in place with respect to the receipt or giving of gifts and/or entertainment. These policies and procedures require employees to contact the Chief Compliance Officer with any concerns about the receipt or giving of a gift or entertainment and whether that may create a conflict of interest. Further, employees are required to notify the Chief Compliance Officer upon receipt of a gift or entertainment in excess of $250 (on an individual basis).
Personal Trading
Milestone abides by a code of ethics which establishes standards of business conduct to prevent possible conflicts of interest between clients and employees, including receiving gifts and entertainment and trading for personal accounts. Every Milestone employee is subject to our personal trading policies and procedures. The policies are intended to ensure that employees do not put their personal interests ahead of our clients. We encourage employees to invest alongside of our clients, but they are controls in place to ensure that they do not take advantage of their knowledge by trading in a manner that is inconsistent with our obligations to clients. Employees who have direct knowledge of client assets like investment advisors, are required to request approval for trades in their personal accounts, or accounts in which they have a beneficial interest, for most securities.
Related and Connected Issuers
There is a potential for conflicts of interest to arise in situations in which Milestone advises or trades in the securities of issuers which are related to or connected to us. We are required to disclose to you any related or connected issue in writing, before we make a trade or provide advice to you and, in a timely manner thereafter if there are any significant changes to this disclosure. In addition, we are required to disclose to you whether any security we recommend for you to buy, sell or hold are securities issued by Milestone, a related issuer or a connected issuer.
A person or company is a “related issuer” of another person or company if:
An “influential security holder” controls more than 20% of an issuer either alone or with others.
A “connected issuer” is one that has a connection to a person or company through common shareowners, directors or officers.
As a part of our business activities, we may buy or sell the securities of related/connected issuers on behalf of our clients, exercise our discretionary power to buy or sell these securities pursuant to discretionary management agreements, or make recommendations in respect of these securities. We will do so in accordance with applicable securities laws and always in the best interest of our clients. We maintain a list of related/connected issuers which is updated regularly and is available on our website.
Filing a complaint with us
If you have a complaint about our services or a product, contact us at:
Milestone Wealth Management Ltd. #207, 322 – 11th Avenue SW
Calgary, AB
T2R 05C
Attention: Compliance
You may want to consider using a method other than email for sensitive information.
Tell us:
• what went wrong
• when it happened
• what you expect, for example, money back, an apology, account correction
Help us resolve your complaint sooner
• make your complaint as soon as possible
• reply promptly if we ask you for more information.
• keep copies of all relevant documents, such as letters, emails and notes of conversations with us
We will acknowledge your complaint
We will acknowledge your complaint in writing, as soon as possible, typically within 5 business days of receiving your complaint. We may ask you to provide clarification or more information to help us resolve your complaint.
We will provide our decision
We normally provide our decision in writing, within 90 days of receiving a complaint. It will include:
• a summary of the complaint
• the results of our investigation
• our decision to make an offer to resolve the complaint or deny it, and an explanation of our decision
• our decision to make an offer to resolve the complaint or deny it, and
• an explanation of our decision
If our decision is delayed
If we cannot provide you with our decision within 90 days, we will:
• inform you of the delay
• explain why our decision is delayed, and
• provide you with a new date for our decision.
You may be eligible for the independent dispute resolution service offered by the Ombudsman for Banking Services and Investments (OBSI).
If you are not satisfied with our decision
You may be eligible for OBSI’s dispute resolution service.
If you are a Québec resident
You may consider the free mediation service offered by the Autorité des marchés financiers.
A word about legal advice
You always have the right to go to a lawyer or seek other ways of resolving your dispute at any time. A lawyer can advise you of your options. There are time limits for taking legal action. Delays could limit your options and legal rights later on.
Taking your complaint to OBSI
You may be eligible for OBSI’s free and independent dispute resolution service if:
• we do not provide our decision within 90 days after you made your complaint, or
• you are not satisfied with our decision
OBSI can recommend compensation of up to $350,000.
OBSI’s service is available to clients of our firm. This does not restrict your ability to take a complaint to a dispute resolution service of your choosing at your own expense, or to bring an action in court. Keep in mind there are time limits for taking legal action.
Who can use OBSI
You have the right to use OBSI’s service if:
• your complaint relates to a trading or advising activity of our firm or by one of our representatives
• you brought your complaint to us within 6 years from the time that you first knew, or ought to have known, about the event that caused the complaint, and
• you file your complaint with OBSI according to its time limits below.
Time limits apply
•If we do not provide you with our decision
within 90 days, you can take your complaint to OBSI any time after the 90‐day period has ended.
• If you are not satisfied with our decision, you have up to 180 days after we provide you with our decision to take your complaint to OBSI.
Filing a complaint with OBSI
Contact OBSI
Email: ombudsman@obsi.ca
Telephone: 1‐888‐451‐4519 or 416‐287‐2877 in Toronto
Information OBSI needs to help you
OBSI can help you best if you promptly provide all relevant information, including:
• your name and contact information
• our firm’s name and contact information
• the names and contact information of any of
our representatives who have been involved in your complaint
• details of your complaint
• all relevant documents, including any
correspondence and notes of discussions with us
OBSI will investigate
OBSI works confidentially and in an informal manner. It is not like going to court, and you do not need a lawyer.
During its investigation, OBSI may interview you and representatives of our firm. We are required to cooperate in OBSI’s investigations.
OBSI will provide its recommendations
Once OBSI has completed its investigation, it will provide its recommendations to you and us. OBSI’s recommendations are not binding on you or us.
OBSI can recommend compensation of up to $350,000. If your claim is higher, you will have to agree to that limit on any compensation you seek through OBSI. If you want to recover more than $350,000, you may want to consider another option, such as legal action, to resolve your complaint.
For more information about OBSI, visit www.obsi.ca
00348708-1