Conflicts of Interest Policy

Overview

  • Conflicts of Interest. Wealthsimple makes money when you have more assets in your account and also manages the portfolios of other clients, but as a portfolio manager, we have a duty to act in your best interest and will make decisions based on what is right for you.

  • The Relationship Between Wealthsimple and the Custodian. Wealthsimple Investments Inc. (“WSII”) is the custodian that Wealthsimple uses to hold your assets and execute trades, among other brokerage services used to support your Wealthsimple Invest account. That means that you are a client of both Wealthsimple and WSII; however, WSII does not provide any investment advice.

  • Allocation of Investment Opportunities. We will treat your accounts fairly and not display favouritism or discrimination.

  • Referral Arrangements. If Wealthsimple takes part in any referral programs relating to you, we will let you know ahead of time.

  • Related and Connected Issuers. Wealthsimple may, on behalf of its clients, buy or sell the securities of its “related issuers” or “connected issuers”. However, these relationships do not influence Wealthsimple’s investment decisions, which are based on your best interest.

1. Conflicts of Interest

As your portfolio manager, we have a duty to act in your best interest and not put our interest ahead of yours. However, it is important to note that the way we make money could create some conflict with your interests. 

Here is an example to help demonstrate a potential conflict of interest:

Wealthsimple makes money when you have more assets in your account which means we are incentivized to encourage you to add assets to your account. In certain situations, and at certain times, it may be better for you not to add more assets to your account. This would create a potential conflict of interest between advising you to grow your account versus a strategy less profitable for Wealthsimple.

In addition, we attempt to negotiate MER fee rebates with third-party investment fund managers in respect of non-Wealthsimple ETFs, and when successful, we share the benefit of such rebates with you by adjusting the price of the applicable ETFs. When your portfolio is invested in Wealthsimple ETFs, such as those found in an SRI portfolio, Wealthsimple will benefit by receiving a portion of the MER fees for those ETFs. However, it is our policy to select the ETFs that are better suited for our clients notwithstanding any rebates granted in respect of certain ETFs.

Rest assured, we take measures to ensure that your interests are considered ahead of ours, and we leverage technology and policies to minimize potential conflicts of interest.

It is important to understand, however, that Wealthsimple performs portfolio management services for various accounts other than your accounts. The services are not exclusive, and, subject to the following, Wealthsimple or any affiliate is not prevented from providing similar services to other clients (whether or not their investment objectives and policies are similar to yours) or from engaging in other activities. Wealthsimple may give advice and take action concerning its other clients, which may be the same as, similar to or different from the advice given, or the timing and nature of action taken, concerning the accounts.

Wealthsimple is not obligated to purchase or sell for you any security or other property which Wealthsimple purchases or sells for any other account if, in the sole discretion of Wealthsimple, such transaction appears unsuitable, impractical or for any reason undesirable for the accounts.

2. The Relationship Between Wealthsimple and the Custodian

WSII is registered as an Investment Dealer in each province and territory of Canada and is a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. WSII and Wealthsimple are separate, but affiliated entities. Although they are separate entities, information about you and your account may be shared between Wealthsimple and WSII in order to service your account.

3. Allocation of Investment Opportunities

We are committed to treating your accounts fairly and will not display favouritism or discrimination. In circumstances where subscriptions or orders for multiple accounts may be grouped and submitted together, each account generally receives 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 to the extent reasonably possible pro rata based on the size of the accounts.

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 fairer and more reasonable result for all accounts involved. 

4. Referral Arrangements

Wealthsimple may enter into referral arrangements as described under applicable securities law. The terms of any referral arrangements made in respect of the Account will be disclosed to you before any referral takes place. 

5. Related and Connected Issuers

As a part of its business activities, Wealthsimple may buy or sell the securities of its “related issuers” (as defined under subsection 1.2(2) of National Instrument 33-105 Underwriting Conflicts) or “connected issuers” (as defined under section 1.1 of National Instrument 33-105 Underwriting Conflicts) on behalf of its clients, exercise its discretionary power to buy or sell such securities pursuant to discretionary management agreements, or make recommendations in respect of such securities, including funds managed by Purpose Investments Inc. (“Purpose Funds”) or Mackenzie Financial Corporation (“Mackenzie Funds”). For clarity, Wealthsimple may, on behalf of its clients, buy or sell Purpose Funds or Mackenzie Funds.

Purpose Funds and Wealthsimple may be considered “connected issuers” as a result of an individual being a director of Purpose Investments Inc. and a director of Wealthsimple’s parent company, Wealthsimple Financial Corp. However, the individual is not involved with, nor has any ability to influence, investment decisions at Wealthsimple Inc.

Mackenzie Funds and Wealthsimple may be considered “connected issuers” as a result of a third party owning or controlling, directly or indirectly, more than twenty percent (20%) of the voting securities of Mackenzie Financial Corporation and Wealthsimple. Further, Mackenzie Financial Corporation is the manager of the Wealthsimple North America Socially Responsible Index ETF, Wealthsimple Developed Markets ex North America Socially Responsible Index ETF and Wealthsimple Shariah World Equity Index ETF, for which Wealthsimple receives a portion of the management fee.

Wealthsimple will only buy or sell the securities of Purpose Funds or Mackenzie Funds on behalf of its clients in accordance with applicable securities laws and based on its good faith determination of the best interest of its clients.

As defined in subsection 1.2(2) of National Instrument 33-105 Underwriting Conflicts, a person or company is a “related issuer” of another person or company if:

  • the person or company is an “influential security holder” of the other person or company,

  • the other person or company is an influential security holder of the person or company, or

  • each of them is a related issuer of the same third person or company.

As defined in section 1.1 of National Instrument 33-105 Underwriting Conflicts, the term “influential security holder” generally refers to a situation where a person or company or professional group (which includes a registered firm and its officers, directors, employees and affiliates):

  • owns or controls, directly or indirectly, more than 20% of the voting securities of an issuer,

  • owns or controls, directly or indirectly, more than 20% of the dividends or distributions to the holders of the equity securities of the issuer, or more than 20% of the amount to be distributed to the holders of equity securities of the issuer on the liquidation or winding up of the issuer,

  • controls or is a partner of the issuer if the issuer is a general partnership,

  • controls or is a general partner of the issuer if the issuer is a limited partnership,

  • owns or controls, directly or indirectly, more than 10% of the voting securities of an issuer, and together with its related issuers, is entitled to nominate at least 20% of the directors of the issuer, or its officers, directors or employees constitute at least 20% of the directors of the issuer.

As defined in section 1.1 of National Instrument 33-105 Underwriting Conflicts, the term “connected issuer” means, for a registered firm or registered individual:

  • an issuer distributing securities, if the issuer or a related issuer of the issuer has a relationship with any of the following persons or companies that may lead a reasonable prospective purchaser of the securities to question if the specified firm registrant and the issuer are independent of each other for the distribution:

    • the specified firm registrant,

    • a related issuer of the specified firm registrant,

    • director, officer or partner of the specified firm registrant,

    • a director, officer or partner of a related issuer of the specified firm registrant, or

  • a selling security holder distributing securities, if the selling security holder or a related issuer of the selling security holder has a relationship with any of the following persons or companies that may lead a reasonable prospective purchaser of the securities to question if the specified firm registrant and the selling security holder are independent of each other for the distribution:

    • the specified firm registrant,

    • a related issuer of the specified firm registrant,

    • a director, officer or partner of the specified firm registrant,

    • a director, officer or partner of a related issuer of the specified firm registrant.