The new year is also a fresh new start. It is a great time to get your finances in order, review your investment goals or even create new ones. If taking charge of your investing journey is one of your 2023 resolutions, we’re here to help.
Whether you’re building your investment strategy for the first time or revisiting it, these tips can help you manage your investments in the new year and beyond.
#1. Identify as an Investor
Are you already an investor? BCSC research indicates that many British Columbians have trouble seeing themselves as investors, even if they’re already investing.
Identifying as an investor is important because people who see themselves as investors are more likely to understand their investments and be on track to meet their financial goals. Keeping your goals in mind is especially important during times of economic instability, which may lead to a change in your financial priorities and, as a result, in your investment goals.
We have a short quiz that can help you determine whether you are already an investor without realizing it.
#2. Learn the Investing Fundamentals
Whether you’re working with a registered investment advisor or going at it alone, building your investment knowledge and understanding your investments is crucial. For example, knowing the key differences between investment products, such as stocks, bonds, mutual funds, and other financial instruments, will help you make more informed decisions when buying and selling securities. And understanding the relationship between risk and return can help you build a balanced strategy that aligns with your risk profile and can help you achieve your short-term and long-term financial goals.
Get Started with Investing
Take advantage of our “Get Started with Investing” toolkit to learn the investing fundamentals! This free resource will take you through the basics, including common investment types and accounts.
Then, we’ll take you to the next step. Our “Get Started with Investing: Deepen Your Knowledge” video series will help you dive into more advanced concepts, such as investing trends, diversification, and different types of investment fees you may come across.
#3. Know Your Money Management Options
You have choices when it comes to managing your investments. Deciding on the best route for you will depend on factors like your investment knowledge, experience, and how comfortable you are with using online technology to manage your investments. There are three common options: working with a registered investment advisor, using a robo-advisor, or going the DIY (do-it-yourself) route.
We cover each of these in more detail in our comprehensive Investor Guide.
#4. Understand the Client-Advisor Relationship
While expert advice is always useful, you may find professional guidance especially valuable during times of economic uncertainty and market volatility. A registered investment advisor can help evaluate your financial circumstances in an objective way and help create or re-calibrate a strategy for pursuing your goals.
If you choose to work with a registered investment advisor, you will get help building your investment portfolio, and you’ll receive recommendations on various investment products that are best suited to your financial circumstances and the level of risk you can afford to take. You can choose to take an active or a passive investing role. Either way, it’s important to know that your advisor has certain responsibilities to you, and that you can enhance the client-advisor relationship by regularly communicating key information and changes to your financial situation.
Know Your Advisor’s Responsibilities
Your registered advisor has certain obligations to you under various securities laws set by securities regulators in Canada.
Client Focused Reforms
A comprehensive set of rules called Client Focused Reforms came into effect in 2021 to protect retail investors in their dealings with investment advisors and firms. These rules are meant to address potential conflicts of interest, as well as disclosure requirements.
Learn more about these rules by reading the following articles:
- Putting Investors First: Client Focused Reforms and Conflicts of Interest
- Putting Investors First: Client Focused Reforms and Relationship Disclosure
Know Your Client, Know Your Product, and Suitability Obligations
The “Know Your Client” (KYC), “Know Your Product” (KYP), and suitability rules require investment advisors to thoroughly understand their client’s financial situation, investment knowledge, and risk capacity. Additionally, before making any investment recommendations to you, they must thoroughly understand the available products offered through their firm.
Client Relationship Model 2 (CRM2)
Under the CRM2 rules, investment firms must share an Annual Charges and Compensation Report and an Investment Performance Report with each client. This report provides investors with detailed information about how their investments have performed, the fees they have paid, and what it cost them to receive advice from their advisors.
Watch our video series that explains various parts of CRM2.
Trusted Contact Person
A necessary step to help protect your financial interests is to establish a Trusted Contact Person (TCP). In fact, your registered investment advisor is required to ask you to name a TCP.
A TCP is someone you have authorized as a point of contact for your advisor if they have concerns you are being financially exploited or showing signs of diminished mental capacity. You can appoint more than one TCP.
It’s important to note that your TCP cannot:
- make financial decisions for you
- make any transactions or changes in your account, or be given information about your account
Our Investor Guide includes a fillable form that can help you name a TCP and provide the documentation to your advisor. Make sure you update the form and provide a new copy to your advisor if you decide to make changes to your TCP.
Report a Concern
If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Inquiries at 604-899-6854 or 1-800-373-6393 or through e-mail at [email protected]. You can also file a complaint or submit a tip anonymously using the BCSC’s online complaint form.
InvestRight.org is the British Columbia Securities Commission’s investor education website. Subscribe to receive email updates from BCSC InvestRight.