Question of the week: Are robo-advisers registered?

Submitted by nsscadmin on Wed, 06/20/2018 - 10:00

This is an interesting question because robo-advisers don’t actually exist. As we explained in our previous post on robo-advisers they are “a class of financial adviser that can provide financial advice or portfolio management online with very little or no human input.” If robo-advisers are algorithms and data used to help clients invest how do you register that?

The robo-adviser don’t create algorithms or run by themselves. This isn’t SkyNet. There’s still a human component, so there’s also registration.

You may see commercials or online ads for a number of robo-advisers such as Wealth Simple, Nest Wealth, or ModernAdvisor. Go to www.aretheyregistered.ca and enter any of those robo-advisors into the registration search and see what you’ll find.

You’ll find that they are all registered separately with all 13 provincial and territorial securities regulators. They have to be registered in every jurisdiction if they want to offer their online services to residents of that province or territory. Their registration category is portfolio manager, because that’s what they’re doing for their clients – managing their portfolio. They may not be providing advice in the traditional sense, but it’s the same outcome.

When robo-advisors began to appear online a few years ago the CSA took notice and decided that a separate registration process was not required. Nor did they provide any special exemptions for robo-advisors. Not only do robo-adviser firms have to follow the same registration process as traditional adviser firms, they also have to abide by the same Know Your Client (KYC) and suitability principles as well. In the registration process robo-advisers must include their proposed KYC questionnaire and information about the processes relating to its use.

The number of robo-advisers has exploded exponentially over the last few years. If you’re thinking about using a robo-adviser do your homework. Check online reviews, check their fees, minimum deposits and the fine print. And, as with any advisor, check registration.

Failure to file annual financial statements.
Failure to file interim financial statements.
Failure to file an annual or interim management’s discussion and analysis (MD&A) or an annual or interim management report of fund performance (MRFP).
Failure to file an Annual Information Form (AIF).
Failure to file a certification of annual or interim filings required by Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (MI 52-109).
Failure to file required proxy materials or a required information circular.
Failure to file an issuer profile supplement on the System for Electronic Disclosure by Insiders (SEDI).
Failure to file a material change report.
Failure to provide a written update after filing a confidential report of a material change.
Failure to file a business acquisition report.
Failure to file annual oil and gas disclosure prescribed by National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities (NI 51-101) or technical reports for a mineral project required under NI 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).
Failure to file a mandatory news release.
Failure to file corporate governance disclosure as required by national Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101).
Failure to file audit committee disclosure as required by Multilateral Instrument 52-110 Audit Committees (MI 52-110) or BC Instrument 52-509 Audit Committees.
Failure to include disclosure in an issuer’s MD&A relating to disclosure controls and procedures and their direct effectiveness that is referred to in a certificate filed under MI 52-109.
Financial statements of the reporting issuer, or the auditors’ report accompanying the financial statements, do not comply with the requirements of NI 51-102 Continuous Disclosure Obligations (NI 51-102), National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) or National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107).
The reporting issuer has acknowledged that its financial statements, or the auditors’ report accompanying the financial statements, may no longer be relied upon.
The reporting issuer’s AIF, MD&A, MRFP, information circular, or business acquisition reports do not contain information for each of the content items required by NI 51-102 or NI 81-106.
The reporting issuer’s technical disclosure or other reports do not comply with the disclosure requirements of NI 43-101 or 51-101.
Failure to pay a fee required by the Act or the regulations.
Failure to comply with any other requirement related to continuous disclosure.