Last updated on September 22, 2023
Conflicts of Interest
A conflict of interest is any circumstance where the interests of a client and those of CI Direct Investing or individuals acting on our behalf are inconsistent or divergent. We take reasonable steps to identify and respond to material conﬂicts of interest and conflicts that are reasonably foreseeable. Conflicts of interest may include conflicts between:
- you as our client and CI Direct Investing
- you and other CI Direct Investing clients
- CI Direct Investing and our related and associated companies and issuers
CI Direct Investing is committed to ensuring that your interests always have precedence. We seek to ensure effective management of any situation that could give rise to a conflict of interest. We seek to manage conflicts of interest in your best interest.
We respond to conflicts of interest in a fair and transparent manner consistent with the best interests of our clients using three methods:
- control, and
Avoiding Conflicts of Interest
We avoid conflicts that are prohibited by law as well as conflicts that cannot be responded to reasonably with controls or disclosures.
Controlling Conflicts of Interest
We have established policies and procedures to control material conflicts of interest, such as the design of our organizational structure and lines of reporting, physical separation of different business functions, limiting the internal exchange of information and ensuring compliance with regulatory requirements, such as conducting suitability assessments that put clients’ interests first based on “know your client” information and having clear policies and procedures which are applicable and available to our representatives and employees.
Disclosing Conflicts of Interest
CI Direct Investing will provide you with information about any material conflicts of interest that may reasonably affect the services we provide at the time of account opening and in certain situations before investing your account. Disclosure will be provided in a timely manner so that you have a reasonable amount of time to assess the conflict. You should understand the conflicts, the risks they may pose for you and how we address these conflicts in your best interests.
Conflicts of Interest Disclosure
In this section we share with you:
- The material conflicts of interest we have identified
- An explanation of each conflict
- How we have addressed the conflict in your best interest
Conflicts of interest related to CI Direct Investing being part of CI Financial Corp.
CI Direct Investing employees may be shareholders of CI Financial Corp.
CI Direct Investing is a wholly owned subsidiary of CI Financial Corp. ("CIX"), a public company whose shares are traded on the Toronto Stock Exchange and The New York Stock Exchange. A principal business of CIX is the management, marketing, distribution and administration of mutual funds, segregated funds and other fee-earning investment products for Canadian investors through its wholly-owned subsidiary, CI Investments Inc, also known as CI Global Asset Management (“CI GAM”). Employees who work within CI Direct Investing and the other members of the CIX organization may hold CIX shares.
In the course of providing services to you, we may from time to time advise you with respect to the purchase or sale of securities from or to, or issued by, persons or companies which are related or connected to us. We will carry out such services in the ordinary course of business in accordance with usual practices and procedures and with all applicable regulatory requirements.
These transactions and arrangements may give rise to conflicts of interest; however, we have adopted policies and procedures to identify and respond to these conflicts. We will only enter into transactions or arrangements where they are permitted under securities laws, where they are consistent with your investment objectives, and where we consider they are in your best interest in the applicable circumstances.
If you invest in investment products managed or sponsored by CI GAM, CIX will, through its ownership of the CI affiliates, profit from ongoing asset management fees that are described in applicable Fund Facts and other offering documents. Accordingly, to the extent that a CI Direct Investing employee owns securities of CIX, he or she will benefit from these fees, which contribute to the share price of CIX.
If this is the case, CI Direct Investing and our employees must manage the conflict of interest in your best interest, which generally means, in this context, considering a reasonable range of investment options for you and your account and not solely those investment products and portfolios managed by CI GAM. Portfolios managed by CI Direct Investing follow an approval process to mitigate and avoid conflicts of interest associated with product selection. A recommendation to invest in CI GAM investment products will only be made if we consider such investment is in your best interest and suitable for you having regard to your financial and personal circumstances.
CI Direct Investing portfolios may contain CI GAM investment products
Given our affiliation with CI GAM, including a CI GAM investment product in our portfolios, in which you may invest is a conflict of interest, and you may be concerned about whether our actions in causing this to occur is in your best interests. To mitigate the associated conflicts of interest and address them in your best interests, CI Direct Investing has adopted controls, including an evaluation and in-depth review process for all investment products that are approved for our investment portfolios.
We have engaged CI GAM as our sub-adviser to create certain portfolios for us. These portfolios may be created primarily using CI GAM investment funds, and will generally only include investment funds managed by third parties where CI GAM considers there is not a suitable CI GAM fund to include in the portfolio. These portfolios will be disclosed to you at account opening as CI GAM portfolios and can be viewed on the Portfolio Disclosure page. By favouring CI GAM funds for these portfolios, we have not considered other securities that may have characteristics, such as cost structure or past performance, similar or superior to the CI GAM investment funds. These securities are evaluated using the same process used to evaluate securities issued by a third party (i.e. non-CI GAM Funds).
CI Direct Investing employees do not receive any incentives for recommending or selecting CI GAM investment products or CI GAM-advised portfolios over non-proprietary investment products or portfolios that do not focus on CI GAM funds.
You will know whether an investment product is a CI GAM investment product generally because it will contain the term “CI” as part of its name. We will tell you if you are invested in a CI GAM sub-advised portfolio.
You should note that CI GAM investment products are “connected issuers” and/or “related issuers” to CI Direct Investing. In general terms, a “related” issuer means a person or company that influences, or is influenced by, another person or company. A “connected” issuer is a company that has business or other relationship with CI Direct Investing that, in connection with a distribution of securities of the issuer, is material to a prospective purchaser of the securities.
Please refer to https://ci.com/en/legal/legal-notices for a current list of related and connected issuers. Alternatively, you may contact us at 1-877-310-1088.
CI Direct Investing is related to other subsidiaries of CIX
Securities legislation requires us to inform clients if we have any principal shareholders, officers, partners or directors who are also principal shareholders, officers, partners or directors of another securities registrant. As well, we must provide clients details of the policies and procedures adopted to minimize the potential for conflict of interest resulting from these relationships.
CIX is also a principal shareholder of the following Canadian securities registrants or service providers to securities registrants. Directors and officers of CI Direct Investing may be directors or officers of one or more of these entities. Investment decisions for your account will be made independently from these relationships.
- Aligned Capital Partners Inc.
- Assante Capital Management Ltd.
- Assante Financial Management Inc.
- Assante Estate and Insurance Services Inc.
- Northwood Family Office Ltd.
- Coriel Capital Inc.
- CI GAM
- CI Private Counsel LP
- CI Investment Services Inc., which also operates as CI Direct Trading
- One Capital Management LLC
- Marret Asset Management Inc.
Each of CIX, CI Direct Investing, and the related registrants is a separate legal entity which carries on its business independently. Conflicts of interest resulting from the above relationships are minimized in a number of ways.
CI Direct Investing has conflict of interest policies and complies with all applicable regulatory restrictions in dealing with its affiliates. Compliance with CI Direct Investing’s policies and procedures are monitored under the guidance of CI Direct Investing’s Compliance Department.
CI Direct Investing may retain related service providers
CI Direct Investing may enter into arrangements with its affiliates (common ownership under CIX) respecting such matters as the provision of support, custodial, and investment management services, distribution of products and services, and client referrals.
Due to the relationship between CI Direct Investing and its affiliates, CI Direct Investing may be incentivized to engage related service providers as opposed to third party service providers. All business conducted by CI Direct Investing with affiliates is agreed to in writing. CI Direct Investing conducts due diligence and ongoing monitoring of related service providers in the same way as it does unrelated service providers. Related service providers maintain systems of internal controls and supervision which are independent from the CI Direct Investing, including separate management and personnel who perform the custodial and investment management functions.
CI Direct Investing at the present time engages CI GAM as a sub-adviser on certain portfolios and uses CI Investment Services as a custodian for managed accounts. CI Direct Investing also has a referral relationship with the Assante dealers listed above, which is intended to facilitate clients of the Assante dealers and their representatives to open accounts with CI Direct Investing, where the Assante dealers and their representatives consider this to be appropriate for those clients. Those clients become clients of CI Direct Investing through the usual portfolio recommendation process and before opening an account receive and acknowledge information about the relationship and the associated conflicts of interest in the managed account agreement.
Conflicts of interest related to CI Direct Investing compensation
CI Direct Investing receives compensation for operating your account from a number of sources.
These sources include:
- management fees charged to you for your account, these fees are set out in your fee-based account agreement;
- referral fees generated where CI Direct Investing refers you to an approved third-party referral partner for services that can be provided to you by that referral partner.
Depending on how you are introduced to CI Direct Investing and the value of your assets invested, your management fee rate may differ than if you were to sign up directly from our website. Your fees are explained to you in the managed account agreement when you sign up. If you have an existing relationship with an introducing representative, you may be offered distinct portfolio options with a different management fee schedule. You may also agree to pay your representative service fees, which we will collect from your account and remit to your representative. You are able to sign up directly on the CI Direct Investing site if you decide not to proceed with opening account through the channel introduced by your representative. You do not need to pay service fees to your representative if you want to open an account with us, but you will open your account through our regular account opening procedures.
Our management fee differentials are due to our relationships with our referral partners and their clients and the different costs we have in providing our services to our various groupings of clients.
Conflicts of interest related to compensation of CI Direct Investing employees
CI Direct Investing and its employees do not accept gifts, beneﬁts, compensation, or consideration that creates, or might reasonably be expected to create, a material conflict of interest.
Conflicts of interest related to outside activities
Our directors, officers, and registered advisers may engage in business activities that are outside CI Direct Investing’s securities related business activities (“outside activity”) only if they have received prior approval from us to do so. You should be aware that portfolio managers may provide other products and services that are outside of his/her affiliation with CI Direct Investing. These are not considered securities-related and are the responsibility of the portfolio manager alone. They may also be employees, officers and/or directors of affiliates, or may also be officers or directors of public companies.
We will, as best possible, monitor all outside activity to ensure the activity doesn’t impair our ability to serve you and is consistent with our duty to deal fairly, honestly, and in good faith with you.
We will investigate and follow up on written client complaints relating to an outside activity. CI Direct Investing makes no representations or warranties and assumes no liability in connection with any outside activities of our directors, officers, and registered advisers.
If you have any questions, please contact CI Direct Investing’s Chief Compliance Officer at 1-877-310-1088.
Conflicts of interest related to employee personal trading
CI Direct Investing employees could put themselves in a situation of conflict of interest by carrying out transactions in their personal account using confidential information about CI Direct Investing or its clients, acquired in the performance of their duties. CI Direct Investing manages these potential conflicts by ensuring our employees act in accordance with our personal trading policy and applicable laws. Additionally, we review on a regular basis securities transactions made in our employees’ personal securities accounts.
Conflicts of interest related to referral arrangements
We may enter into referral arrangements with affiliated or non-affiliated registrants and non-registrants, some of which are related registrants to CI Direct Investing, so that we may provide portfolio management services to referred clients. We may provide “referral fees” (as such term is defined in applicable securities laws) to the referrer. A referral fee is any benefit provided to the referrer for the referral. We negotiate the referral fee with the referrer. You should know that referral fees or benefits provided to a referrer creates an incentive for those referrers to refer you to us, and gives rise to conflicts of interest for those referrers that they must manage in your best interests. We will inform all referred clients about our referral arrangements, including the benefits we provide to the referrers. Since we receive management fees from clients referred to us, who we accept as our clients and who agree to our services, we are incented to enter into referral arrangements and also to accept referred clients as our clients. We manage our conflicts of interest in this regard, in the best interests of clients by following our same rigorous procedures in collecting financial and personal information about clients and ensuring that an account with us, and any chosen portfolio, is suitable for that client and puts that client’s interests first.
In some circumstances we may agree to develop an online platform for our referral partners to provide ease of access to our platform for referred clients. We may receive a fee from our referral partners in respect of this service. This relationship also creates incentives for us to accept these clients, which we manage through the rigorous procedures described above.
We may also work with our referral partners to develop curated portfolios for referred clients, with those curated portfolios containing investment products managed by the referral party (in some but not all cases, along with other third-party investment products). This means that the referral party may receive benefits from the referral in the form of additional management fees due to your investment through us in the applicable portfolios. This may also serve to incent our referral partners to refer you to us, which they must manage in your best interests. We ensure that the curated portfolios are appropriate and perform on-going due diligence on them as with our other portfolios. We will cause you to invest in them if we consider that they are suitable for you and puts your interests first.
CI Direct Investing may also receive a referral fee for referring its clients to other service providers. The purpose of referrals is to introduce our clients or potential clients to qualified persons who are best suited to help them achieve their financial objectives.
If a referral arrangement is in place, we will provide you with a written disclosure at the time you commence to open an account with us with full particulars of the conflicts and how we manage them. We will provide you with the specific details of the arrangement, including:
- the name of our referral partner;
- the purpose and material terms of the referral arrangement, including the nature of the services to be provided by each party – generally our referral partners are not permitted to give you any advice about our services or our portfolios, including any curated portfolios we develop with the referral partner;
- any conflicts of interest resulting from the relationship between the parties to the referral arrangement and from any other element of the referral arrangement;
- the method of calculating the referral fee or benefits and, to the extent possible, the amount of the fee or benefits;
- the category of registration of each registrant that is a party to the agreement, with a description of the activities that the registrant is authorized to engage in under that category and, giving consideration to the nature of the referral, the activities that the registrant is not permitted to engage in under that category.