Investor Behaviours, Canada’s investment suitability regulations, and Robo-advising

In Canada and around the world, investors hire financial advisors and dealers to manage, monitor, and guide their investment choices purchased from a financial dealer. Dealers and advisors are obligated by regulations–introduced in 2009 by the Ontario Securities Commission (OSC)–to ensure that their investment products and recommendations are “suitable”. As part of the regulations, advisors and dealers conduct due diligence on clients known as the Know Your Client (KYC) protocol; they must take “reasonable steps” to establish their identity, creditworthiness, investment needs, financial objectives, whether the client is an insider, and risk tolerance. The proposed research herein will quantify the importance of the KYC information collected by Aligned Capital Partners (ACP) Inc. through their financial advisors. ACP is a financial investment dealer that licenses and supports independent financial advisors, who are interested in understanding the client-advisor relationship using a statistical and behavioural science approach. We will provide statistical analysis that will characterize client behaviours, provide unique insight into the advisor-client relationship, develop tools for dealers and advisors that provide automated feedback about their investors’ behaviours, and inform and improve KYC regulations in Canada.

Faculty Supervisor:

R. Mark Reesor;Matt Davison

Student:

John Thompson

Partner:

Aligned Capital Partners Inc

Discipline:

Other

Sector:

Finance, insurance and business

University:

Program: