Clients often ask how their money is safeguarded from nefarious activity or bankruptcy – and you have every right to ask this of any investment provider you work with. There are a few layers of protection embedded in how we work with clients.

Canadian Investor Protection Fund (CIPF)

Steadyhand is a member of the Canadian Investment Regulatory Organization (CIRO) and pays into a fund that serves to protect clients’ assets in case of insolvency. For clients who open their accounts directly with us, up to $1 million of an investor’s registered accounts – including RRSPs, RRIFs, and TFSAs – are covered in aggregate. Another $1 million of coverage is afforded to taxable accounts. You can find more details here.

Mutual Fund Trust structure

While CIRO protection is comforting, investors also benefit from the way mutual funds are structured. When clients invest with Steadyhand, their money does not go into a Steadyhand bank account. Instead, it goes into a trust overseen by a third-party trustee that is held at a custodian – in our case, CIBC Mellon. Portfolio managers decide which stocks or bonds the trust should own, but can’t access any of the funds because the trust is completely separate from Steadyhand.

While our funds’ assets are held at a custodian, they do not belong to the custodian. Nor do they belong to Steadyhand, our portfolio advisers, or our trustee. Rather, they belong to the funds themselves and, in turn, fundholders. Neither Steadyhand nor any of the companies involved in providing services to our funds have any claim to the funds’ assets. This separation of ownership ensures that investors in our funds are the only individuals who have access or claim to the assets within them, and they’re protected if we or any of our service providers ever face financial difficulties.

Non-discretionary relationship

Investment providers generally offer one of two relationships with their clients: discretionary or non-discretionary. This bit of jargon is an important distinction in the way investment firms operate.

We have a non-discretionary relationship with our clients. This means we do not have the authority to decide what funds you should own in your accounts. We provide advice on what we believe you should own and in what proportion, but ultimately, you make the decision. To further ensure you are protected, transactions can only be made once we verify your identity over our recorded phone line or through a signed document.

Audits

KPMG, one of the “big four” accounting firms, audits our funds every year. These audited financial statements are available on our website and SEDAR. We are also audited by the British Columbia Securities Commission, MFDA, Canadian Western Trust and FINTRAC, which monitors money laundering practices. Many of these audits happen on a surprise basis, and who doesn’t love a surprise?

The funds we invest your portfolios in have IRCs. This committee is comprised of at least three individuals who are independent of the portfolio manager. The IRC is tasked with monitoring conflicts and issues and issuing an annual report discussing its findings.

Putting it together

No safeguards are 100% foolproof. But these measures – combined with our business principles of transparency, co-investing, low fees, and being our clients’ steady hand – should give investors confidence that their money is protected from fraud or insolvency. It’s important to note, however, that these measures aren’t meant to protect investors from the natural ups and downs a portfolio may experience in fluctuating markets.