Independent Review Committee

Did you know that... In Canada, securities regulation requires every public investment fund to have a fully independent body, called an Independent Review Committee, whose role is to oversee all decisions involving an actual or perceived conflict of interest faced by the mutual fund manager in the operation of the fund?

An independent oversight regime for all publicly offered investment funds is intended to improve investment fund governance in Canada.

There is some irony in the whole "conflict of interest" debate.

Does an advisor who is payed by a mutual fund company to sell their mutual funds pose a potential conflict of interest?

I would argue yes.

Of course the new regulations (CRM2) coming in to effect in a few months will finally force advisors to have to disclose the dollar amount of what they are paid (by the mutual fund company). At least that conflict of interest will be exposed.

What I (as a client) would really want to know is: does the advisor who is recommending my portfolio holdings own any of the same securities / funds that she / he is selling me?

And if not, why not?

At High Rock we are not required to have a Independent Review Committee because we do not offer a public mutual fund. However, we do want our clients to have total transparency not only to fees, but also to any potential conflicts of interest and as we suggests to our clients, that we are invested in the same assets that they are. Importantly, the IRC ensures portfolio suitability (which we often see when a new client transfers in old assets).

To our knowledge, we are the only portfolio management company in the country (managing money on a Separately Managed Account basis) who has formed an IRC. The IRC is for the sole benefit of our clients.

So we have hired a former OSC staff member who has an independent compliance company to review our accounts and portfolios quarterly and report directly back to our clients.

Nothing builds trust like the comfort of knowing that we are doing what we say we are going to do.

For our clients, we want to go beyond that which is required so that they know that what we do for ourselves, we also do for them.

We don't just say it. We do it.