The Conflicts of Interest Disclosure provides important information concerning the relationship between OceanFront Investment Counsel Inc. (“OFIC”) and you, the Client. To clarify, when the terms “OFIC”, “Portfolio Manager”, “we”, “our”, or “us” are used in this document, we mean OceanFront Investment Counsel Inc. and its registered employees (“Registrants”). When we refer to “Client”, “you”, or “your”, we are referring to you as the Account Holder, and, if applicable, anyone who is an authorized individual on the Account. An Account Holder also includes authorized individuals for non-individual entities such as corporations and trusts.
What are Conflicts of Interest?
Conflicts of Interest (“COI”) may arise when OFIC’s interests are inconsistent with your own, potentially compromising our ability to act in your best interest. As part of the Client Focused Reforms, Canadian securities regulators require us to take reasonable steps to identify and address actual or perceived material COIs. This ensures that we take appropriate measures to maintain transparency and prioritize acting in your best interest. Should you require further details regarding the information provided in this document, please do not hesitate to contact your Portfolio Manager.
There are three general types of conflicts that can arise:
- COI between you and us;
- COI between you and our other clients, and
- COI between us and our related entities.
We manage conflicts through one or more of the following ways:
- Avoid: This includes avoiding conflicts that are prohibited by laws as well as conflicts that cannot be effectively addressed in your favour.
- Control: We manage the conflict through policies, procedures, and internal controls.
- Disclose: We provide you with information about the conflict, allowing you to independently assess its significance when evaluating our products and services.
Examples of actual or perceived material COIs may include the following:
Affiliates and Related Entities
Nature of Conflict: We have a relationship with an affiliated or related entity, and our actions or decisions may be influenced by our own interests.
Potential Conflict: Conflicts may occur if there are competing interests that compromise our ability to make impartial decisions. These interests might interfere with our objectivity, judgement, or integrity, impacting our ability to put the Client’s interest first.
How the Conflict is Addressed: We provide the following disclosure to you to maintain transparency: OFIC is a wholly owned subsidiary of OceanFront Wealth Inc. (“OFWI”). OFWI also has the following additional subsidiary:
- Lindsay Insurance and Financial Planning Inc. offers financial planning, and insurance services and operates under the trade name OceanFront Wealth (“OFW”), and
OFWI has the following related entities:
- Lindsay Holdings Inc.;
- McVit Holdings Inc., and
- Portfolio By Design Inc.
OFIC has policies in place to address conflicts with its affiliated or related entities relating to intra-company transactions, preferential cost schedules, confidentiality and sharing of information. Client recommendations or advice are based on our fiduciary duty to act in your best interest.
Best Execution
Nature of Conflict: OFIC may have a financial or other interest that may compromise its ability to obtain the best possible trade execution price.
Potential Conflict: A less objective and less competitive trading process may result in a Client being disadvantaged with a less favourable trade price, slower execution, and/or higher costs when compared to other similar trades.
How the Conflict is Addressed: Trade execution is managed by an independent third party, Fidelity Clearing Canada ULC (“FCC”), a firm required to follow industry handling and routing practices designed to achieve best execution. OFIC conducts due diligence on FCC’s execution performance. FCC’s Best Execution Policies are available upon request.
Board of Director Appointment
Nature of Conflict: Director appointments of another firm or reporting issuer have the potential for clashing interests.
Potential Conflict: Directors who have fiduciary responsibilities to both the company they serve on the board of and to the Client can create situations where conflicting or competing interests may not align with the Client’s best interests.
How the Conflict is Addressed: Registrants are required to obtain pre-approval for any Outside Activities and, if applicable, recuse themselves from any discussions, decisions, or activities that create a conflict. Activities will not be permitted if a real or perceived COI cannot be effectively controlled. OFIC does not permit Registrants to act as directors for an issuer whose securities are distributed or advised by OFIC. OFIC does permit its directors to serve as directors for its related entities. See Affiliates and Related Entities COI for additional information.
Compensation Arrangements and Competing Interests
Nature of Conflict: Compensation structures and incentives tied to sales and revenue goals can influence our actions and decision-making in ways that may not align with your best interests.
Potential Conflict: We may prioritize our growth by incentivizing our Registrants to acquire assets, potentially diverting attention from client service.
How the Conflict is Addressed: We have established a compensation structure that prioritizes your interests. For example, compensation consists mainly of a base salary, with variable compensation aligned with OFIC’s success in building long-term client relationships and tied to overall profitability. Business development metrics and targets are established while taking into consideration the allocation of time for the ongoing servicing of existing Clients. Registrant’s compensation does not vary across services, products, accounts, or client types. Supervisory controls are in place to monitor Registrant’s activities ensuring that they are consistent with their fiduciary responsibilities.
Complaints
Nature of Conflict: Our interests in mitigating potential reputational harm or regulatory scrutiny may influence the fair and unbiased resolution of Client complaints.
Potential Conflict: To mitigate potential harm to our reputation, financial liabilities, and/or regulatory scrutiny, we may choose to delay the resolution process or arrive at an unfair conclusion. Such actions would be unjust to our Clients as they deserve a timely and impartial resolution that truly addresses their concerns.
How the Conflict is Addressed: We outline our complaints and dispute resolution process in the Relationship Disclosure Information document provided at the time of account opening. If you are unsatisfied with our resolution decision, we offer free and independent third-party dispute resolution services through the Ombudsman for Banking Services and Investments.
Connected Issuer
Nature of Conflict: When recommending connected issuer securities, COI can arise due to the potential for biased recommendations.
Potential Conflict: Our business relationship with an issuer might jeopardize our objectivity, possibly leading to making unsuitable recommendations.
How the Conflict is Addressed: We conduct a suitability review of all products that we recommend to you. Your Investment Policy Statement guides how we manage assets to ensure investment decisions are aligned with your goals and objectives. At this time, we do not have any connected issuers.
Cross Trades
Nature of Conflict: We may conduct an intentional cross of a security between two accounts we manage, effectively assuming the roles on behalf of the buyer and the seller simultaneously. This can create a conflict if we cannot act in the best interest of both parties.
Potential Conflict: A cross trade may not align with the Client’s interests, and the lack of market exposure may raise concerns about pricing, trade terms, and lack of transparency, potentially compromising best execution and fair treatment.
How the Conflict is Addressed: OFIC has a policy in place to only permit a cross trade under specific circumstances and when it serves your best interest. Trade execution is managed by an independent third party, FCC, and the fair treatment of the trade is based on acceptable industry practices.
Fee Arrangements
Nature of Conflict: Fee arrangements and negotiations can lead to unfair situations when Clients are charged different fees for the same products and services offered to others.
Potential Conflict: Charging different fees for the same or substantially similar services and products can lead to unequal treatment. This could be a breach of our duty to treat Clients fairly, honestly, and in good faith.
How the Conflict is Addressed: Administrative fees, such as wire fees imposed by other institutions, may be rebated on an exception basis if we are unable to provide an alternative solution, such as EFT or bill payment, to facilitate the transaction in a timely and efficient manner. Transfer fees from other institutions may also be rebated under exceptional circumstances for long-standing clients of OFIC’s affiliates who are encouraged to transfer their assets to OFIC. Additionally, these clients may retain their legacy fee schedule to prevent any unfavorable outcome by moving their accounts to OFIC. We disclose our fee schedule to you so that you are fully informed of costs. We have controls in place to review rebates in accordance with internal guidelines.
Gifts
Nature of Conflict: Giving or receiving gifts may affect the behaviour of both the donor and the recipient, compromising our ability to act in the Client’s best interest.
Potential Conflict: Giving gifts to Clients may deter them from expressing their concerns about our service quality. Receiving gifts from Clients may influence our decisions, compromising our ability to remain impartial and treat all Clients fairly.
How the Conflict is Addressed: We only give or receive gifts on a reasonable basis for occasions such as showing gratitude, an appreciation gesture, or celebrating milestones and holidays. We have set limits on the frequency, number, and value of gifts deemed not to be frequent, excessive, or extravagant.
Managed Accounts
Nature of Conflict: Registrants who manage accounts may be incentivized or have conflicting interests that could impact their ability to act in the Client’s best interest.
Potential Conflict: With managed accounts, Clients rely on the Portfolio Manager who has discretion to make investment decisions on their behalf. However, the fundamental nature of exercising discretionary control can give rise to an array of conflicts outlined in this document, such as conflicts relating to compensation, investment strategies, promotion of affiliated products, or allocation decisions. This could impact our ability to treat Clients fairly, honestly, and in good faith.
How the Conflict is Addressed: We have policies and procedures that impose restrictions on certain managed account transactions unless the transaction is disclosed to you, and we obtain written consent. We have supervisory processes in place to identify and manage potential conflicts and avoid any that cannot be resolved in your favour.
Misleading Marketing
Nature of Conflict: Misleading marketing claims conflict with the Registrant’s fiduciary duty to deal fairly, honestly and in good faith with the Client.
Potential Conflict: Marketing materials which may contain inaccurate performance claims, misleading hypothetical data, exaggerated and unsubstantiated claims, and other disingenuous information, have the potential to mislead Clients. This could result in Clients making ill-informed decisions, potentially resulting in financial harm.
How the Conflict is Addressed: We have policies and procedures in place detailing acceptable marketing material practices. There is a compliance review and approval process in place for marketing materials before public dissemination.
Misleading Titles
Nature of Conflict: The conflict of interest can arise when the use of titles or designations leads to misleading or deceptive practices that compromise the interests of Clients.
Potential Conflict: Misrepresentations can lead Clients to believe they are dealing with a more experienced or qualified professional, potentially hindering the Clients’ ability to make informed decisions about the suitability of the services being offered or the credibility of the individuals involved.
How the Conflict is Addressed: Registrants are only permitted to use titles or designations that are appropriate to their role, registration category, and business activities. The firm verifies qualifications, certifications, and designations before including them in marketing materials.
Outside Activities
Nature of Conflict: Outside Activities, which encompass activities with another registered firm including affiliated entities, activities with an entity that receives compensation from another registered firm, other securities-related activities, and positions of influence could potentially create a conflict with the Registrant’s objectivity.
Potential Conflict: Outside Activities may interfere with our ability to provide objective advice and divert our time and attention from our fiduciary responsibilities to Clients. Outside Activities may also create an undue influence over Clients, potentially affecting their decision-making and financial choices.
How the Conflict is Addressed: Registrants are required to obtain pre-approval for any Outside Activities and, if applicable, recuse themselves from any discussions, decisions, or activities that create a conflict. Outside Activities will not be permitted if a real or perceived COI cannot be effectively controlled. See Board of Director Appointments COI for additional information.
Personal Trading
Nature of Conflict: Registrants trading securities for their own personal accounts can potentially lead to situations where personal gain takes precedence over client interests, resulting in biased decision-making or preferential trade allocations.
Potential Conflict: Personal trading activities may divert a Registrant’s time and attention away from their responsibilities to clients, potentially impacting their ability to provide adequate services. The Registrant may take advantage of information used to manage Client’s portfolios for their own personal gains resulting in unfavourable treatment of the Client.
How the Conflict is Addressed: We have policies and procedures in place that include regular reviews of Registrant’s outside accounts to ensure personal trading activities do not negatively impact client interests.
Personal Transactions with Clients
Nature of Conflict: Engaging in personal transactions with Clients, which may involve having authority or control through a Power of Attorney or Trustee relationship, can introduce conflicting interests that are not in the Client’s best interest.
Potential Conflict: There is a potential conflict with Registrants who engage in personal transactions with Clients or possess authority, such as Power of Attorney or Trustee appointments. They may misuse their authority or prioritize their interests, thereby straying away from the Client’s intended investment goals and objectives.
How the Conflict is Addressed: We have a policy prohibiting personal transactions between Registrants and Clients unless the transaction involves a family member, or the transaction is approved by OFIC’s compliance/supervisory staff. Registrants are not permitted to accept Power of Attorney or Trustee appointments except in family-related situations. We monitor Registrant appointments of Power of Attorney or Trustee over the accounts, conducting heightened reviews of Client transactions to identify impropriety.
Portfolio Valuations
Nature of Conflict: Fees calculated based on assets under management could potentially lead OFIC to overstate the portfolio values.
Potential Conflict: Our financial interests have the potential to impact valuation methods, fee structures, and performance reporting, potentially leading to biased outcomes favouring us. This could result in Clients paying higher fees.
How the Conflict is Addressed: Portfolio valuations are determined by an independent third party using standard industry-recognized methodologies to determine pricing, reducing the potential for bias and ensuring consistency.
Product Shelf Development, including Proprietary Products
Nature of Conflict: We select investments from our product shelf, including proprietary products when more suitable options are available for the Client.
Potential Conflict: We may have a financial incentive to promote and recommend products, including our proprietary products, which may not always be the most suitable option for Clients. The use of proprietary products may limit the range of investment options available to Clients.
How the Conflict is Addressed: We do not offer proprietary products. As part of our product shelf development, we conduct a suitability assessment of all investments to uphold our fiduciary duties. Your Investment Policy Statement guides how we manage assets to ensure investment decisions are aligned with your goals and objectives. We provide the following disclosure to you to maintain transparency: OFIC’s parent, OFWI, has an investment in Purpose Unlimited, and we may incorporate Purpose Investment’s Funds or ETFs into our product shelf. While we may financially gain from the growth of Purpose Unlimited, we evaluate Purpose Investment Funds with the same degree of due diligence and rigour as other investment options, always putting your best interest first.
Proxy Voting
Nature of Conflict: Proxy voting refers to the act of casting votes on routine corporate matters, such as board elections, mergers and acquisitions, stock issuance, and other relevant company decisions. A conflict may arise if we vote on matters that are not in the Client’s best interest.
Potential Conflict: We may have business relationships, financial interests, or affiliations with companies where we vote on business matters on the Client’s behalf. This can create a conflict if our voting decisions are influenced by self-serving interests.
How the Conflict is Addressed: Voting decisions are determined based on the best possible outcome for Clients despite any business relationship. OFIC maintains records of the voting decisions and the rationale behind each decision. Clients can request a copy of the proxy voting record for their accounts. Registrants with potential conflicts arising from their Outside Activities are not permitted to render voting decisions.
Referral Arrangements
Nature of Conflict: We may refer Clients to third-party service providers in exchange for compensation or other benefits, or we pay compensation to third parties for referrals. These arrangements may not always be in the Client’s best interest.
Potential Conflict: The financial incentive associated with referral arrangements may compromise the objectivity of the party making the referral, creating a situation in which both the Registrant and the referring party put their interests ahead of the Client’s interests.
How the Conflict is Addressed: We may introduce Clients to other firms when it has been established that the Client’s interests will be better served by another party. In such instances, the Client is not obliged to choose the third party, and we do not receive any compensation for making the introduction. For Clients referred to OFIC, we perform the necessary due diligence to ensure our products and services serve the Client’s interests. Clients referred to us do not pay additional fees for similar products and services offered to non-referred Clients. Referred Clients receive a Disclosure Statement outlining the referral arrangement and provide signed authorization before any compensation is paid to the referring party.
Registrants Owning the Same Securities as Clients
Nature of Conflict: Registrants owning the same securities as Clients may have personal financial interests in the performance of those securities, potentially influencing their actions and decisions in managing your portfolio.
Potential Conflict: Conflicts may arise when Registrants prioritize their investments over the Client’s portfolio, potentially resulting in unfair advantages such as different pricing and allocation of opportunities.
How the Conflict is Addressed: We have established policies and processes in place to review the Registrant’s trading activities to manage potential conflicts. OFIC has a Fair Allocation policy as outlined in the Relationship Disclosure Information document.
Supervisory Level Compensation
Nature of Conflict: There is an inherent conflict if supervisory staff’s compensation is not separate from the activities they oversee.
Potential Conflict: If OFIC’s supervisory staff’s compensation is tied to sales or revenue, there is a competing interest whereby the compliance or supervisory staff may prioritize their personal interests, potentially leading to ineffective supervision of Client accounts.
How the Conflict is Addressed: Compensation consists mainly of a base salary, with variable compensation aligned with OFIC’s success in building long-term relationships and tied to overall profitability. OFIC refrains from offering incentives that could create conflicts that cannot be effectively managed, such as investment performance bonuses, compensation tied to trading or transaction-based activities, or finder’s fees/commissions on products. Supervision occurs at multiple levels within the organization, enabling thorough oversight and accountability, which reduces the likelihood of impropriety.
Third-Party Compensation
Nature of Conflict: The conflict of interest arises when Registrants receive compensation or other benefits from third parties for recommending or selling certain products or services.
Potential Conflict: Compensation received from third parties can introduce a bias, influencing our recommendations when another product may be more suitable.
How the Conflict is Addressed: OFIC does not permit third-party compensation.
Trade Errors
Nature of Conflict: The conflict arises when trading or pricing errors occur, potentially causing adverse effects on the Client.
Potential Conflict: Errors such as incorrect order execution can result in financial losses for Clients. Pricing errors, such as incorrect valuation or mispriced securities, can lead to inaccurate portfolio valuations and potentially affect Clients’ investment performance, returns, or fees.
How the Conflict is Addressed: OFIC has procedures in place to reconcile trading activities on a frequent basis. Trade or pricing errors are resolved as soon as they are identified. You are safeguarded against financial losses resulting from trading errors made by OFIC.
