Here's what you need to know about the regulatory requirement of assessing client risk tolerance in Canada, and how Stackup helps you meet it
In Canda the requirement for advisors to determine their client’s risk tolerance is set out in Requirement NI 31-103
NI 31-103 requires firms to know which investments are suitable for their client's when making recommendations.
One of the key considerations when assessing suitability is the "client's risk tolerance" under section 13.3.
A recent OSC commissioned report found that 83% of risk tolerance questionnaires in the Canadian market were not fit for purpose
In 2017, an IIROC report found that "suitability of recommendations", for which risk tolerance is a key consideration, made up the largest category of complaints against advisors in Canada.
This industry problem emanates, in part, from insufficient risk profiling practices and a lack of access to psychometrically validated risk tolerance tools.
RiskTRACK has been statistically validated, meaning our methods will stack up to regulatory scrutiny
We offer a risk profiling system that is internally robust and externally predictive of a comfortable portfolio allocation. Our methods are academically and scientifically based and not just thrown together to tick a box.
Our reports allow you to discuss your client's risk profile with them before signing off. This ensures that they are comfortable and agree with your assessment, lowering the risk of rebuttal down the track.
Deficient risk tolerance assessment is currently under increased regulatory scrutiny in Canada due to the broad scope of incorrest assessments leading to poor consumer outcomes.
of OSC reviewed tools were deficient
complaint cases opened in 2017
of complaints were due to suitability issues