Conflict of Interest Brochure

Introduction 

The Conflict of Interest Brochure provides you with information on conflicts of interest that may arise during your relationship with Optimize Wealth Management (“Optimize”).  

It is important that you are fully informed about these conflicts. Canadian securities laws require us to take reasonable steps to identify, disclose, and respond appropriately to existing and potential material conflicts of interest. Please take a moment to read it carefully; your Portfolio Manager can answer any questions you may have. 

a. What is a conflict of interest? 

A conflict of interest is any circumstance where the interests of different parties, such as the interest of a client and those of  Optimize or its employees, are inconsistent or divergent. A conflict of interest also includes any circumstances where a  registrant may be influenced to put their interest ahead of a client’s. This includes situations where an employee may receive a monetary or non-monetary benefits or disadvantages, which could compromise the objectivity of a decision. Conflicts are considered material if they affect the decision making of the client or judgement of Optimize or its employees.

b. How do we handle conflicts of interest? 

It is our policy to identify conflicts of interest and ensure that they are always resolved in your best interest, ahead of our own interest and any other competing considerations. If we cannot resolve a conflict in your best interest, we will completely avoid the activity that raises that conflict. 

We have policies in place and provide ongoing training to our employees to assist them to identify existing and reasonably foreseeable material conflict of interests in a timely manner and address them in your best interest.

c. Why is this important? 

It is important that you understand that if a conflict arises, we will always resolve it in your best interest or completely avoid it altogether. 

d. Delivery of Disclosure. 

The Conflict of Interest Brochure (“Brochure”) will be provided to you at the time of account opening. You can find a copy of the brochure on our website https://optimize.ca or you can call us at this number 1-(866)-209-6862 to request a copy. The  Brochure will be updated annually, or as we identify new material conflicts of interest as part of our ongoing conflicts of interest management. The updates will be provided to clients in a timely manner by email or mail depending on the consent we have received from you. 

Ethics Program 

We have an Ethics Program, which sets out the standards of conduct expected of our employees and includes restrictions and controls on outside activities, gifts and entertainment, personal financial dealing with clients, and person trading. The  Code of Ethics is designed to ensure our employees act in accordance with applicable Canadian Securities laws, and they act in the best interest of Optimize and our clients. We provide Ethics Training to new employees within 30 days of employment and to all employees annually. 

OPTIMIZE WEALTH MANAGEMENT 

Optimize is registered to carry on business as an investment fund manager in the province of Ontario, a portfolio manager in the provinces of Manitoba, Alberta, Saskatchewan, British Columbia, New Brunswick, Newfoundland and Labrador,  Nova Scotia, Ontario and Quebec and an exempt market dealer in the provinces of British Columbia and Ontario. As a  result, potential conflicts of interest could arise in connection with Optimize acting in all of these capacities.

PRODUCTS AND SERVICES WE OFFER 

Discretionary Investment Management 

Discretionary portfolio management services are offered to our clients through segregated fully managed accounts (“Account “or “Accounts”), which will be invested in our Optimize Private Client Program (the “Program”). The services are based on a suitability assessment which produces an Investment Policy Statement for each client.  

Optimize manages the Program by offering a series of Model Portfolios comprised solely of our proprietary Optimize Funds (the “Funds”). Details of the Program, Model Portfolios and Funds can be found in the Optimize Fund Disclosure Document,  which will be provided to you at account opening and throughout your relationship with us. 

Your assets will be invested in proprietary funds, which means that Optimize will earn management fees and, in some cases,  performance fees from the Funds, and you will bear a proportion of those fees as well as operating expenses of the Funds held in your Account.  

Financial Planning 

Comprehensive Financial Plans are available to our clients as part of the Optimize Family Office Service offering. This value-added offering is available at no additional cost to the account level management fee charged to clients. 

Tax Returns and Wills 

As part of its financial planning services, Optimize provides professional accounting services to assist you with the completion of your tax returns and professional legal services to assist you with your wills. These services are offered as a  complement to Optimize’s core investment management services and may be provided by Optimize’s in-house professionals or outsourced as needed. These professional services are only for the preparation of tax returns and wills, Optimize does not provide tax planning or estate planning services or advice or other accounting or legal services. 

CONFLICTS OF INTEREST REGISTER 

Managed Accounts invested in Proprietary Funds  

Conflicts exist when we exercise our discretion to invest your Account in our Proprietary Funds. In these instances, the conflict arises because we will receive additional fee revenue from the Funds in which you invest, which we would not receive if your Account were invested in third party funds or securities. In this case it may be perceived that we are favouring our business interest over yours. 

We manage this conflict in the following manner: 

By ensuring that each Optimize Model Portfolio, and the underlying Fund, in your Account, is recommended to you based on a comprehensive suitability assessment. You will only receive the services that are appropriate to you in our professional judgement. We employ a robust Know your Client/Suitability process that is supervised by an internal compliance team. We constantly review and assess the service offering and fees to ensure they bring value to you. 
When we recommend a Model Portfolio, we do so because we have used our professional judgement to assess the appropriateness and suitability of the investment for you in our discretion. The depth of our investment team and the nature of our processes mean that we are able to effectively assess our products and services to ensure they are competitive and suitable to each client. 
We disclose our fees associated with services provided to you, including management fees, performance fees, custodian, and trading fees. This means you will be able to compare and evaluate our costs. 
The majority of our Associate Portfolio Managers and Portfolio Managers (“APMs and PM”s) are paid a salary. There are a small number who also receive a portion of their compensation which is derived from the value of assets they manage. This conflict is managed as the bonus is calculated on the overall value of assets, there is no incentive paid for at a client or product level or for performance of the Funds. 
Fair Allocation of Investment Opportunities 

Optimize manages Accounts for clients as well as our Funds. The Funds are different and are managed separately from client Accounts. It is our policy to ensure that we deal fairly, honestly and in good faith when allocating investment opportunities (which includes securities traded on public exchanges, new issues, or participation in an initial public offering)  across all Accounts. No single Account will receive preference in the allocation of investment opportunities. The principal determination when allocating investment opportunities is the suitability of the transaction given each client’s particular investment mandate. 

The Optimize Private Client Program will only invest Accounts using the Model Portfolios composed of our Funds, which enhances the ability for Optimize to allocate trades fairly and ensure that similarly situated clients receive similar investment at the same time and the same NAV.  

Related and Connected Issuers 

The Optimize Funds are the only investment products that are managed and distributed by Optimize. The Funds are proprietary products and are related and connected issuers of Optimize, because Optimize is the trustee, investment fund manager and portfolio manager of the Funds and earns management fees and, in some cases, performance fees from the  Funds, The Optimize Funds are the only related and connected issuers of Optimize. 

Further information regarding Optimize Funds and how they are managed is set out in the Optimize Fund Disclosure Document under “Conflicts of Interest” and “Fees and Expenses”. 

Proprietary Products 

Optimize solely offers proprietary products, which are manufactured by us. When you enter into our Private Client Program,  your account will only be invested in the Funds. In carrying out our duties as a portfolio manager, we select the Model  Portfolio that is most suitable for you, which will include one or more Optimize Funds. The selection of Funds will be based on your personal circumstances and investment needs, which may change over time. As we only offer proprietary products,  our suitability determination will not consider the larger market of non-proprietary products or whether those non-proprietary products would be better, worse or equal in meeting your investment needs and objectives. 

The Optimize Private Client Program Brochure describes our use of the Model Portfolios and Funds for your Account. We  have policies and procedures in place to manage our Know-your-Client and Know-your-Product obligations as a portfolio manager, which includes compliance and training programs. Our Investment Team conducts ongoing assessment of our  Funds, which includes peer reviews to ensure our proprietary products continue to be competitive within the greater market offerings. Additionally, since we do not offer third party products, we do not have the conflicts that would arise in respect to compensation received from such products. 

Error Corrections 

Should an error occur in the course of managing your Account, a potential conflict of interest could occur during the process of correcting the error where the expense is charged to you, or a gain is taken by Optimize. We avoid this conflict by bearing all costs associated with trading errors, and if a trade error results in a loss, we will endeavor to make you whole. In the cases where the error favours you, Optimize will bear the loss.  

All errors are documented in an error log as a control measure and as a measure to improve business processes. Annually,  a brief account of trade errors is included in the Chief Compliance Officer’s report to the Board.  

Full Control over Client Affairs 

Optimize deems full control or authority of a client’s financial affairs to be an inherent material conflict of interest and therefore we prohibit such activity. This includes but is not limited to, acting as a trustee, executor, power of attorney or any other position that may give a registered advisor such as your PM or employee control over the financial affairs of a  client. An exception is granted to individuals acting on behalf of their immediate family. Compliance approval is required to open and maintain a client account at Optimize, this includes approval of individuals who are acting on behalf of a client on an account. 

Revenue Based Compensation 

Portfolio Managers, Wealth Planners and other client facing employees in the investment industry are often paid by salary,  bonus and/or by commission as part of their compensation agreements. This raises a material conflict of interest as it may be perceived that the Portfolio Manager, Wealth Planner or employee is putting their interest ahead of yours. 

Optimize compensates some of its client facing employees including Portfolio Managers primarily on salary and in certain circumstances a portion of their compensation is derived from the ongoing management fees received from client accounts.  Optimize manages this conflict by not paying these employees an upfront commission but rather an ongoing portion of management fees over a period of time. In addition, we provide training and supervision around assessing various types of investments as to their suitability for clients.  

Fees Payable to Wealth Planners 

Wealth Planners (“WP”s) are Optimize representatives who are not licensed as APMs or PMs and who provide clients with supplementary services such as financial plans and help with the coordination of tax or will preparation. In some cases the  

WPs have joined Optimize from another firm and at the same time transitioned their clients’ assets to Optimize. They will  receive compensation for those clients as follows:  

For accounts introduced to Optimize by a WP, they will receive a one-time transition payment based on the initial portfolio asset value, which will be paid in monthly increments over a 36 month period. 
Ongoing compensation of a portion of the management fees charged to the transitioned clients will be paid to WPs based on the assets of the clients who remain clients of Optimize. 
 When a WP retires, they may be entitled to receive a succession payout based on the managed assets they initially transferred to Optimize, which will be paid over three to five years from their retirement date. 
The Management Fees clients pay are not affected by the compensation paid to WPs by Optimize, the value-added services provided to clients are included as part of the fee they are charged. Clients of WPs who are directly impacted will receive an Acknowledgement Disclosure, which sets out in detail the specifics of how their WP is compensated prior to the transition of their account. 

Management Compensation  

It is the policy of Optimize that no member of management, including senior officers receives any direct bonus, commission of incentive. Members of management and senior officers are paid a salary. 

Personal Trading 

Optimize has adopted a policy intended to restrict and monitor all personal trading by the employees of Optimize in order to prevent, detect and mitigate conflicts between such personal trading and the interests of the Funds and the Accounts. It is the policy of Optimize that any individual who has or can obtain access to non-public information concerning the portfolio holdings, the trading activity or the ongoing investment programs of our funds or client accounts, is prohibited from using such information for their direct or indirect personal benefit or in a manner that would not be in the best interest of our clients. These individuals also must not use their position to obtain special treatment or investment opportunities not generally available to our clients or the public. These individuals are only allowed to make a personal trade if it falls within our personal trading policy and has been approved by the designated compliance officer, where it was determined that such trade will not cause a conflict with the best interest of our clients. Employees are required to have duplicate trading statements delivered to Compliance, who is responsible for reviewing them for monitoring purposes. 

Outside Activities 

At times, employees of Optimize may participate in outside activities such as serving on a board, participating in community events of pursuing a personal outside business interest. It is our policy that no registered individual may act as a director or officer of another investment firm. Optimize has a policy in place that requires individuals to avoid situations where a  conflict of interest may arise and for registrants to seek approval from Compliance prior to initiating an outside activity. An analysis is conducted based on the nature of the activity and the time commitment required to ensure there is little impact to the client. Activities that potentially create a conflict of interest are prohibited.  

In certain circumstances your Portfolio Manager or Wealth Planner may provide you with additional services such as financial plans or insurance products. These activities may require registration not related to the investment industry. In each of these cases, approval to engage in these value added services will be required by Compliance; an assessment will be conducted for potential conflicts of interest that may arise, prior to granting approval. Further, these activities may only be offered to you through our Private Client Program, which includes these additional services as part of the management fee you pay with the exception of insurance premiums.  

Referral Arrangements 

Optimize may enter into referral arrangements whereby it pays a fee for the referral of a client to Optimize. No such payments will be made unless the referred investors are first advised of the arrangement in writing, the terms and conditions are explained and all applicable securities laws are complied with. 

Soft Dollar Arrangements 

Soft dollar arrangements occur when brokers have agreed to provide other services (relating to research and trade execution)  at no cost to Optimize in exchange for brokerage business from Optimize’s clients, including the Funds and Accounts.  Optimize does not use Soft Dollar Arrangements. 

Best Execution 

Most trades in publicly traded securities for the Optimize Funds and for client accounts are executed by National Bank  Financial Inc. They offer both Optimize and clients, competitive rates for both trade execution commissions and custody fees. As part of our Third Party Oversight Policy, we regularly review the commission rates available from other execution brokers and the custody fees charged by other custodians with a view to ensuring that we are getting fair and competitive pricing consistent with industry practice.  

When considering the costs associated with the Optimize Private Client Program, please note that the Accounts do not pay: (i) trade execution fees for subscriptions for, and redemptions of, Units of the Optimize Funds to clients; or (ii) custody fees for Units of the Funds held in your Account. Any trade execution and custody costs directly associated with the management of the Funds are borne by each Fund. Please review the section on Administration Fees and Expenses as described in the Optimize Fund Disclosure Document. 

Fair Valuation 

The Management Fees you pay are based on the value of the assets in your Account. There is a potential conflict of interest because the higher the valuation of your Account the higher the fees we are paid. Overstating value of investments held by  Optimize Funds that pay Performance Fees would also increase the Fees we receive. To ensure the fair valuation of the underlying securities held in our Funds, we have implemented policies and procedures that set our pricing principles for bonds, equities and illiquid securities as well as a policy for valuation of foreign currencies and securities. 

Our Investment Committee meets on a regular basis, to ensure that we are using industry standards for our valuation methodologies.  

Relationship Disclosure Information  

Please review the Relationship Disclosure Information for further information regarding the conflicts of interest which may arise when Optimize provides services to Accounts, Optimize’s complaint handling process and other important information.