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 Inc. or Optimize Global Asset Management Inc. (collectively “Optimize”).     

Canadian securities laws require us to take reasonable steps to identify, disclose, and respond appropriately to existing material conflicts of interest and those that are reasonably foreseeable. Please take a moment to read it carefully. Your Portfolio Manager (“PM”), Associate Portfolio Manager (“APM”) or Financial Professional (“FP”) can answer any questions you may have.

a) What is a conflict of interest?

A conflict of interest (“COI”)  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.   It includes where a registrant may be influenced to put their interest ahead of a client’s. Conflicts are considered material if they may reasonably be expected to affect the decision making of the client or judgement of Optimize or its employees.

b) How do we handle conflicts of interest?

Optimize takes reasonable steps to identify COIs and ensure that they are always resolved in your best interest, ahead of our own interest or any other competing considerations. If we cannot resolve a conflict in your best interest, we will avoid the activity that raises that conflict.

We have policies and provide ongoing training to our employees to assist them in identifying existing and reasonably foreseeable COIs in a timely manner.

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 avoid it altogether.

d) Delivery of Disclosure?

The Conflict of Interest Brochure (“Brochure”) will be provided to you at the time of account opening and is available to you at any time upon request. The Brochure is updated annually, or as we identify new COIs .  The updates will be provided to clients promptly by email or mail depending on the consent we received from you.

Ethics Program

We have a Code of Ethics, which sets out the standard of conduct expected of our employees.  It includes restrictions and controls on outside activities, gifts and entertainment, personal financial dealing with clients, and personal trading. The Code of Ethics is designed to ensure our employees act in accordance with applicable Canadian securities laws, and that they act in the best interest of Optimize and our clients.

Ownership

Optimize Wealth Management Inc. and Optimize Global Asset Management Inc. are wholly owned by Optimize Financial Group Inc. (“OFG”).  Optimize Wealth Management Inc. is registered with the Canadian Investment Regulatory Organization (“CIRO”) to carry on business as an Investment Dealer in the provinces of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Québec, Saskatchewan and Yukon.  Optimize Wealth Management Inc. is also a member of the Canadian Investor Protection Fund (“CIPF”).  Optimize Global Asset Management Inc. is registered as a Portfolio Manager in the provinces or territories of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Northwest Territories, Nunavut, Ontario, Prince Edward Island, Quebec, Saskatchewan and Yukon.  Optimize Global Asset Management Inc. is also registered as an Investment Fund Manager in Ontario and Exempt Market Dealer in the provinces of British Columbia, Manitoba, Ontario and Saskatchewan.

 

PRODUCTS AND SERVICES WE OFFER

Discretionary Investment Management

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

This Program is offered through our affiliate Optimize Global Asset Management Inc., which manages the Program by offering a series of Model Portfolios comprised solely of proprietary Funds.  Details of the Program, Model Portfolios and Funds can be found in the Optimize Fund Disclosure Document, which will be made available to you at account opening and throughout your relationship with us.

Since your assets will be invested in proprietary funds, Optimize Global Asset Management Inc. will earn management fees and, in some cases, performance fees from the Funds.  As a result you will bear a proportion of those fees as well as operating expenses of the Funds held in your Account.

Non-Managed Accounts

On an exception basis, we offer non-managed accounts where clients are responsible for the investment decision and where required, a PM or APM may make a recommendation.  Commissions or any other related fees or charges will be disclosed to the client, prior to any transactions.

Financial Planning

Comprehensive Financial Plans are available to our clients as part of the Program through Optimize Family Office Services Inc. (“Family Office Services”). This value-added offering is available at no additional cost to the account level management fee charged to clients.

Tax Returns and Wills

Family Office Services also provides clients of the Program, access to professional tax preparation services to assist you with the completion of your tax returns and comprehensive will and estate plans to assist you with your estate planning needs.  These services are offered as a complement to Optimize’s core investment management services and may be provided by in-house professionals or outsourced as needed. These professional services are only for the preparation of tax returns, wills and powers of attorney.  Optimize does not provide advice on tax planning, estate planning, accounting or legal services.

For a more fulsome description of the products and services we offer, please refer to the Relationship Disclosure Information relating to Optimize that we have provided to you.

CONFLICTS OF INTEREST REGISTER

Managed Accounts invested in Proprietary Funds of Related Affiliates

Conflicts exist when we exercise our discretion to invest your Account in proprietary Funds which are managed by Optimize Global Asset Management Inc.  In these instances, the conflict arises because Optimize will receive additional fee revenue from the Funds 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 by:

a) Ensuring that each Optimize Model Portfolio, and the underlying Funds, in your Account, are recommended to you based on a comprehensive suitability assessment. You will only receive the products that are appropriate for you in our professional judgement. We undertake a comprehensive Know-your-Client/Suitability process that is supervised by Compliance.

b) When we recommend a product, we do so because we have used our professional judgement to assess the appropriateness and suitability of the investment for you. The depth of our investment team allows us to effectively assess our products and services to ensure they are competitive and suitable to each client.

c) We disclose the fees associated with services provided to you, including management fees, performance fees, custodian, and trading fees. This means you can compare and evaluate our costs.

d) There are some PMs and APMs who  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.

e) We regularly review comparable funds in the marketplace.

Fair Allocation of Investment Opportunities 

It is our policy to ensure that we deal fairly, honestly and in good faith when allocating investment opportunities.  This includes securities traded on public exchanges, new issues, or participation in an initial public offering.  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.  If there is insufficient availability of an investment opportunity, then the investment will be allocated on a pro rata basis across the suitable accounts.    

Accounts will only invest in the Model Portfolios.  This enhances the ability for Optimize to allocate trades fairly and ensure that similarly situated clients receive similar investment at the same time with the same NAV.

Related and Connected Issuers

Optimize is wholly owned by OFG, the parent company.  The Funds are the only investment products that are managed by Optimize and are available to clients of Optimize through the Program. The Funds are proprietary products and are related and connected issuers, as Optimize Global Asset Management Inc. is the Trustee, Investment Fund Manager and Portfolio Manager of the Funds.  Optimize Global Asset Management Inc. earns management fees and, in some cases, performance fees from the Funds.  The Funds are the only related and connected issuers of Optimize.

Further information regarding 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

When you enter into Optimize’s Private Client Program, your Account will be invested in the Funds.  We select the Model Portfolio that is most suitable for you, which will include one or more 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 the 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, which includes compliance and training programs.  The Investment Team conducts ongoing assessment of the Funds, which includes peer reviews to ensure the proprietary products continue to be competitive within the greater market offerings.

Error Corrections

Should an error occur while managing your Account, a potential conflict of interest could arise 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 endeavour 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 Optimize’s Chief Compliance Officer’s report to the Boards.

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 PM, APM,  FP or employee control over the financial affairs of a client. An exception is granted to individuals acting on behalf of immediate family.  Compliance approval is required in these instances.

Personal Trading

Optimize has adopted a personal trading policy in order to prevent, detect and mitigate conflicts between such personal trading and the interests of clients.  Any individual who has or can obtain access to non-public information concerning the portfolio holdings, the trading activity of client accounts, is prohibited from using such information for their personal benefit. These individuals also must not use their position to obtain special treatment or investment opportunities not generally available to our clients. These individuals are only allowed to make a personal trade if it falls within our personal trading policy.  It must 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 reviews them on a continuous basis.

Outside Activities

At times, employees of Optimize may participate in outside activities such as serving on a board, participating in community events or pursuing a personal outside business interest. Optimize 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 time commitment required to ensure there is little impact to the client. Activities that potentially create a material conflict of interest are prohibited.

In certain circumstances your PM, APM or FP 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.  These activities may only be offered to you through managed accounts, which includes the additional services through Family Office Services.  These form part of the management fee you pay (excluding insurance premiums).

Referral Arrangements

Optimize may enter referral arrangements whereby it pays a fee for the referral of a client to Optimize. No payments will be made unless the referred investors are first advised of the arrangement in writing, the terms 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 additional cost to Optimize in exchange for brokerage business from Optimize’s clients, including Accounts. Optimize does not use Soft Dollar Arrangements.

Best Execution

Most trades in publicly traded securities for Optimize and for client accounts are executed by National Bank Independent Network. They offer competitive rates for both trade execution and custody fees. As part of our third-party oversight, 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.

Fair Valuation

The Account Level 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. To ensure the fair valuation of the securities in your Account, Optimize has implemented policies and procedures which set pricing principles for bonds, equities and illiquid securities as well as a policy for valuation of foreign currencies and securities.

Relationship Disclosure Information

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