A couple of weeks ago, we released Our Voluntary Code of Conduct for the Stewardship of Your Wealth. Click here to read the full, signed document: highrockcapital.ca/uploads/3/4/2/5/34254660/our_voluntary_code_of_conduct_as_stewards6.pdf
This Voluntary Code of Conduct is, largely...voluntary. There are items in there that we do NOT need to do or have in there from a regulatory point of view. Things like: "be transparent with fees/costs, respect our client's money is theirs, make ourselves available, forming an IRC, manage our own personal money exactly the same as our clients", etc, etc. At High Rock, we go "above and beyond the regulatory requirement" and take every item in Our Code very seriously. The very fact we have a Code of Conduct, in and of itself, goes above and beyond the regulatory requirement.
However, some of our Voluntary Code of Conduct items are not...voluntary. For instance, and most importantly, our very first Code of Conduct states: "We will always put our client's interests ahead of our own". We didn't have the space in the document to elaborate, so I will do it today, but this Code is a regulatory requirement, and so it should be.
Putting our client's interests ahead of our own should be self-explanatory. Scott put it best in a real-life blog two days ago: highrockcapital.ca/scotts-blog/whos-money-is-it-anyway
Without me going on, have a read and you will get part of the picture of how we, High Rock, not only saved our clients some $ (and didn't keep it for ourselves) but also did not try to talk them out of their dreams just so we could increase our own revenue.
Herein lies the difference between a simple Standard of Care and a Fiduciary Duty.
A Standard of Care simply means that an Advisor just needs to treat you "fairly, honestly and in good faith". If that means selling high-fee mutual funds to the client, so be it. If it means keeping the "spread" on a foreign exchange trade, so be it. If it means collecting a commission for selling clients structured products or various funds, so be it. All "fair (not really), honest (not really) and in good faith (not really)"...get the picture?
A Fiduciary Duty, on the other hand, states that we (High Rock) are "REQUIRED to act in the best interests of our clients at all times". If that means we can cut their fees and expenses by not buying them high-fee mutual funds, then that is what we MUST do. And we do...High Rock clients will never own a mutual fund...EVER! We have the intellectual capital in-house to manage money directly.
Here is the difference on a slide:
It may seem like a subtle difference to you but to us, it's a big deal. So much so, that you will see that Scott, Bianca and myself have all signed our Code and commit to following every line item at all times. Anyone out there have an Advisor that has produced and signed such a Code?
According to the Small Investor Protection Association (SIPA..the group that uncovered what has been going on at the big banks and alerted the CBC's Go Public), there are 121,000 people in Canada registered as "financial professionals" and only about 4,000 of them have a fiduciary duty...the other 117,000 have a simple standard of care. In Canada, I believe the only professionals who owe their clients a fiduciary duty are: lawyers, accountants and portfolio managers. High Rock is registered with the Ontario Securities Commission (and BC, Alta and Sask) as a Portfolio Manager and, as such, owes it's clients a Fiduciary Duty at all times. We would have it no other way...it is in our DNA.
And on top of that, Bianca is a Certified Financial Planner (CFP) so is governed by their internal Standards of Professional Responsibility and Code of Ethics and I am a Charted Financial Analyst (CFA) and am governed by the CFA Institute's Code of Ethics and Standards of Professional Conduct along with an annual certification stating, among a long list of items, that I have not been charged, arrested, investigated or under the influence of narcotics (no, I will not utilize the legalization of marijuana in Canada).