Conflicts Of Interest Disclosure
The purpose of this document is to inform you on the nature and the extent of the conflicts of interest that may affect the service provided to you by Rothenberg Wealth Management (“RWM”) and how we have identified and responded to them in order to reduce their impact.
We consider a conflict of interest to be any circumstance where the interests of RWM are inconsistent or divergent from the interests of you, our client. Any situation where a Wealth Management Advisor may be influenced to put their own interests ahead of their client’s is also a conflict of interest. We take reasonable steps to identify all existing or potential conflicts of interest. We assess the level of risk associated with those conflicts, and then we ensure that appropriate measures are implemented to effectively control the conflict.
In keeping with expectations regarding ethical corporate conduct, our clients have a right to openness and honesty in all their dealings with RWM. We must avoid any activities or circumstances that create actual, potential, or perceived conflicts of interest. When avoidance is not possible, we must ensure those situations are resolved in the client’s favour.
Simply put, we must always put our client’s interests first.
Conflicts arising from compensation and incentive practices
We offer our clients two different compensation models: commission-based and advisory fee-based. Your Wealth Management Advisor is responsible for determining which model is the most suitable for your specific needs. In order to avoid a conflict of interest, we have ensured that our advisors are identically compensated regardless of the chosen model.
Investment products sometimes provide third-party compensation. Those products are evaluated based on their quality, without bias towards those that provide a higher level of compensation. We assess all investment products using the same process to ensure those products that offer little to no third-party compensation are included. We conduct periodic due diligence on those products to ensure they are competitive with other alternatives available.
We have ensured that our advisors do not receive greater compensation for the sale or recommendation of certain products over others.
We have ensured that all bonus compensation paid to our advisors is based on achieving high levels of customer service, and not on sales or revenue targets.
We must never recommend a product or service because it compensates us better than the alternatives.
Conflicts of interest at the supervisory level
There is an inherent conflict of interest in situations where compliance or supervisory staff’s compensation is tied to the sales or revenue generation of the firm, as that can lead to insufficient oversight in order to further their personal interests. As such, we do not provide any bonuses or special forms of compensation to supervisory staff.
We do not compensate supervisory staff based on sales or revenue targets.
Conflicts in fee-based accounts
There is a potential conflict of interest when fee-based accounts hold securities with embedded commissions, leading to the client effectively paying for two types of compensation on the same product.
There are often situations where a product that pays embedded commissions is the most suitable recommendation for the portfolio, where an alternative product without embedded commissions is unavailable. We have controls in place to ensure that, when those products are added to a fee-based portfolio, they are exempt from the list of assets that advisory fees are applied to.
We ensure that we never earn both types of compensation on any product within a fee-based account.
Addressing conflicts between clients
We recognize that there can be competing interests between clients that have opened an account jointly. A corporate account with multiple partners or a joint account between siblings are two examples. In order to address any potential conflict of interest situations fairly and without bias towards one individual, we ensure that all instructions given for these accounts are approved by all of the individuals that own the account.
We require any transactions within a jointly held non-spousal account be approved by all parties.
Purchasing assets from a client outside the normal course of business
Arranging to purchase assets, such as real estate or collectibles, from a client is an inherent conflict of interest because the advisor can take advantage of the trust their client extends to them. As such, those transactions are normally forbidden.
In extraordinary circumstances, where it is deemed that the transaction would be of benefit to the client, the firm can approve the transaction only if the client and/or advisor have acquired independent legal or professional advice.
We do not permit personal transactions between clients and advisors except under exceptional circumstances.
Control or authority over the financial affairs of a client
Having complete control or authority over the financial affairs of a client, either through a power of attorney, or acting as executor for a client’s estate, is an inherent conflict of interest. As such, accepting any authority is strictly forbidden. Should a client name an advisor as their executor without the advisor’s knowledge, the advisor must immediately relinquish their position.
Under no circumstances can an advisor be granted control or authority over your financial affairs.
Registered individuals serving on a board of directors
Regulations prohibit advisors and other registered individuals from holding a board position with any registered firm other than Rothenberg Wealth Management. Registered individuals are permitted to serve on the board of non-industry corporations; however, conflicts of interest can arise due to conflicting fiduciary duties towards RWM, its clients, and the outside corporation.
To avoid these conflicts, we ensure that no advisor act on the board of a company whose shares are listed on the stock market. We also ensure that there are no conflicting demands on the advisor’s time because our clients come first.
We ensure that allowing an advisor to serve on a board of directors does not impact the service provided to their clients.
Individuals with outside business activities
Conflicts can arise when registered individuals are involved in outside business activities, such as charitable organizations. Those advisors who hold a license to sell insurance products are also considered to be involved in an outside business activity.
Before approving these activities, we ensure the following:
The advisor has sufficient time to carry out their duties properly;
The advisor is able to service their clients properly;
The advisor does not solicit clients for their outside business activities (with the exception of insurance products, when appropriate);
The advisor is not placed in a position of power or authority over any clients due to the outside business activities;
The advisor does not use privileged, confidential or insider information for the benefit of their outside business activities.
We regularly monitor the outside business activities of our advisors to ensure that no unforeseen conflicts of interest arise.
We ensure that only approved outside business activities are permitted.
Proprietary products and referral arrangements
Conflicts can arise when dealing with proprietary products or when engaging in referral arrangements.
Rothenberg Wealth Management does not offer proprietary products, nor does it engage any other firms in referral arrangements.
A careful analysis of our business practices has allowed us to disclose all conflicts of interest that could potentially affect our clients. We continue to monitor and evaluate all of our business practices, and should we identify any previously undisclosed conflicts of interest, we will inform you in a timely manner.
It is important that our clients use this conflict of interest disclosure to better inform their decisions when evaluating Rothenberg Wealth Management’s business practices, conflict management, and overall performance.