The Conflicts of Interest Disclosure provides important information concerning the relationship between OceanFront Investment Counsel Inc. (“OFIC”) and you, the Account Holder. To clarify, when the terms “OFIC”, “Portfolio Manager”, “we”, “our”, or “us” are used in this document, we mean OceanFront Investment Counsel Inc. and its registered employees (“Registrants”). When we refer to “Account Holder”, “you”, or “your”, we are referring to you as the Account Holder, and, if applicable, anyone who is an authorized individual on the Account. An Account Holder also includes authorized individuals for non-individual entities such as corporations and trusts.
What are Conflicts of Interest?
Conflicts of Interest (“COI”) may arise when OFIC’s interests are inconsistent with your own, potentially compromising our ability to act in your best interest. As part of the Client Focused Reforms, Canadian securities regulators require us to take reasonable steps to identify and address actual or perceived material COIs. This ensures that we take appropriate measures to maintain transparency and prioritize acting in your best interest. Should you require further details regarding the information provided in this document, please do not hesitate to contact your Portfolio Manager.
There are three general types of conflicts that can arise:
- COI between you and us,
- COI between you and our other clients, and
- COI between us and our related entities.
We manage conflicts through one or more of the following ways:
- Avoid: This includes avoiding conflicts that are prohibited by laws and conflicts that cannot be effectively addressed in your favour.
- Control: We manage the conflict through policies, procedures, and internal controls.
- Disclose: We provide you with information about the conflict, allowing you to independently assess its significance when evaluating our products and services.
Examples of actual or perceived material COIs may include the following:
Affiliates and Related Entities
Nature of Conflict: We have a relationship with an affiliated or related entity, and our actions or decisions may be influenced by our own interests.
Potential Conflict: Conflicts may occur if there are competing interests that compromise our ability to make impartial decisions. These interests might interfere with our objectivity, judgement, or integrity, impacting our ability to put your interests first.
How the Conflict is Addressed: We provide the following disclosure to you to maintain transparency: OFIC is a wholly owned subsidiary of OceanFront Wealth Inc. (“OFWI”). OFWI also has the following additional subsidiary:
- Lindsay Insurance and Financial Planning Inc. offers financial planning and insurance services and operates under the trade name OceanFront Wealth (“OFW”), and
OFWI has the following related entities:
- Lindsay Holdings Inc.;
- McVit Holdings Inc., and
- Portfolio By Design Inc.
OFIC has policies in place to address conflicts with its affiliated or related entities relating to intra-company transactions, preferential cost schedules, confidentiality and sharing of information. Our recommendations or advice to you are based on our fiduciary duty to act in your best interest.
Best Execution
Nature of Conflict: OFIC may have a financial or other interest that may compromise its ability to obtain the best possible trade execution price.
Potential Conflict: A less objective and less competitive trading process may result in you being disadvantaged with a less favourable trade price, slower execution, and/or higher costs when compared to other similar trades.
How the Conflict is Addressed: Trade execution is managed by an independent third party, Fidelity Clearing Canada ULC (“FCC”), a firm required to follow industry handling and routing practices designed to achieve best execution. OFIC conducts due diligence on FCC’s execution performance. FCC’s Best Execution Policies are available upon request.
Board of Director Appointment
Nature of Conflict: Director appointments at another firm or reporting issuer have the potential for clashing interests.
Potential Conflict: Directors who have fiduciary responsibilities to both the company they serve and to you and this can create situations where conflicting or competing interests may not align with your best interests.
How the Conflict is Addressed: Registrants are required to obtain pre-approval for any Outside Activities and, if applicable, recuse themselves from any discussions, decisions, or activities that could create a conflict. Activities will not be permitted if a real or perceived COI cannot be effectively controlled. OFIC does not permit Registrants to act as directors for an issuer whose securities are distributed or advised by OFIC. OFIC does permit its directors to serve as directors for its related entities. See Affiliates and Related Entities COI for additional information.
Compensation Arrangements and Competing Interests
Nature of Conflict: Compensation structures and incentives tied to sales and revenue goals can influence our actions and decision-making in ways that may not align with your best interests.
Potential Conflict: We may prioritize our growth by incentivizing our Registrants to acquire assets, potentially diverting attention from client service.
How the Conflict is Addressed: We have established a compensation structure that prioritizes your interests. For example, compensation consists mainly of a base salary, with variable compensation aligned with OFIC’s success in building long-term client relationships and tied to overall profitability. Business development metrics and targets are established while taking into consideration the allocation of time for the ongoing servicing of existing clients. Registrants’ compensation does not vary across services, products, accounts, or client types. Supervisory controls are in place to monitor Registrant’s activities ensuring that they are consistent with their fiduciary responsibilities.
Complaints
Nature of Conflict: Our interests in mitigating potential reputational harm or regulatory scrutiny may influence the fair and unbiased resolution of your complaints.
Potential Conflict: To mitigate potential harm to our reputation, financial liabilities, and/or regulatory scrutiny, we may choose to delay the resolution process or arrive at an unfair conclusion. Such actions would be unjust as you deserve a timely and impartial resolution that truly addresses your concerns.
How the Conflict is Addressed: We outline our complaints and dispute resolution process in the Relationship Disclosure Information document provided at the time of account opening. The most recent copy of the document is also available in your client portal and on our website at www.oceanfrontwealth.com. If you are unsatisfied with our resolution decision, we offer free and independent third-party dispute resolution services through the Ombudsman for Banking Services and Investments.
Connected Issuer
Nature of Conflict: When recommending connected issuer securities, COI can arise due to the potential for biased recommendations.
Potential Conflict: Our business relationship with an issuer might jeopardize our objectivity, possibly leading to making unsuitable recommendations.
How the Conflict is Addressed: We conduct a suitability review of all products that we recommend to you. Your Investment Policy Statement guides how we manage assets to ensure investment decisions are aligned with your goals and objectives. At this time, we do not have any connected issuers.
Cross Trades
Nature of Conflict: We may conduct an intentional cross of a security between two accounts we manage, effectively assuming the roles on behalf of the buyer and the seller simultaneously. This can create a conflict if we cannot act in the best interest of both parties.
Potential Conflict: A cross trade may not align with your interests, and the lack of market exposure may raise concerns about pricing, trade terms, and lack of transparency, potentially compromising best execution and fair treatment.
How the Conflict is Addressed: OFIC has a policy in place to only permit a cross trade only under specific circumstances and when it serves your interest. Trade execution is managed by an independent third party, FCC, and the fair treatment of the trade is based on standard industry practices.
Fee Arrangements
Nature of Conflict: Fee arrangements and negotiations can lead to unfair situations when you are charged different fees for the same products and services offered to other clients.
Potential Conflict: Charging different fees for the same or substantially similar services and products can lead to unequal treatment. This could be a breach of our duty to treat you fairly, honestly, and in good faith.
How the Conflict is Addressed: We manage this conflict by applying a consistent framework for assessing when fee adjustments or rebates are appropriate in accordance with internal guidelines. Administrative fees, such as wire fees imposed by other institutions, may be rebated if we cannot provide an alternative solution, such as EFT or bill payment, to facilitate the transaction in a timely and efficient manner. Transfer fees from other institutions may also be rebated for long-standing clients of OFIC’s affiliates who are encouraged to transfer their assets to OFIC. These clients may also retain their legacy fee schedule to prevent any unfavorable outcome by moving their accounts to OFIC. We disclose our fee schedule to you so that you are fully informed of costs.
Gifts
Nature of Conflict: Giving or receiving gifts may affect the behaviour of both the donor and the recipient, compromising our ability to act in your best interest.
Potential Conflict: Giving gifts to you may deter you from expressing your concerns about our service quality. Receiving gifts from you may influence our decisions, compromising our ability to remain impartial and treat all our clients fairly.
How the Conflict is Addressed: We only give or receive gifts on a reasonable basis for occasions such as showing gratitude, expressing appreciation, or celebrating milestones and holidays. We have set limits on the frequency, number, and value of gifts so that they are not excessive, or extravagant.
Managed Accounts
Nature of Conflict: Registrants who manage accounts may have conflicting interests that could impact their ability to act in your best interest.
Potential Conflict: With managed accounts, you rely on the Portfolio Manager who has discretion to make investment decisions on their behalf. However, the fundamental nature of exercising discretionary control can give rise to the various conflicts outlined in this document, such as conflicts relating to compensation, investment strategies, or promotion of affiliated products. This could impact our ability to treat you fairly, honestly, and in good faith.
How the Conflict is Addressed: We have policies and procedures that impose restrictions on certain managed account transactions unless the transaction is disclosed to you, and we obtain your consent. We have supervisory processes in place to identify and manage potential conflicts and avoid any that cannot be resolved in your favour.
Misleading Marketing
Nature of Conflict: Misleading marketing claims conflict with the Registrant’s fiduciary duty to deal fairly, honestly, and in good faith.
Potential Conflict: Marketing materials which may contain inaccurate performance claims, misleading hypothetical data, exaggerated and unsubstantiated claims, and other disingenuous information have the potential to mislead you. This could result in you making ill-informed decisions, potentially resulting in financial harm.
How the Conflict is Addressed: We have policies and procedures in place detailing acceptable marketing material practices. There is a compliance review and approval process in place for marketing materials before public dissemination.
Misleading Titles
Nature of Conflict: The conflict of interest can arise when the use of titles or designations leads to misleading or deceptive practices that compromise your interests.
Potential Conflict: Misrepresentations can lead to you believing you are dealing with a more experienced or qualified professional, potentially hindering your ability to make informed decisions about the suitability of the services being offered or the credibility of the individuals involved.
How the Conflict is Addressed: Registrants are only permitted to use titles or designations that are appropriate to their role, registration category, and business activities. OFIC verifies qualifications, certifications, and designations before including them in marketing materials.
Outside Activities
Nature of Conflict: Outside Activities, which encompass activities with another registered firm including affiliated entities, activities with an entity that receives compensation from another registered firm, other securities-related activities, and positions of influence could create a conflict that impairs the Registrant’s objectivity.
Potential Conflict: Outside Activities may interfere with our ability to provide objective advice and divert our time and attention from our fiduciary responsibilities. Outside Activities may also create an undue influence over you, potentially affecting your decision-making and financial choices.
How the Conflict is Addressed: Registrants are required to obtain pre-approval for any Outside Activities and, if applicable, recuse themselves from any discussions, decisions, or activities that create a conflict. Outside Activities will not be permitted if a real or perceived COI cannot be effectively controlled. See Board of Director Appointments COI for additional information.
Personal Trading
Nature of Conflict: Registrants trading securities for their own personal accounts can potentially lead to situations where personal gains take precedence over your interests, resulting in biased decision-making or preferential trade allocations.
Potential Conflict: Personal trading activities may divert a Registrant’s time and attention away from their responsibilities to you, potentially impacting their ability to provide adequate services. The Registrant may take advantage of information used to manage client portfolios for their own personal gains resulting in unfavourable treatment of you.
How the Conflict is Addressed: We have policies and procedures in place that include regular reviews of Registrant’s outside accounts to ensure personal trading activities do not negatively impact your interests.
Personal Transactions with Clients
Nature of Conflict: Engaging in personal transactions with you, which may involve having authority or control through a Power of Attorney or Trustee relationship, can introduce conflicting interests.
Potential Conflict: There is a potential conflict when Registrants engage in personal transactions with you or possess authority, such as Power of Attorney or Trustee appointments. Borrowing or lending arrangements between a Registrant and you may create undue influence or impair a Registrant’s objectivity, increasing the risk that the Registrant may prioritize personal interests over your goals and objectives.
How the Conflict is Addressed: We have a policy prohibiting personal transactions between Registrants and clients, including borrowing or lending arrangements unless the transaction involves a family member, or the transaction is approved by OFIC’s compliance staff. Registrants are not permitted to accept Power of Attorney or Trustee appointments except in family-related situations. In such circumstances the account activities are subject to heightened supervisory reviews to ensure the client’s interests are best served.
Portfolio Valuations
Nature of Conflict: Fees calculated based on assets under management could potentially lead OFIC to overstate the portfolio values.
Potential Conflict: Our financial interests have the potential to impact valuation methods, fee structures, and performance reporting, potentially leading to biased outcomes favouring us. This could result in you paying higher fees.
How the Conflict is Addressed: Portfolio valuations are determined by an independent third party using standard industry-recognized methodologies to determine pricing, reducing the potential for bias and ensuring consistency.
Product Shelf Development, including Proprietary Products
Nature of Conflict: We may select investments from our product shelf, including proprietary products when more suitable options are available for you.
Potential Conflict: We may have a financial incentive to promote and recommend products, including our proprietary products, when more suitable options are available.
How the Conflict is Addressed: We do not offer proprietary products. As part of our product shelf development, we conduct a suitability assessment of all investments to uphold our fiduciary duties. Your Investment Policy Statement guides how we manage assets to ensure investment decisions are aligned with your goals and objectives. We provide the following disclosure to you to maintain transparency: OFIC’s parent, OFWI, has an investment in Purpose Unlimited, and we may incorporate Purpose Investment Funds or ETFs into our product shelf. While we may financially gain from the growth of Purpose Unlimited, we evaluate Purpose Investment Funds and its ETFs with the same degree of due diligence and rigour as other investment options, always putting your interests first.
Proxy Voting
Nature of Conflict: Proxy voting refers to the act of casting votes on routine corporate matters, such as board elections, mergers and acquisitions, stock issuance, and other relevant company decisions. A conflict may arise if we vote on matters that are not in your best interest.
Potential Conflict: We may have business relationships, financial interests, or affiliations with companies where we vote on business matters on your behalf. This can create a conflict if our voting decisions are influenced by self-serving interests.
How the Conflict is Addressed: Voting decisions are determined based on the best possible outcome for you despite any business relationship. OFIC maintains records of the voting decisions and the rationale behind each decision. You can request a copy of the proxy voting record for your Accounts. Registrants with potential conflicts arising from their Outside Activities are not permitted to render voting decisions. See Outside Activities COI for additional information.
Referral Arrangements
Nature of Conflict: We may refer you to third-party service providers in exchange for compensation or other benefits, or we pay compensation to third parties for referrals. These arrangements may not always be in your best interest.
Potential Conflict: The financial incentive associated with referral arrangements may compromise the objectivity of the party making the referral, creating a situation in which both the referrer and referee put their interests ahead of your interests.
How the Conflict is Addressed: We may introduce you to other firms when it has been established that your interests will be better served by another party. In such instances, you are not obliged to choose the third party, and we do not receive any compensation for making the introduction. For clients referred to OFIC, we perform the necessary due diligence to ensure our products and services serve their interests. Clients referred to us do not pay additional fees for similar products and services offered to non-referred clients. As a referred client, you will receive a Disclosure Statement outlining the referral arrangement and provide signed authorization before any compensation is paid to the referring party.
Registrants Owning the Same Securities as Clients
Nature of Conflict: Registrants owning the same securities as you may have personal financial interests in the performance of those securities, potentially influencing their actions and decisions when managing your portfolio.
Potential Conflict: Conflicts may arise when Registrants prioritize their investments over your portfolio, potentially resulting in unfair advantages such as different pricing and allocation of opportunities.
How the Conflict is Addressed: We have established policies and processes in place to review the Registrant’s trading activities to manage potential conflicts. OFIC adheres to a Fair Allocation policy, as described in the Relationship Disclosure Information provided to you at the time of account opening. The most recent copy of the document is also available in your client portal and on our website at www.oceanfrontwealth.com.
Sub-Advisory Arrangements
Nature of Conflict: We may engage external portfolio managers (“Sub-Advisors”) to manage your portfolio. The Sub-Advisors may also manage similar strategies for other parties, including institutional investors, pooled funds, or proprietary accounts. This may create a situation where the Sub-Advisors have competing interests across multiple accounts.
Potential Conflict: Because Sub-Advisors manage multiple accounts, they may intentionally or unintentionally allocate limited investment opportunities or prioritize trade execution in a way that favors other parties over you. This could result in differences in pricing, timing, or access to certain securities.
How the Conflict is Addressed: OFIC has policies and procedures in place to conduct oversight of the Sub-Advisor’s activities to identify any patterns of inequitable treatment and escalate accordingly.
Supervisory Level Compensation
Nature of Conflict: There is an inherent conflict if supervisory staff’s compensation is tied to the activities they oversee.
Potential Conflict: If OFIC’s supervisory staff’s compensation is tied to sales or revenue, there is a competing interest whereby the supervisory staff may prioritize their personal interests, potentially leading to ineffective supervision of your Accounts.
How the Conflict is Addressed: Compensation consists mainly of a base salary, with variable compensation aligned with OFIC’s success in building long-term relationships and tied to overall profitability. OFIC refrains from offering incentives that could create conflicts that cannot be effectively managed, such as investment performance bonuses, compensation tied to trading or transaction-based activities, or finder’s fees/commissions on products. Supervision occurs at multiple levels within the organization, enabling thorough oversight and accountability, minimizing the risk of impropriety.
Third-Party Compensation
Nature of Conflict: The conflict of interest arises when Registrants receive compensation or other benefits from third parties for recommending or selling certain products or services.
Potential Conflict: Compensation received from third parties can introduce a bias, influencing our recommendations when another product may be more suitable.
How the Conflict is Addressed: OFIC does not permit third-party compensation.
Trade and Price Errors
Nature of Conflict: The conflict arises when trading or pricing errors occur, potentially causing adverse effects on you.
Potential Conflict: Errors such as incorrect order execution can result in financial losses. Pricing errors, such as incorrect valuation or mispriced securities, can lead to inaccurate portfolio valuations and potentially affect your investment performance, returns, or fees.
How the Conflict is Addressed: OFIC has procedures in place to reconcile trading activities. Trade or pricing errors are resolved as soon as they are identified. You are safeguarded against financial losses resulting from trading errors made by OFIC.
