CIRO’s investor office sets broad agenda

The Canadian Investment Regulatory Organization’s (CIRO) new investor office singled out the investor/advisor relationship as one of its main priorities as it undertakes work that will include research and contributing to policy development.

In particular, CIRO’s new Office of the Investor intends to examine the quality of advice that investors receive and the availability of advice, the organization said in a paper setting out its initial agenda.

“We are also interested in examining whether an increasing number of investors, particularly younger investors, are choosing to turn away from traditional sources of investment advice,” the paper said, citing research that has found younger investors increasingly rely on social media and other online sources of investment advice.

And, while a large crop of new investors opened discount brokerage accounts during the pandemic, the self-regulatory organization’s investor office may examine how many of those investors are still investing, and how many are now working with an advisor, particularly as volatility increased in the past couple of years.

CIRO’s investor office also aims to gain greater insight into the investor experience, including issues such as fees, disclosure and industry reporting to investors.

The investor office will also look into how growing economic and financial pressures affect investors’ resilience, goals and habits.

“We will also gather information to understand if the advice investors receive has evolved to meet these financial challenges,” it said.

CIRO said its investor office will be contributing to the regulators’ work on complaint handling and redress for harmed investors — including proposed changes to complaint handling rules, reviewing the CIRO’s arbitration program, an initiative to return disgorged funds to investors, and regulatory oversight of the Ombudsman for Banking Services and Investments.

The investor office also said it will monitor complaint trends and the outcomes of compliance reviews to assess whether new research or policy engagement is needed on the regulatory approach to investment suitability, which is perennially a leading source of investor complaints.

In particular, the office intends to analyze the information investors use when making decisions and investors’ understanding of risky investments (including cryptoassets). It will also look at resources to help investors understand their risk tolerance, risk capacity, and the risks of various investments and strategies.

Finally, the CIRO investor office indicated its work will focus on vulnerable investors and their susceptibility to investment fraud, scams and financial exploitation — including “the extent to which frauds and scams disproportionately impact seniors or other vulnerable investors and what tools and interventions can mitigate the risks.”