Conflict of Interest Disclosure
Under new security laws taking effect June 30, 2021, Tulett, Matthews & Assoc. Inc. (TMA) is required to provide you with a disclosure statement identifying any material conflicts of interest that may arise in your dealings with our firm.
In general, there are three possible areas of conflict:
- Conflicts between you and us,
- Conflicts between you and other clients, and
- Conflicts between you and other business relationships.
It is important you be aware of any conflicts that could impact you financially, as well as the policies we have in place to identify, avoid, control, and disclose them in order to minimize any impact on you, our client.
Connected issuers or related parties
A related or connected issuer is a person or company that could influence our firm through ownership and control over our voting shares. TMA is 100% independent and wholly owned by its management.
The firm has signed arms-length agreements with key suppliers and is free to change these relationships at any time should it be in the best interest of our clients and firm.
Our firm and staff work solely in a management/advisory capacity and do not sell any products. As such, we do not receive any compensation, sales commissions, trailer fees, trips, or monetary awards from any person or company other than the fee we charge you based on the value of assets under management.
Our staff are compensated by a salary and bonus arrangement that rewards them for bringing new clients to the firm or for increased workload from a busy year.
A referral arrangement is when our firm or advisor agrees to provide or receive a referral fee or definable benefit to or from another person or company for a client or prospect referral.
Our firm does not engage in any referral arrangements. Should we enter into such an arrangement, we will notify the client in writing of the terms of the arrangement.
Gifts and entertainment
We have adopted a policy that restricts employees from accepting or giving any gift over a specified amount unless approved as having a legitimate business purpose.
Our staff sign a Code of Ethics each year that sets forth the business conduct intended to prevent possible conflicts between staff and client trades. All staff are required to receive pre-approval from our Chief Compliance Officer (CCO) for all security trades other than open-ended mutual funds and exchange-traded funds.
Periodically, in firms that trade in scarce securities, whether it be an initial public offering (IPO) or a thinly-traded security, it is possible to favour or disadvantage one client over another.
TMA chooses to use factor-based or Index-based investment philosophies delivered through an “I” or “F”-class mutual fund or an ETF structure. These investment vehicles can efficiently hold a large number of securities – often totalling more than 10,000, packaged together in either a single global security or a portfolio of several components depending on the preference of the portfolio manager.
“I” and ”F” class mutual funds provide inherent fairness in liquidity and pricing such that all client and staff transactions receive the same execution price at the close of the market each day with no advantage to any one person.
ETF’s held inside our portfolios are broad-based, liquid, with small bid-ask spreads and present a very low possibility of encountering a material conflict of interest.
None of the securities we include in your portfolio pay our staff or firm a commission for their inclusion.
Our firm has adopted policies and procedures designed to monitor the fair allocation between clients and staff.
Outside business activities
Security regulators require our staff to receive pre-approval from our CCO for all outside business activities that may give the appearance of interfering with an employee’s ability to act fairly toward our clients.
Our policies and procedures require employees to disclose their outside business activities each year along with their signed code of ethics.
As part of our annual Know Your Client (KYC) process, we spend time with you updating your goals and cash needs for the coming year. A core financial principle we use in our portfolio design is to ensure the market value on your account statement is accurate and available when you need it.
Our portfolios only include securities that have nightly pricing and high liquidity. We do not use private equity, alternative or derivative securities that may have difficult-to-determine or sporadic pricing.
Control/authority over a client’s finances
Financial professionals are often approached (particularly by elderly clients) to act as executors of their estate or to have power of attorney over their affairs. This type of request can lead to a material conflict of interest between the advisor, client, and the estate or beneficiaries of the estate.
The firm has a policy prohibiting staff in a fiduciary position (portfolio managers and associate portfolio managers) from exercising control over a client’s financial affairs either as an executor or through a power of attorney. The only exception would be if the client is also a family member.
As a discretionary investment management firm, we require trading authorization on your account in order to perform our work, but not power of attorney. This allows us a sufficient level of authorization to manage your account on a day-to-day basis without exposing you to the undue risk of a power of attorney.
Trading authorization does not allow us to remove cash or securities from your account without your written approval.
We have adopted a core procedure to review a daily list of each and every transaction in the firm and ensure every cash withdrawal has written approval.
TMA’s fee-only approach and transparent investment philosophy provide our clients with an easy-to-understand approach to managing your money. Should a material conflict of interest arise, we will notify you in writing and address it to your advantage.
If there are any areas of this disclosure you wish to discuss further, please contact either of the following partners:
Keith Matthews 514-695-0096 Ext. 106
Don Tulett (514) 695-0096 Ext. 109