The principal business activity of Justwealth Financial Inc. (“Justwealth”) is to act as a portfolio manager for separately managed investment accounts(a “Managed Account”) on behalf of its clients. In providing advisory services, it is important to understand Justwealth’s interests in the service or a transaction. As a portfolio manager, Justwealth may occasionally face conflicts between its interests and those of its clients, or between those of one client and those of another. Justwealth has adopted certain policies and procedures to minimize the occurrence of such conflicts or to deal fairly where those conflicts cannot be avoided. In no case will Justwealth put its own interests ahead of those of its clients.
Conflicts of Interest Disclosure
Related and Connected Issuers
When Justwealth advises its clients or exercises discretion on their behalf, with respect to securities issued by Justwealth or a related or connected issuer, Justwealth must disclose this relationship to its clients.
Justwealth has no related or connected issuers, nor has it issued any securities. Should this change, Justwealth will disclose this to its clients, and, to the extent required by law, prior to exercising discretionary authority, Justwealth will secure specific and informed written consent to allow Justwealth to exercise its discretion to acquire the Related Securities on behalf of their clients.
Where Justwealth has a principal shareholder, director or officer that is a principal shareholder, director or officer of another registrant, Justwealth shall adopt policies and procedures to minimize the potential for conflict of interest resulting from such relationship(s). Justwealth is also required to disclose to its clients in writing, initially before providing advice to them, and in a timely manner thereafter and, if possible, before providing advice to them, if there are any significant changes to this disclosure, the details of the relationship(s) and the policies and procedures adopted to minimize the potential for conflicts of interest resulting from such relationships. Justwealth has no related registrants.
Justwealth must ensure the fair treatment of its clients through the highest standards of integrity and ethical business conduct. The principle of fair treatment must be recognized by all employees, officers and directors of Justwealth in order to provide a true benefit to its clients. Justwealth clients have the right to be assured that their interests will always take precedence over the personal trading activities of Justwealth portfolio managers and other Justwealth access persons.
Fair Allocation of Investment Opportunities
In order to ensure fairness in the allocation of investment opportunities for all Justwealth clients, Justwealth will allocate investment opportunities with consideration to the suitability of such investments to the investment objectives and strategies, portfolio composition, restrictions and cash availability for each client. If an investment opportunity is suitable for more than one client, Justwealth will allocate such investment opportunities equitably in order to ensure that each client has equal access to the same quality and quantity of investment opportunities.
To ensure fairness in the allocation of investment opportunities as between each client, Justwealth will ensure:
(a) where orders are entered simultaneously for execution at the same price, fills are allocated on a pro-rata basis;
(b) when transactions are executed at different prices for a group of clients, fills are allocated on an average price basis;
(c) in the case of a block trade or a new or secondary securities issue, if all client orders can be accommodated (demand is smaller than supply), allocation is made on a pro-rata basis based on the order size of each client. Where the allotment received is insufficient to meet the full requirements of all clients on whose behalf orders have been placed (demand exceeds supply), allocation is made on a pro-rata basis based on the size of the client account or the existing position size in a client account. However, if such prorating should result in an inappropriately small position for a client, the allotment would be reallocated to another client. Depending on the number of block trades or new or secondary issues, over a period of time, every effort will be made to ensure that these prorating and reallocation policies result in fair and equal treatment to all clients; and
(d) when orders for more than one client are bunched or blocked and the transactions are executed at varying prices, an average price will be determined and allocated to each client on a pro rata basis. For a normal secondary purchase order executed through a dealer or broker, the average price will be calculated and allocated evenly amongst clients.
A portfolio manager could execute trades between client accounts or between a client account and a fund managed by the portfolio manager, with one party receiving a benefit at the expense of the other party. At no time will Justwealth execute a trade between client accounts. All trade instructions for client accounts will be delivered to the investment dealer for execution in keeping with the appropriate stock exchange rules.
There are many different participants involved in discretionary investment management services; the portfolio management firm provides the investment advice on client assets, a custodian holds client assets in safekeeping, and broker/dealers provide access to the financial markets for the execution of buy and sell orders as directed by the portfolio manager. When a portfolio management firm is affiliated with a custodian and/or a broker dealer, the portfolio management firm can benefit, directly or indirectly, from the introduction of a client for safekeeping services, or from the execution of trades through an affiliated dealer. Justwealth is independent and receives no benefits, either directly or indirectly, relating to the custody of client assets or the execution of trades in client accounts.
Representatives of Justwealth are compensated through cash and non-cash remuneration including salary, bonus, equity-based compensation or other incentives. Some representatives may receive compensation tied to the assets under management of Justwealth. Additional assets will result in Justwealth receiving additional revenue. There may be circumstances where it would not be advantageous for current or potential clients to provide assets for Justwealth to manage.
As per the Investment Management Agreement, Justwealth receives a fee for the provision of discretionary asset management services, in accordance with the fee schedule and in respect of the assets in client managed accounts. Clients may occasionally include mutual funds in the assets transferred in kind to a Managed Account because of deferred sales charges, tax or other considerations. If the mutual fund positions are to be sold over time to avoid deferred sales charges and to spread out the realization of capital gains, the mutual fund company may pay a trailer fee to Justwealth. As this may result in additional revenue to Justwealth, above the agreed upon fee schedule, it may be in Justwealth’s interest to maintain those mutual funds in a Managed Account which could be a conflict with their interest. Justwealth is firmly committed to the delivery of discretionary investment management services at a low cost. Although there may be short term reasons to maintain mutual fund positions, Justwealth believes the holdings in its models will deliver the greatest benefits to clients and its goal will be to dispose of mutual fund positions in keeping with sales charge and tax considerations. Any fees paid to Justwealth will be reported to clients in an annual report on operating and transaction charges as required by securities regulations.
The calculation of fees payable to Justwealth is based upon a monthly valuation of client portfolios. Justwealth could be in a conflict of interest if it were responsible for the determination of the market value of the assets in client portfolios. The value of the securities in client portfolios is determined by the custodian, independent of Justwealth. Justwealth calculates the fees based upon the information provided by the custodian.
In the interest of growing its business, Justwealth may enter into referral arrangement in which a third party may be paid a one-time or ongoing referral fee when a client opens an account with Justwealth. Such an arrangement may put the third party’s interests in conflict with client interests. All such referral arrangements are subject to a written agreement. Clients will be informed of any referral arrangement and asked to acknowledge it when they open an account with Justwealth.
Many investment industry participants may perform more than one function, like offering discretionary investment management services along with managing mutual funds. In those instances, the firm could be in a conflict of interest when it distributes its managed mutual funds to its discretionary clients. Justwealth is focused solely on the provision of independent discretionary investment management services to clients, with assets issued by third parties, selected for Justwealth clients as being the best choice from a broad universe of investment alternatives for each asset class.
Another way a firm can make money is buying making the delivery of one service conditional upon the provision of another services. This is referred to as “tied selling”. There is a potential conflict of interest as the firm may be achieve higher revenues with a sale of a product or service that is not required or may be inappropriate for the client. Justwealth only provides discretionary investment management services and does not offers other services or products.
Justwealth has a fiduciary obligation to act in the best interest of its clients and the firm’s policies and procedures reflect this commitment.