Wealth management in Canada: mandates, brokerage and protection

Private wealth arms of the large banks

Wealth management in Canada is provided mainly by the private wealth and brokerage subsidiaries of the large banks, under the oversight of the Canadian Investment Regulatory Organization and the provincial securities commissions. Each large bank owns such an arm, present in Toronto, Montreal, Calgary and Vancouver, and independent portfolio managers and large pension funds complete a highly concentrated market.

Each large bank owns a private wealth in Canada and full-service brokerage subsidiary, present in Toronto, Montreal, Calgary and Vancouver. Independent portfolio managers and the large pension funds complete what remains a highly concentrated market.

CIRO and provincial securities commissions

Since 2023 the Canadian Investment Regulatory Organization (CIRO) has overseen investment dealers and mutual fund dealers. Provincial commissions, such as the OSC in Ontario or the AMF in Quebec, retain market regulation.

Discretionary management or advisory account

In Canadian wealth management, the client chooses between a discretionary mandate, where a portfolio manager decides trades, and an advisory account, where each transaction is approved. Know-your-client and suitability checks are documented in writing in both cases.

CIPF protection for investment accounts

The Canadian Investor Protection Fund (CIPF) covers a client’s property if a CIRO member dealer becomes insolvent, up to one million dollars per account category. It does not cover market losses.

Entry thresholds and percentage-based fees

Private wealth services generally target large investable assets, with a threshold set by each firm. Fees often take the form of an annual percentage of assets under management, decreasing as the amount entrusted grows.

Why non-residents are often turned away

A Canadian dealer must comply with the securities laws of the country where its client lives. Many therefore refuse to open or keep an investment account for a non-resident, especially one living in the EU or the US.

Custody and multi-currency portfolios

Securities are generally held in the dealer’s name at CDS, the Canadian depository, with segregation in its books. Portfolios can combine Canadian and US dollar sub-accounts, which avoids converting dividends paid by American companies.

Returning expats and private wealth accounts

Royal Bank of Canada (RBC) serves Canadians who have moved abroad to work or retire through its wealth management arm; their adviser must then check which transactions remain allowed under the rules of their new country of residence.

Departure tax and deemed disposition

A person who ceases to be a Canadian resident is deemed to have sold most assets at fair market value, which can create a taxable gain. Registered accounts such as the RRSP follow separate rules.

Annual statements, CRS and form 3916

Canadian rules require dealers to send an annual report on portfolio fees and performance. The CRA exchanges non-residents’ accounts under CRS, and a French resident declares each Canadian securities account on form 3916.

How to access wealth management in Canada from abroad

Before any contact, check your residence situation. Wealth management in Canada is aimed first at residents, and a Canadian dealer must comply with the securities laws of the country where its client lives. Many therefore refuse to open or keep an investment account for a non-resident, especially one living in the European Union or the United States.

If your project has a real link with Canada, ask several bank-owned wealth firms whether they accept your profile and on what terms. State your country of residence, the amount envisaged and the origin of the funds. A written reply avoids misunderstandings, because policy varies by institution, by province and by your tax situation.

If the file is accepted, plan an appointment with an adviser to define the type of account, the mandate or advisory account, the currency and the risk profile. The firm documents know-your-client and suitability checks. Take the time to read each document before signing, including the fee schedules.

Documents to prepare for private wealth in Canada

The first set of documents establishes your identity and residence: a valid passport, recent proof of address, the tax number of your country of residence and, if you have one, a Canadian social insurance number. The firm must know your tax residence to apply information-exchange rules and decide whether it can serve you.

The second set substantiates the origin of funds and wealth: bank and brokerage statements, a property sale contract, a dividend certificate, inheritance papers or payslips. Private wealth subsidiaries examine these items carefully. Recent documents that are consistent with each other noticeably shorten the checks.

The third set concerns your investor profile: objectives, horizon, experience, risk tolerance and overall financial situation. This information is used to document the suitability of investments, whether the account is advisory or discretionary. Answer accurately, since an inaccurate profile can lead to unsuitable products and weakens your position in a dispute.

Common mistakes with private wealth in Canada

The first mistake is to assume a non-resident will be welcomed like a resident. Refusals are frequent, and they stem from securities laws, not from a judgement about the client. It is better to check before transferring funds, and to have a fallback in your country of residence if the Canadian firm declines.

The second mistake is to ignore departure tax. A person who ceases to be a Canadian resident is deemed to have sold most assets at fair market value, which can create a taxable gain. Registered accounts, such as the RRSP, follow separate rules. Consult a tax adviser before changing residence.

The third mistake is to neglect fees. Remuneration often takes the form of an annual percentage of assets, decreasing as the amount entrusted grows, to which commissions and custody charges may be added. Compare the annual report on your portfolio’s fees and performance with the offer of at least one other institution before committing.

Questions to ask before entrusting a portfolio to a Canadian private bank

First ask what protection applies to your investment account. The Canadian Investor Protection Fund covers a client’s property if a CIRO member dealer becomes insolvent, up to one million dollars per account category, but not market losses. Have the firm explain how your accounts will be classified so you know what amount remains covered.

Then ask the adviser about custody: securities generally held in the dealer’s name at the Canadian depository, with segregation in its books. Also ask whether the portfolio can combine Canadian and US dollar sub-accounts, to avoid converting dividends paid by American companies.

Finally, check the monitoring and exit terms: frequency of statements, annual fee report, procedure for transfer to another institution and closing conditions. If you plan to leave Canada, ask how the firm handles a change of residence. Keep every answer in writing, along with the signed agreements.

Two practical cases: leaving Canada and living abroad

A Canadian resident planning to move to France should talk to the adviser well before leaving. Departure tax treats most assets as sold at fair market value on the day residence ends, so ask for a valuation of each position and a list of the registered accounts, such as the RRSP, which follow other rules. Ask too whether the firm will keep the portfolio open once the client lives in the EU, since many dealers decline non-resident accounts.

A Canadian who already lives abroad and turns to RBC through its wealth arm faces another question: which transactions remain permitted under the rules of the new country. Request the answer in writing, together with the CIPF category in which each account will fall, since the one million dollar cover applies per account category. Keep the annual fee and performance report beside the CRS information the CRA exchanges, as you will need both for form 3916.