Advisors explain their KYP strategies

Know Your Product (KYP) regulations set an ongoing standard for advisors to meet. It’s relatively straightforward. Advisors need to demonstrate a deep knowledge of the products they are recommending, monitor those products on an ongoing basis, and explain them to clients. They also need to find and assess meaningful comparative products, which is where the work gets complicated.

At the end of 2025, Canada had almost 1,800 ETFs and nearly 3,500 mutual funds listed on Canadian exchanges. The ETF industry grew by leaps and bounds last year, with 364 new products launched, many of them offering active management and niche exposures. Comparison becomes a daunting task, even if dealers limit the total number of products on an advisor’s shelf. Finding the right metrics to compare products with, the right filters to apply, and the right means of communication isn’t easy.

“The hardest part of the KYP question is to say whether you are being consistent. To know that you understand the product enough where you’re making the proper comparison from one to another,” says William Chan, Certified Financial Planner at Modern Vision Planning. “It can be very subjective to the individual. You can try to do the process as an organization, but that can take away the freedom of advice.”

Chan explains that for certain classes of fund the comparison can be straightforward. Two S&P 500 index ETFs are relatively easy to compare. But even an S&P 500 index fund and an actively managed US mid-cap ETF could be very difficult to meaningfully compare without some element of subjectivity introduced into the process. The task, he says, is much like being forced to compare apples to oranges and come up with an objective recommendation between the two.

While Chan has seen some advisors switch to managed solutions in the face of this task, he sees those tools as too unwieldy for his clients. He sees others pushed towards streamlining their services to ensure compliance. His own view is to focus on process, filtering products with a core set of metrics.

Chan says that cost remains a factor in his process, but that he prefers to assess a product based on net of fee performance. He adds that advisor fees can sometimes stack on top of management fees for ETF products, which could also skew overall performance. Chan only looks at products with a minimum of three years’ worth of performance data, using the net of fees filter as the first stage of his KYP process. From there, he’ll filter by alpha generation potential, geography, and sector.

Joanne Lam’s practice focuses, explicitly, on capital preservation. Lam is the found of JADA Financial Corporation and says he product focus is usually around segregated funds and other insurance solutions. In that more limited space, she leans on the information wholesalers provider her to build out a meaningful KYP comparison process. While she works closely with those salespeople, she applies a critical eye to all their claims.

“Every wholesaler will say their product is the best,” Lam says. “That’s why we listen to every different carrier, even the ones we don’t deal with.”

Lam will filter out some products and strategies ahead of client meetings, but she always prefers to recommend multiple options to clients. They may prefer a product with the lowest premiums, or something with enhanced benefits. That choice can then be framed in the context of that client’s financial plan.

For his part, Chan will also leverage wholesaler relationships, for access more to market insights than to take specific product recommendations. Those insights, he says, can be a valuable way to test whether the market is primed for a particular strategy to succeed. If those wholesalers can show him that their team is positioning themselves for a correction, then Chan can align his client portfolios accordingly. He believes that advisors face real challenges around the KYP requirements that they face, but challenges they must overcome to better serve clients.

“It all comes down to the skill of the advisor. And that’s the trickiest part. Whether or not the advisor runs a consistent model to filter out things,” Chan says.