Financial advisors working with new Canadians must be prepared to overcome and bridge crucial gaps
Over the past few years, stakeholders of the financial services industry have been tightening their focus on protecting vulnerable investors. To that end, we’ve seen regulators come out with studies, reports, and proposed frameworks to ensure that seniors’ interests are kept in mind.
But there’s another group of investors who are also financially vulnerable, but not getting nearly as much attention. According to Wilkie Kam, vice president and senior investment advisor at the Wilkie Kam Investment Advisory Team with BMO Nesbitt Burns, new Canadians are under severe threat from unscrupulous actors.
“I would say they are definitely financially vulnerable because of their lack of local knowledge,” Kam told Wealth Professional. “They’re more prone to scams, like seniors.”
One particular emotion that dishonest individuals may exploit is the insecurity new Canadians tend to feel around their immigration status. Just as seniors can get fooled into giving away their money by con men purporting to be from the Canada Revenue Agency, new immigrants may be targeted and tricked into thinking they’re in trouble.
“There are days I would get one or two robo calls in Mandarin, saying I’ve got some important things left at the embassy and have to call them as soon as possible,” Kam said. “Some people get concerned that if they don’t do certain things, it may affect their immigration and they may be deported.”
For the ones who fall for such schemes, the consequences are particularly severe. Aside from the lack of local knowledge, Kam says new Canadians tend to have a weaker support network than born-in-Canada citizens, which makes them less able to recover from financial losses.
What makes it even more challenging, in Kam’s line of work, is an ingrained distrust of financial institutions held by clients who hail mostly from China.
“They tend to question the honesty of investment professionals,” he said. “In China, for example, there are a lot of investment scams. It’s not like here in Canada, where no one’s allowed to just go out and accept deposits, telling people that they can get a 20% return. A lot of people there place deposits with individuals, and many of those stories end with the individuals just disappearing with the money.”
Given the lack of stringency in regulating financial institutions, particularly in China, new Canadians tend to be suspicious. To earn their trust, financial service companies must reassure them by providing access to proper resources and tools. At BMO, particularly in Vancouver, Kam says that every branch has a financial advisor or financial planner on hand — in many cases multilingual — to assist such clients. Good financial advisory firms, he added, would have a lot of different divisions to help with a variety of planning concerns.
In addition, new Canadians should also familiarize themselves with the coverage from the Canadian Deposit Insurance Corporation (CDIC) and Canadian Investors Protection Fund (CIPF) on how they can get further protection on their assets, Kam adds.
“I would also encourage new Canadians to take advantage of the seminars and information sessions offered by these institutions,” he said. “We also try to surmount hurdles of trust by talking about BMO Private Wealth’s professional standards, the different requirements we need to pass to become an investment advisor or a financial planner … it really educates them about the difference in what we do.”