Most Canadian firms still use account-level models despite favouring household-level suitability
Three in four Canadian wealth firms say household-level risk profiling is the preferred approach—yet most still use account-based models.
This discrepancy was one of several findings from From Compliance to Client Value: Evolving Investment Suitability in Canada, a new report from Canada’s Financial Wellness Lab and Ortec Finance.
The study is based on interviews with 20 investment firms across retail, mass affluent, and high-net-worth segments, focusing on how suitability regulations are being implemented in practice.
The study shows that despite widespread recognition of the benefits of household-level profiling, most firms continue to assess suitability at the account level.
This has implications for how risk is documented and understood across portfolios.
In one example cited, half the firms said they would only assess risk on a new $200,000 investment, without factoring in a client’s existing $300,000 in savings—leaving a potential blind spot in total exposure.
Risk profiling approaches vary: 55 percent of firms use questionnaires at the account level, while 45 percent apply a client-level approach.
Only 35 percent of firms supplement these with risk and return data to contextualise investment decisions.
The report also identifies a gap between financial planning and suitability processes.
One-third of firms surveyed report no formal linkage between risk questionnaires and planning frameworks. Another 40 percent rely on informal checks. Just 5 percent use structured integration to align investment risk with planning assumptions.
While most firms offer financial planning, fewer than half provide it to more than 25 percent of clients.
Updates to plans tend to occur every one to three years, generally prompted by scheduled reviews rather than changes in a client’s situation.
Manual data collection remains the norm. Ninety percent of firms continue to rely on advisors to gather Know Your Client (KYC) and Know Your Product (KYP) information.
Goal setting is part of client onboarding at all firms, but only half prioritise goals within the advisory process, and ongoing tracking is limited.
Digitisation is limited.
Although many firms rank it as a strategic priority, just 40 percent incorporate long-term risk metrics into profiling, and only 50 percent consider goal feasibility in investment advice.
Most firms rely on asset allocation thresholds to monitor portfolio risk, but this approach may overlook significant shifts in exposure.
According to the report, firms are still in various stages of adapting to the Client Focused Reforms (CFRs).
Ronald Janssen, head of Innovation and Research Global Wealth Solutions at Ortec Finance, said firms are in different stages of adapting to the CFRs.
He added that the study aimed to better understand how suitability is currently operationalised and to identify changes that could support better client outcomes, efficiency, and more effective risk oversight.
The study notes similarities between issues flagged by the Canadian Investment Regulatory Organization’s (CIRO) 2025 Compliance Report—such as weak documentation and lack of integration—and the operational gaps identified across the firms interviewed
