Asset Safety
Hoovest Financial Group is a conglomerate of related and associated financial companies that operates within the global financial system, with business lines spanning investments, insurance, fund management and administration, corporate advisory, and family office services.
As part of our duties to you, we have developed this information package to explain the safeguards around your money. The Hoovest Group of member companies (Hoovest Group) include Hoovest Financial Group, which consists of Hoovest Financial Inc. (HFI), Corex Financial Inc. (CFI), Hoovest Capital Management Inc. (HCM), and Hoovest Insurance Services Inc. (HIS) which are the registered and regulated entities as related or associated companies.
Regulatory
Hoovest Financial Inc. (HFI) is a Canadian company registered as an Investment Fund Manager (IFM), Portfolio Manager (PM), and Exempt Market Dealer (EMD) in the provinces of British Columbia, Ontario, Quebec, Alberta, Saskatchewan and Manitoba. You can search for our registration by visiting this link(1), select Firm, and search for “Hoovest Financial”.
Corex Financial Inc. (CFI) is a Canadian company registered as an Investment Fund Manager (IFM) and Portfolio Manager in the provinces and territories of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Québec, Saskatchewan, and Yukon. You can search for our registration by visiting this link(1), select Firm, and search for “Corex Financial”.
Hoovest Capital Management Inc. is a U.S. company that is registered as a Registered Investment Adviser (RIA) with the U.S. Securities and Exchange Commission (SEC). You can verify our registration here(2).
Hoovest Insurance Services Inc. is a Canadian company that is Life Licence registered with the Insurance Council of British Columbia. You can find our registration here(3). As members of these regulatory organizations, our entities must comply with a series of rules and procedures governing securities transactions, portfolio management, and investment fund management to protect client assets. The regulatory authorities also require quarterly, annual, and bi-annual submissions of questionnaires, documents, and spot checks that assert its ongoing financial strength and capabilities to manage an effective compliance system.
(1) https://info.securities-administrators.ca/nrsmobile/nrssearch.aspx
(2) https://adviserinfo.sec.gov/firm/summary/327888
(3) https://portal.insurancecouncilofbc.com/LicenseeDirectory/agencydirectory/AReport.aspx?LicenseNumber=LIC-2022-0040159-R01
Auditors
Certain Hoovest entities that require an audit by law are audited by major accounting firms. KPMG and Grant Thornton are our two auditors for this purpose. The full audited report is provided to the board of directors, along with the regulatory bodies. Generally, auditors may check a multitude of items, including sampling of actual client fees charged, client statements, valuation of holdings, and financial positions.
Banking Relationships
Hoovest Group has banking relationships across institutions such as Deutsche Bank, Royal Bank of Canada (RBC), Bank of Montreal (BMO Harris), and Hang Seng Bank (an HSBC company). HFI’s primary banking relationship is with RBC and its trust accounts function as settlement accounts as well as holding cash balances of certain investment funds or non-investment funds managed by HFI. Our banking relationships monitor accounts for suspicious transactions and conduct regular anti-money laundering oversight on accounts held by them.
Financial Strength
HFI must report, on a monthly basis, its capital position with its primary regulator, the British Columbia Securities Commission (BCSC). The BCSC monitors firms to ensure that they maintain excess working capital, and all firms must report between monthly filings if their working capital falls below regulatory minimums. This ensures that firms operating within the regulated financial space in Canada remain solvent and in good financial standing.
Financial Institutions Bond
HFI and CFI are fully insured against direct losses caused by crime-related exposure such as employee dishonesty, forgery, or robbery. The bond or insurance policy also protects against computer system fraud, and other important coverage. Our financial institutions bond policies are with Liberty Mutual, a major U.S. insurance company with total assets of over US$165 billion and Berkshire Hathaway Specialty Insurance.
Custodians and Client Protections
When HFI invests client money, it uses custodians such as National Bank Independent Network (NBIN, part of National Bank of Canada) or Aviso Wealth (a conglomerate of Desjardin Financial, Vancity Credit Union, and other financial institutions) to custody client accounts that are either client-name accounts or nominee accounts.
The role of the custodian is to provide a place for clients to hold their investments under a management or fee agreement with HFI. This creates a clear separation of duties, and we never hold legal title to the clients’ custodied funds or consolidate as part of our balance sheet. Funds can only be moved between a client’s bank account, a client’s custodian account, or into investment funds as a unitholder under the same client’s name. The custodian monitors all administrative requests (such as the withdrawal of funds or securities) to ensure that funds are being properly managed, withdrawals are only processed to a bank account in the client’s name, and no suspicious transactions occur.
Bank account updates are also verified through phone calls by the custodian from time to time.
Additionally, transactions in Canada are monitored by FINTRAC, the Financial Transactions & Reports Analysis Centre of Canada. Its mandate is to facilitate the detection, prevention, and deterrence of money laundering and fraud. They regularly audit financial institutions to ensure adherence with anti-money laundering obligations. HFI’s compliance officer also monitors withdrawals through spot checking client accounts on a monthly basis. Our transfer agency also checks all trades to ensure they
accurately match the intentions of our portfolio managers.