Compliance Memo

Compliance Memorandum 2015-05; Change of fund risk rankings: Franklin Templeton Investments

For more information, contact:

Compliance Team
compliance@gpwealth.ca

Date Issued:

June 8, 2015

We have been advised by Franklin Templeton Investments that they have recently increased the risk ranking of the following funds:

Franklin Bissett Canadian High Dividend Fund and Corporate Class

  • Changing the risk ranking from a “Low/Medium” to “Medium”.

Templeton Asian Growth Fund and Corporate Class

  • Changing the risk ranking from a “Medium” to “Medium/High”.

Templeton Smaller Companies Fund and Corporate Class

  • Changing the risk ranking from a “Medium” to “Medium/High”.

Templeton BRIC Corporate Class

  • Changing the risk ranking from a “Medium/High” to “High”.

In addition to the above mentioned funds, Franklin Templeton Investment has made changes to the risk ranking of other funds. A full list of the affected funds can be found here.

As both a best practice and regulatory requirement, please review each client’s portfolio holding any of these funds for suitability. At a minimum, a review of the clients KYC and portfolio must occur prior to the next transaction in the affected plan.

Where the risk ranking of the existing holdings now exceed the client’s stated “Plan Risk Tolerance”, a recommendation must be made to rebalance the client’s portfolio to bring it into compliance.

We must caution financial advisors that updating a client’s risk tolerance to simply match a new risk ranking with existing holdings in an effort to maintain the affected plans onside with KYC may be inappropriate. At minimum, when faced with this circumstance, advisor notes must be maintained documenting a discussion on the amended client risk tolerance with a client.

As always, if you have any questions or comments, contact the Compliance Department by email at compliance@gpwealth.ca.