With more people turning to do-it-yourself (DIY) investing, the Financial and Consumer Services Commission (FCNB) is using Investor Education Month to encourage New Brunswickers to think critically about investment opportunities before handing over their money.
“Before embarking into DIY investing, investors should weigh both its pros and cons,” said Marissa Sollows, FCNB’s Director of Education and Communications.
While DIY investing might offer the potential for lower fees, allows investors to engage “hands-on” in the market and provides them full control over their investments, investors must carefully consider their own abilities, needs and time available before jumping in, she said.
“Without a solid understanding of investing fundamentals, strong self-discipline and emotional control, and the ability and willingness to put in the time needed, investors may make ill-informed, impulsive and costly decisions.”
Investors should ask themselves these questions before opening a self-directed investment account:
- What is my level of investment knowledge? DIY investors should be comfortable evaluating investment products and managing their portfolio.
- Do I understand my investing needs and goals? DIY investors should have a clear investment plan tailored to their personal and financial situation.
- How much time do I have to invest in investing? DIY investors should do their own research and keep their portfolio and plan up-to-date.
- What is my risk tolerance? DIY investors should be disciplined and able to tolerate market ups and downs without making rash or emotional decisions.
- Am I just jumping on the latest investment trend? DIY investors should make sure it’s the right decision for them and not jumping in because of a fear of missing out or social pressure.
To encourage New Brunswickers to think critically about DIY investing, FCNB will launch a social media campaign later this month. The campaign is intended to help New Brunswickers understand how to make informed investment decisions and recognize the impact of these decisions.
Investors who decide DIY investing is not right for them may consider working with a registered firm or individual, Sollows said. These professionals can help them set financial goals, build a long-term plan, choose suitable investments, track progress, and adjust the investment plan when needed.
Recently, FCNB, along with its provincial and territorial counterparts at the Canadian Securities Administrators (CSA), developed a comprehensive set of Client Focused Reforms and new provisions to enhance investor protection. The Client Focused Reforms are based on the fundamental concept that investors’ interests come first in their dealings with firms and individuals registered to give investment advice and trade in securities. The CSA is also introducing changes to increase protections for older and vulnerable clients and to support registrants in cases where there are concerns of financial abuse. Some of these changes took effect on June 30 while others will take effect on December 31.
To help New Brunswick retail investors and registrants understand the reforms and how they enhance investor protection in Canada, FCNB has developed resources and is holding events during Investor Education Month. They include:
- A new online consumer guide called Client Focused Reforms: Understanding Conflicts of Interest as well as new web content and social media posts.
- Two free webinars to help New Brunswick’s registrants understand their regulatory requirements. The webinars (with simultaneous translation) will be held on October 20 and 26 and will focus on the CSA reforms to enhance the client-registrant relationship as well as the protection of older and vulnerable clients. More information on the webinars and registration details are available online.
“FCNB is providing this content during Investor Education Month to build investor knowledge and to raise awareness about the importance of investor protection and education,” Sollows said. “At any time of the year, however, New Brunswickers can turn to FCNB’s website at fcnb.ca for unbiased investor and consumer tools and information.”