Canadians have flocked to DIY investing platforms, with many turning to social media for investing information and advice.vgajic/iStockPhoto / Getty Images
The Canadian Investment Regulatory Organization is giving order-execution-only dealers the go-ahead to offer more educational resources to do-it-yourself investors, including alerts, self-assessment tools and sample portfolios.
The self-regulatory organization published proposed guidance on Tuesday aimed at addressing DIY investors’ reliance on unregulated sources of investment information, including social media finfluencers and online forums.
The proposed guidance, resulting from a consultation that ended in February, narrows the definition of what constitutes a recommendation and allows online brokers to provide “decision-making supports.”
“Customers [are] wanting to have control over their trades and activities, but they want to get another opinion, they want to get ideas and get information,” says Alexandra Williams, senior vice-president of strategy, innovation and stakeholder protection at CIRO.
The proposal is out for consultation until Nov. 10. Ms. Williams says she thinks a finalized guidance could go into effect by late March or early April 2026, the end of CIRO’s fiscal year.
Canadians have flocked to DIY investing platforms: 45 per cent of all investors have a DIY account, and many DIYers are younger, less well off, and far more likely than other investors to turn to social media, internet forums and finfluencers for investing information and advice.
According to research released last month from CIRO’s investor office based on in-depth interviews with 40 DIY investors, many are open to additional tools through their DIY platform including visualizations, integrated news and company information, educational resources and customizable notifications.
But CIRO’s current guidance for order-execution-only (OEO) dealers prevents them from sharing investment information with DIY investors that constitutes a recommendation, as self-directed investing clients haven’t undergone suitability assessments.
The lack of clarity around the definition of “recommendation,” which included any communication that could “reasonably be expected to influence” an investment decision, has led to dealers taking different approaches. Some have offered educational tools and risk warnings, while others have taken a more cautious tack out of concern that any educational information could be construed as a recommendation.
Ms. Williams says the regulator has heard from firms that they want to provide tools to meet customers’ needs, but in the past few years they’ve removed those tools from their websites due to CIRO’s existing guidance, driving investors to seek information elsewhere.
The new proposed guidance narrows the definition of recommendation significantly to communication that “endorses a specific investment decision for the client.”
Supporting without endorsing
CIRO’s new guidance explicitly allows OEO dealers to provide “decision-making supports” for DIY investors, which many dealers choose to offer to win client business and loyalty. Rather than creating a specific list of approved supports, the regulator plans to take a principles-based approach to allow OEO dealers to innovate.
The guidance document says CIRO will permit supports that allow dealers to use client-specific information to provide timely and relevant information such as alerts and notifications about unnecessary fees, volatile or otherwise risky assets, scams or cyber threats, and market news related to one of their holdings. It notes that providing alerts and notifications is not mandatory.
CIRO also listed self-assessment questionnaires, rebalancing tools and filtering mechanisms as examples of helpful investor supports, as they allow investors to determine their risk tolerance and capacity, find securities that align with their investment strategies and goals, and maintain their positions over time. The document says these tools wouldn’t be considered prohibited recommendations if all the inputs are the client’s.
Sample portfolios
The guidance document also allows for OEO dealers to provide sample portfolios – but only at the allocation level. Mentioning specific investment products is prohibited.
OEO dealers are also able to offer multiple tools, CIRO says, but “must avoid the sum output of decision-making supports resulting in a prohibited recommendation to a client.”
Comments on the organization’s initial consultation in February differed on how to balance giving investors enough information to make good decisions on their own and protecting them from biased, incomplete or misleading communications.
The proposed guidance now stipulates that OEO dealers that choose to offer decision-making supports “incur the responsibility to provide safeguards for their clients,” including providing educational resources about how to properly use any tools, clear explanations of the methodology and limitations behind any tools offered, and regularly monitoring and updating the supports offered.
It also stressed that dealers should address or avoid any conflicts of interest – including prioritizing references to proprietary or affiliated products, or those that the dealers have an incentive to prefer – within educational tools.
CIRO says the safeguards are meant to ensure clients understand the limitations of the OEO channel and any support tools, but says “merely providing extensive disclosure regarding the limitations of an OEO account during account opening, or housing all such disclosure on a single web page, will likely not meet the standard for making this clear to clients.”
The push-pull of information
The organization is also revising the prior guidance’s approach to information that is “pushed” to clients versus “pulled,” or sought out by the clients themselves.
Pushed information was previously viewed as more likely to be relied on by clients, and therefore more likely to be considered a recommendation.
The proposed guidance will now assess the content of a dealer’s communications or tools to determine whether they’re considered recommendations.
However, CIRO says how information is delivered could be relevant in some cases, such as proactively sharing research reports that characterize a certain stock as a “buy” or a “sell,” which could be misinterpreted by an investor as the dealer endorsing the action in the report.
What it means for advice
CIRO said in its consultation in the fall that it doesn’t want to “diminish the value” of the full-service advice channel. Ms. Williams notes many DIY investors also have full-service accounts, and financial advisors bring an important value proposition, including a thorough understanding of clients’ goals, risk tolerance and suitability for certain investments, as well as product research and robust compliance departments.
While there are still grey areas between the two channels, she says, the new guidance is supposed to be “a little bit clearer [so] the do-it-yourself investor, who previously would have gone to an influencer or an unregistered site … they now have a place to go with good information from a registered dealer.”
The updated guidance acknowledges that the online world is “a very different world than it was even 10 years ago,” she adds, and it provides investors with options.
“There’s still some good protection and it meets the customers where they are.”