Frequently Asked Questions......

What is An Exempt Market Security?

An exempt market security is an investment which is distributed under an exemption from the prospectus requirement.
Exempt market securities are typically "term" investments and have limited liquidity, meaning that once the funds are put into the investment there is often limited, or no option, for the investor to get their money out prior to the end of investment term
They are also not subject to fluctuations in the stock market.

For more information see "What Is The Exempt Market?"

Is the Exempt Market Regulated?

In September 2010 new rules took effect in the investment industry, regulating the Exempt Market and all advisors working within the Exempt Market. Anyone selling Exempt Market Securities are now required to be registered with their local Securities Commission as an Exempt Market Dealing Representative; working under an Exempt Market Dealer.
All our planners are registered Exempt Market Dealing Representatives and work with WealthTerra Capital Management Inc. as their Exempt Market Dealer.

All registered and permitted individuals are available for the public to see on the Canadian Securities Administrators' website at

Is The Exempt Market New?

Exempt Market products have been offered for over 30 years, but have only really become common since the late 1990s. Generally Exempt Market products are backed by tangible assets and usually target higher than normal returns. They typically offer limited liquidity options with the main risk being the risk of time.

In 2010, approximately $8.5 billion was raised from BC investors and an additional $7.7 billion was raised by BC issuers from outside the province. About seven times larger than the prospectus market.
(Source: BC Securities Commission)

How Is The Exempt Market Different From The Stock Market?

Exempt Market Securities are not traded or listed on the Stock Market and do not fluctuate in value on a day to day basis based on market trends and emotions. They are an important part of a well diversified portfolio and deliver tangible, predictable returns versus the rollercoaster ride on the markets.
Liquidity is a major difference between Exempt Market Securities and "traditional" investments, meaning that once the funds are invested in an Exempt Market security there is often limited, or no option, for the investor ro get their money our prior to the end of the investment term.

Is The Exempt Market For Me?

Our clients are just like you. They come to us looking for cash flow, tax efficiencies, options for their RRSPs and new ways to create wealth. The Exempt Market covers a wide range of investment structures and asset classes including income (cash flow), short and long term growth and tax efficient strategies. Most of our investments are RRSP and TFSA eligible.

We believe all clients are equal and always welcome the opportunity to meet with new and existing clients. There is no income criteria, investment knowledge requirement or age restrictions. We will work with you to create a strategy to determine the suitability of Exempt Market products and ensure they are used appropriately within your portfolio.

For more information see "What We Do"

What Should I Be Looking For in An Exempt Market Security?

As with any investment there are many factors to consider when looking at an Exempt Market opportunity. This is not an exhaustive list and you are strongly advised to obtain professional advice (Advisor, Lawyer, Accountant etc.) where appropriate.

Track Record
It is always important to ensure the investment has an experienced management team working on your behalf. Ask questions about the track record of the management team as well as the investment.

Investor Alignment
It is always important to know that there is an incentive for the management team of an investment to perform well. Look for investments where the management team is compensated on the exit of a successful investment; ensuring the investment company doesn't make money until the investor makes money. Also, ask whether the management team has any of their own assets on the line, along with investors, so they have something to lose if things don't go as planned.

Tax Efficient Structure
Taxation can have a significant impact on the returns of your investment. Ask questions about the tax structure to ensure it's efficient, and get independant tax advice to ensure you understand the tax implications of your investment.

Due Diligence Process
At the heart of any investment opportunity is the question of risk. Every Exempt Market Dealer is required to perform rigorous due diligence on any investment they carry on their shelf, and your Exempt Market Dealing Representative should always be happy to provide you with details of the due diligence process and the outcome for each investment. If you are uncomfortable - ask more questions.

Exempt Market investments should be fully transparent to clients. If you have questions, ask them; if you need information, ask to see the information you need. There should be nothing hidden, and no information about the investment that you cannot access.

See Also:

Investment Terms