An alert is a question, not an answer. It says something about a product has changed; it doesn't say whether that change matters, what the firm should do about it, or what the people who offer the product need to know. Those answers come from two processes that run side by side: the firm's product review, and each advisor's response.
Most firms have some version of both. Where they fall short is in the handoffs - an alert reviewed but never decided, a decision made but never communicated, an advisor notified but never confirming they understood. Canadian regulators expect firms to document their assessment of a significant change and consider responses including notifying registered individuals, revisiting the firm's approval, and adding controls around sale.[1] Those responses only work if the handoffs between them are designed.
This guide sets out how an alert becomes a documented decision, and how that decision reaches the advisor. It covers the product review workflow, the decision options and what each one means, a review record template, the advisor's six-step response, a worked example following one alert from start to finish, and responsibilities and an example written process.
It is the third of five guides in the Product series. It follows Material Change, which covers how products are monitored and alerts are raised. Client-level follow-up is outside its scope.
The product review is the firm's answer to the question an alert raises: does our assessment and approval of this product still hold?
In the KYP HubWhere alerts come from: Material Change. When a change should reopen KYP: Material Change: When to Reopen a KYP Assessment.
Triage matters more than it looks. A meaningful share of alerts in any monitoring system come from data problems - a stale field, a corporate action recorded wrongly. Confirming the alert is real before a reviewer spends time on it saves effort, and routing data errors to the data owner rather than closing them as "no action" keeps the record honest.
The assessment is against the product's own file. The question isn't whether the change is good or bad in general, but whether the firm's documented understanding of this product - its strategy, risks, costs, parties and features - is still accurate. If it isn't, the file needs updating whatever the decision.
| Severity | Reviewer | Decided By | Illustrative Timeframe |
|---|---|---|---|
| Critical | Product analyst | Product committee | Opened within 1 business day; decided within 5 |
| Important | Product analyst | Product owner, escalating to committee if the decision is anything other than maintain | Decided within 10 business days |
| Watch | Product owner | Product owner, at the next scheduled review | By next scheduled review |
A review should end in one of a small set of defined outcomes. Letting reviewers write free-text conclusions produces decisions no one can aggregate, compare or supervise. The five below cover most situations.
| Outcome | What It Means | What Advisors Must Do |
|---|---|---|
| Maintain | The assessment still holds; the product stays on the shelf unchanged | Note the change and review the updated file if one was issued |
| Maintain with watch | The assessment holds for now, but the product gets closer monitoring and a set review date | Review the updated file; expect a further decision by the review date |
| Restrict | The product stays available with conditions, such as limiting it to advisors with specific training or requiring pre-approval | Offer it only within the conditions |
| Suspend | No new purchases or recommendations until a defined condition is met; existing holdings stay under monitoring | Stop recommending new purchases |
| Remove | The product leaves the shelf; a wind-down plan applies | Follow the wind-down plan |
These map onto the responses Canadian regulators describe: revisiting the firm's approval, implementing additional controls around the sale of the security, and, where corrective action is limited by illiquidity or redemption restrictions, halting new sales.[1] Removal is covered in the first guide, Product Approval.
Canadian regulators expect approval records to show "meaningful consideration" of the key elements assessed and support for why the decision was appropriate.[1] A review that re-confirms an approval is held to the same standard. The example below uses a hypothetical fund.
What makes this record useful is that the rationale is specific. "Reviewed - no concerns" would record that a review happened; it wouldn't show that anyone considered what changed.
While the firm reviews the product, each advisor who offers it has their own obligation: to keep their understanding of the product current. SEC staff have said financial professionals "cannot satisfy their own care obligations by solely relying on the efforts of others at their firm,"[2] and Canadian rules give each registered individual a separate duty to understand what they recommend.[3]
| Severity | Advisor Action | Illustrative Timeframe |
|---|---|---|
| Critical | Read immediately; stop new recommendations until the firm decides if the alert says so; acknowledge the decision | Read within 1 business day; acknowledge within 10 |
| Important | Read, review the change and record a note | Within 10 business days |
| Watch | Awareness only; reviewed in the advisor's regular routine | Next routine review |
An advisor's note on a product alert doesn't need to be long. It needs to show that the advisor understood what changed. Compare:
| Weak | Strong |
|---|---|
| "Reviewed. No concerns." | "Read amendment and firm review. Lead PM retired; co-manager of four years now lead. Process and mandate unchanged per firm review. Product maintained with watch, review in six months. Acknowledged updated summary." |
| "Fee change noted." | "Management fee on Series A up 0.10% from next month per filing. MER impact about 0.11%. Series F unaffected. Reviewed updated cost section of product file." |
The fourth guide, Advisor Due Diligence, covers product notes in more depth.
The two tracks only work if they meet at the right points. A worked example shows where.
Using the hypothetical portfolio manager change from the review record above:
| Day | Firm Track | Advisor Track |
|---|---|---|
| 0 | Engine detects the change from the amendment filing; Critical alert raised and routed to the product committee, 42 advisors and supervision | Advisors receive the alert: "Review in progress - decision expected within 5 business days" |
| 1 | Triage confirms the alert is valid; analyst assigned | Advisors read the alert and the filing |
| 2 - 3 | Analyst gathers sources, calls the fund company, drafts the review | No action required; product remains available pending decision |
| 4 | Committee decides: maintain with watch; product file updated; notice sent | Advisors receive the decision and updated summary |
| 5 - 14 | Supervision tracks acknowledgements | Advisors read the summary, acknowledge, and record a note |
| 14 | Unacknowledged advisors escalated to their supervisors | Remaining acknowledgements completed |
| Month 6 | Scheduled watch review; decision recorded | Advisors notified of the outcome |
The handoffs are on days 0, 4 and 14: the alert reaches advisors with an expected decision date, the decision reaches them with the updated file, and supervision closes the loop on who has confirmed they understood it. The fifth guide, Supervising a KYP Program, covers that oversight in detail.