Questions & Answers


We want our clients to be educated, enabled and empowered to make informed decisions. This means encouraging our clients to ask more questions, not less. Our Private Wealth Advisors are trained professionals who can help answer these questions and provide our clients with the tools needed to make knowledgeable decisions.


An Exempt Market Dealer (often abbreviated to “EMD”) is a firm that has been licensed to distribute investment securities that haven’t been qualified by a prospectus, but are exempt from the prospectus requirement based on the rules and regulations of each province where the EMD is registered to carry on business. These investments are often referred to as “private capital” because they aren’t publicly traded like other stocks and securities.
Unless a firm is registered as an EMD under the securities regulation of the provinces where they perform dealing activities, it is illegal to be in the business of selling these investments. An EMD has regulated standards that make sure they know their investments, know their clients, maintain appropriate knowledge and proficiencies, resolve complaints in a timely fashion, carry reasonable insurance, and most importantly, treat their clients “fairly, honestly, and in good faith”. These are the pillars that Raintree was founded on, and we take our responsibilities to investors very seriously.
More information on EMDs and their regulatory obligations can be found at your local Securities Regulatory Authority, the National Exempt Market Association, or the Private Capital Market Association of Canada. Whether you’re investing in public stocks, mutual funds or private capital, you have rights as an investor.
In Canada, the companies you invest with are not allowed to issue securities unless they file a prospectus, which can be a very expensive process and significantly increase the cost of capital. Because it’s so expensive, most Canadians think of Fortune 500 companies when they think of investing. Private capital investments are different, because they can be purchased with an exemption from the prospectus requirement. These exemptions give Canadians access to a unique investment class that acts and performs differently than the traditional investments that most retail investors hold in their portfolios. It’s a strategy that many institutional investors* have been relying on for years to help disassociate a portion of their portfolio away from some of the systemic risks of freely trading stocks and bonds.5
Private capital investments can allow investors to acquire tangible assets and specialized capital in unique investment opportunities.

No, all investing is risky, and that includes private capital. One of the reasons that private capital performs differently than public stocks is that there are very limited resale rights. This is often referred to as a “lack of liquidity”. It’s also one of the key risks.
Unlike stocks that have been qualified by a prospectus, private capital investments cannot typically be resold, and there may or may not be redemption rights. This can mean that your investments are tied up for a period of time. Raintree strives to find a balance of investments that have varying projected hold periods so that investors have options on how long they want to have their capital tied up for. Your Private Wealth Advisor can help explore these risks to help you find the right private capital investments for you.
Fortunately, the lack of liquidity is also one of the reasons why private capital is different and can make for a powerful diversification tool. In our opinion, the success of your private capital investments is based largely on their ability to execute on defined business objectives and profitably. Because private capital isn’t traded on an exchange, their popularity on any given day won’t impact their value. However, they can still be affected by market sentiment to the business or industry in which it operates. Due to timing, a private security may or may not be worth what the public market might suggest its worth. These pricing anomalies and timing differences can have a material diversifying impact on one’s portfolio. In contrast, the value of public investments like stocks can fluctuate daily based on any number of trading responses, often including unrelated market events and predatory large volume trading activities.
In addition to illiquidity, there will always be other risks to investing. Our industry-leading training empowers your Private Wealth Advisor to help you understand both the risks and benefits of each private capital investment that we distribute. We can help you make informed decisions that are right for you and your family, based on a sound assessment of your life circumstances and aspirations for the future.
To buy private capital on the “exempt market” you have to qualify for an exemption from the prospectus requirement that typically applies to distributions. Your Private Wealth Advisor can help you determine whether or not you qualify for one of these exemptions. The good news is that almost all Canadian investors can qualify to purchase most of the investments we distribute.
Once you have been qualified, your Private Wealth Advisor has the expertise to help you determine whether or not an investment is suitable for you. They will provide you with a list of investments that we have reviewed and approved for distribution through our channel and help you understand the pros and cons of each, as well as how to put techniques like diversification to use as a way of mitigating risk.
Yes. Many of the investments that Raintree distributes can be purchased into a registered plan. As part of our objective of bringing private capital investing to Canadian retail investors, we work with many of our issuers to create platforms that qualify for registered plans under the Income Tax Act (Canada).
Your best resource for more information on private capital investing with Raintree is through one of our Private Wealth Advisors. These individuals will work directly with you to help find out what solutions are right for you. There’s no cost to meeting with a Private Wealth Advisor, and all sale compensation is paid by the investment issuers and fully disclosed upfront – before you make any decisions.


*Your experience, financial circumstances, time horizon, level of risk tolerance, and investment objectives may be materially different than institutional investors who have implemented these strategies.

Investors of any investment should ask the following five questions:

1.  Who is the management team of my investment?

It is critical to know who the managers of the investment are. It should be demonstrable what their experience, expertise, educational background, character, and capabilities are. The people who run the investments have the greatest influence on the success or failure of a business.

2.  How is management compensated?

Knowing how a manager is compensated, and for what activities, is critical. Having an understanding of what activities a manager will be compensated for will provide insight into how they are motivated. We believe it is imperative that managers make higher earnings after investors make initial profits. This aligns management and investor interests.

3.  What is the business model?

You should have a general understanding of how businesses you invest in work. We believe that investors should understand how the basic business plan of an investment would generate earnings. It should be clear how the business could make money. Most investments sold by Raintree are fairly straightforward. We want our investors to be comfortable about the investments they are making, therefore we generally steer clear of high tech or complex businesses.

4.  What is the use of proceeds?

Investors should have a general understanding of what their capital will be spent on or invested in. This will provide you with insight into whether there is asset coverage or whether your capital will be entirely at risk, which can help you plan. An investment that invests in a hard asset (for instance land) is generally less risky than an investment that is made in working capital (for instance research). You should also be sure to know what other capital is being raised by the company and if any of that capital has priority over yours.

5.  What are the risks of the investment?

Every investment has risks. You should know what the general risks of an investment are. You should also have an idea about what management plans to do around managing through business and financial risks. If you only find out about what will ideally happen with a business, without understanding the risks, you have incomplete analysis. The potential returns of an investment should compensate you for the risk you incur on the investment.

These questions apply to every investment you make – and we encourage you to ask them every time you invest. If you have more questions, please contact us. We are only a phone call or email away.


Our team of Executives are experienced in the private capital market and are focused on changing the way Canadians think about investing their money.


Discover your “Portfolio Diversification Rating” by completing our portfolio diversification quiz. Portfolio diversification protects investors by smoothing out risks and allowing for losses in one area to be made up by gains in another. Find out how diversified you are.


The Head Office staff, Corporate Finance division, and Private Wealth Advisors of Raintree Financial Solutions are available to assist you and answer any questions you may have. Contact us today for more information on how we can help shape your financial future.