Many of you may have heard or read about the upcoming 2016 CRM2 investment reforms. More importantly, you may have already begun to wonder; how, if at all, does this really affect me? More importantly, is this something that you have to worry or think about?
The CRM (Client Relationship Model) initiative is a comprehensive reform package designed to promote transparency, enhance investor protection, and raise industry standards with the end goal of empowering Canadian investors. All advisors and professionals who deliver investment services to individual Canadians must follow these reforms. Advisors required to follow these reforms fall into 3 different advisor categories: IIROC regulated investment advisors, [bank owned and independent security advisors] MFDA regulated independent mutual fund advisors, and provincially regulated portfolio management firms [Tulett, Matthews & Associates].
The reforms were started in 2013 and are expected to be completed by 2018. In 2016 the industry will be implementing important measures in CRM2. The focus will be on increasing clarity and transparency on two main fronts: 1) investor performance and benchmarking, and 2) advisory fee reporting. By providing performance reports and comprehensive fee reports, Canadians will have a much better idea of how they are doing and how much they are paying for advice. This will provide Canadians with a better start point to review the value of services they receive from their advisory firm.
Unfortunately, many Canadians do not receive clear information on these fronts. Regrettably, most Canadian investors have NEVER seen a performance report on their total investments, nor are they aware of the cost of their advisory services. These new reforms will not only help investors get better clarity on their investments, but they will also make advisory groups more accountable to their clients.
Does CRM2 really matter to our clients? Absolutely.
Let’s take a closer look at two of the biggest areas affected by CRM2’s new reporting requirements:
1) Performance & benchmarking – Our clients have had the benefit of regular personal performance reporting and asset class benchmarking since the inception of the firm. Originally, our clients received semi-annual performance and account statements; now they receive those statements quarterly. We have been reporting time-weighted returns up to now but in 2016 we will be changing to
2) Management fees – Starting in 2017, advisory firms will be required to produce an annual report stating all fees across all accounts, for the 2016 calendar year. Canadian investors might experience some degree of sticker shock once this is implemented – especially if they have not had these discussions with their advisory firms. We look forward to presenting this new consolidated report to you and it will be found at the end of your performance account statement.
Over the past 20
- As a percentage of assets in your annual meeting agenda (annual)
- As a percentage of assets in your Investment Policy Statement (every 3 years)
- In absolute $ in your TDWIS / NBCN monthly statements for all accounts (cumulative monthly)
- In absolute $ via annual
nonregistered account invoice – for tax deductibility (annual)
- As a percentage of assets through the TMA Relationship Disclosure Information document. This document also shows all costs related to working with us.
Tulett, Matthews & Assoc. has been fully supportive of the CRM reforms since the outset. We think that CRM2 will set
We thank you for your support and continued trust.