With the final stage of the second phase of the client relationship model (CRM2) requirements finally taking effect on July 15, the investment industry is gearing up to help demystify some of the enhanced disclosure that investors will soon be receiving as a result.
The Canadian Foundation for Advancement of Investor Rights (a.k.a. FAIR Canada) released a series of seven short videos on Thursday that highlight the CRM2 reforms, and, in particular, aim to explain certain aspects of the new investment cost and performance reporting requirements that formally kick in on July 15.
Dealers will have until July 2017 to deliver these new reports, although most investors will likely start receiving them in early 2017 based on data for calendar 2016.
The FAIR Canada videos, which are available on YouTube and on FAIR Canada’s website, were produced by the investor advocacy group’s staff, along with Preet Banerjee, a former investment advisor, who is now a media commentator and a member of FAIR Canada’s board.
The videos explain the two new reports that investors will be receiving and delve into greater detail on subjects such as trailer commissions, deferred sales charges. benchmarking and the differences between money-weighted and time-weighted returns.
At the same time, the Investment Funds Institute of Canada (IFIC) released its own infographic on Thursday, which aims to explain the services that investors receive for the embedded costs of mutual fund investing, including the services that dealers and their reps provide, such as advice, execution, and reporting; the services from fund managers, including fund management and administrative functions; and federal and provincial taxes.
“We expect the new reports will encourage more investors to talk to their advisors about the costs and performance of their investments,” said Joanne De Laurentiis, president and CEO of IFIC, in a statement. “Our new infographic will help advisors explain the services investors receive for the fees that they pay using an easy-to-understand visual format.”
The infographic will also “augment the success of CRM2 by giving investors more knowledge and confidence to pose questions to their advisors, and to make sound decisions about their investments,” De Laurentiis suggested.
See also: CRM2 Guide 2015
Photo copyright: IFIC