Three months out from the launch of total cost reporting (TCR), Canadian dealers appear ready to begin collecting the data needed for fuller disclosure of investment fund ownership costs. It’ll be another year before clients receive their first TCR-compliant reports, in early 2027.
It’s been a heavy lift.
“When you combine attendance, the number of people hours, just in terms of attending [SIMA] meetings, is in the thousands,” said Arnie Hochman, senior vice-president and general counsel at the association.
And that was the easy part. The actual IT work was “enormous,” Hochman said. “Our members have been working incredibly hard on getting ready for the data-gathering phase.”
The Canadian Securities Administrators (CSA) and Canadian Investment Regulatory Organization (CIRO) had to postpone TCR’s launch by more than a year to give firms time to prepare their systems.
“Our members at the outset were very concerned about the timeline for implementation,” he told me. “Some people have said it’s the most expensive and complicated regulatory project ever rolled out.”
Often referred to as CRM3 — a nod to the Client Relationship Model – Phase 2 (CRM2) reforms that preceded it — TCR was introduced in April 2023 by the CSA and the Canadian Council of Insurance Regulators (CCIR).
Mutual funds, ETFs, segregated funds and other pooled funds are all affected — the full list includes any product with ongoing embedded costs. Individual securities and GICs are out of scope, as are alternatives such as hedge funds or private equity investments sold under exempt-market rules, foreign products not covered by domestic disclosure rules, closed accounts and insurance products other than segregated funds.
The dealers are currently conducting tests.
“We’re running our data in October and November,” said Jordy Chilcott, head of retail intermediary distribution, Canada at Manulife Investments. “The clock starts ticking January 2, the first business day of 2026. … I believe [the dealers] are all prepared.”
Investor advocates have long criticized the investment industry for its lack of fee transparency. Certainly this information was available to those willing to dig into a prospectus, but we’re long past arguing the importance of plain-language, easily accessible disclosure.
Advisors need to begin focusing on how to talk with clients who’ll soon be armed with more information about what they’re paying.
“There are major dealers telling their advisors to get prepared — if there’s an under-performer with a high fee, take action before year-end,” Chilcott said.
He stressed that advisors should focus their clients’ attention on outcomes rather than fees. Still, it’s not difficult to imagine competitors using TCR as an opportunity to win new customers.
“It could be a competitive advantage between advisors,” Chilcott said. Get out ahead of it.
Hochman said dealers should help advisors get ready.
“It’s really important for the firms to train up their advisors so that this rolls out extremely well,” he said. “There will inevitably be more discussions. And discussions with advisors are a good thing.”
This article has been updated.