In January, new rules were implemented to govern financial advisers and wealth managers. CRM2, or Phase 2 of the Client-Relationship Model, requires wealth managers to be more transparent about their clients’ portfolios, and was put into effect by the Canadian Securities Administrators (CSA).
Under the new rules, wealth managers are now required to provide two reports on an annual basis to their clients. One report details the clients’ performance enabling them to assess the progress and state of their portfolios. A second report is designed to show clients exactly how much investing is costing them in dollars and cents.
The purpose of these changes to the way fees are disclosed is to make it simpler for clients to understand how much they are paying their Investment Counsellor, Portfolio Manager or Financial Adviser (difference between Adviser and Advisor). Many clients don’t realize the layers of fees that can exist in the investment industry. These fees can be simple and direct in the form of a management fee or indirect in the form of a trailer, commission, foreign exchange transaction, custody fee, to name but a few.
This increased transparency aims to break down these fees more clearly and enables clients to better understand how their Investment Counsellor, Portfolio Manager or Adviser is being compensated. Under the new rules, reports must “show clients what they paid in trading commissions, administration and advice charges, and mutual fund trailers,” according to a Globe and Mail finance expert.
We believe these changes are positive developments in the industry and are proud to have always kept our clients informed with our simple fee structure that puts us on the same side as our clients.
The RaeLipskie Partnership has always valued honesty and trustworthiness between adviser and client above all else. We take a great deal of pride in having always offered regular performance reports and transparent fee disclosure. Our relationships are what ultimately keep us in business and our clients can continue to count on us to keep them completely informed of any changes that affect them in any way.