By Nicolas Gill, investment advisor & financial planner
RBC Wealth Management | Dominion Securities
New investment industry regulations: CRM2
Client Relationship Model 2 applies to most investment firms, banks & credit unions in Canada including mutual fund advisors. It is part of a global shift towards increased reporting, disclosure and transparency in the investment industry. Under CRM2, you will receive more details on the fees and performance of your investment accounts.
Don’t I already know the costs?
This is dependent upon the relationship between you and your advisor.
The two prevailing investment advice structures in Canada are commission-based advice and fee-based advice. Types of costs, some of which are not always obvious, can include transaction/ trade commissions and new issue compensation as well as various costs of mutual fund investing such as: management expense ratios (MERs), front end commission and deferred sales charges.
How will CRM2 affect me?
You will receive two new annual reports starting in 2017. An annual charges and compensation report will show a detailed list of account fees, while an annual investment performance report will provide details on how the account is performing using a “money weighted” rate of return. These positive changes include further transparency of fees and performance of your investments, which will improve your ability to assess how you are progressing towards your financial goals.
Am I getting good value for my money?
To answer this question, investors must ask themselves if the issues that truly matter to them have been addressed and planned for. The following questions are common ones we discuss thoroughly with our clients and plan for them accordingly:
- How much do we need to retire, and what level of income will that provide us with?
- When can I retire, or be financially independent?
- How do I take a retirement income from my investments?
- How do we deal with the challenges of a recession while trying to draw a retirement income from our savings?
- How can we leave a long-lasting legacy for our children and grandchildren in a fair and orderly manner?
- Can the tax efficiency of my investments — or my income from them — be improved?
Taking the time to both answer and ask good questions is the cornerstone of how we help people. If your questions and priorities are not being addressed or receiving the attention they deserve, do not hesitate to contact our office. We complete and provide written financial planning reports for all of our clients, and can assist you with a full cost assessment based on your current situation.
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