CRM2, which sought to increase transparency of the cost and performance of financial advice<\/a>.<\/p>\n\u201cCRM3 requirements seek to clarify investment fund costs \u2014 which are mostly embedded in the value of the fund, in addition to the dealers\u2019 and advisors\u2019 own fees \u2014 via disclosures that are meaningful, easy to understand and enable clients to compare costs across products,\u201d Williams said in a statement.<\/p>\n
\u201cThese changes seek to further investor protection by mandating enhanced transparency of investment fund costs and align with the insurance and securities regulators.\u201d<\/p>\n
Be proactive<\/p>\n
There will be both a practical and emotional aspect to clients\u2019 reactions to the enhanced fee disclosures, \u201cand we want to make sure that we\u2019re leaning into the conversation early,\u201d said Chandra Smith, vice-president, portfolio construction and practice management with RBC Wealth Management.<\/p>\n
She said advisors and their dealers need to communicate the upcoming changes to clients and why they\u2019re happening \u2014 \u201cand, most importantly, what it means to them in terms of an investment and an advice experience.\u201d<\/p>\n
Kaitlyn Lawson, head of practice management with CI Global Asset Management, agreed, noting that advisors should take the time to educate themselves on the regulatory requirements of both their dealers and themselves, so they can confidently navigate the transition to CRM3. As well, she said advisors should tell clients that these changes are happening industry-wide, and that they want them to be prepared in advance.<\/p>\n
\u201cIf advisors prepare early and frame disclosures as part of a broader value conversation, I think clients will see this as positive and be grateful for that proactivity,\u201d she said.<\/p>\n
\u201cBut if advisors are not prepared, if they simply think their dealers will handle it and that really no responsibility lies with them specifically, then we could see some client backlash or fee pressure increase competition for those clients, and inevitably, some attrition.\u201d<\/p>\n
As part of these broader value conversations, advisors must regularly show clients that they\u2019re making solid recommendations on not just where to invest money, but in other key financial planning areas such as estate planning, taxes, insurance, cash flow, debt management and retirement planning, said Annamaria Testani, head of strategy, client and advisor experience with IG Wealth Management.<\/p>\n
\u201cValue is no longer reserved for the return of your portfolio,\u201d she said.<\/p>\n
\u201cThere is a service element that is being required that is a game changer if you want to keep your client.\u201d<\/p>\n
Advisors who fail to demonstrate their value will be challenged by their clients, Testani said, \u201cbut if you\u2019ve been extremely clear [about the depth] of service you provide for your practice that you then deliver to clients, I actually see this as an opportunity for those advisors.\u201d<\/p>\n
Arnie Hochman, senior vice-president and general counsel at the Securities and Investment Management Association, agrees that CRM3 is an opportunity for advisors to solidify client relationships.<\/p>\n
\u201cThe provision of additional data may serve to foster closer relationships between advisors and clients. It may give clients greater confidence as a result of having more \u2014 not that discussions before weren\u2019t forthright \u2014 but more focused discussions on cost,\u201d he said.<\/p>\n
At the same time, Hochman said most advisors have presumably discussed the costs associated with financial products before and that \u201cthis isn\u2019t new data.\u201d<\/p>\n
\u201cThis information does appear in offering documents, continuous disclosure documents,\u201d he explained.<\/p>\n
\u201cIt\u2019s really just being presented in a different place, the annual account statement. So, hopefully it\u2019ll be very positive for clients.\u201d<\/p>\n
Still, while many advisors may feel they\u2019ve always been having open conversations with clients about fees, Smith said advisors need to clearly communicate with clients that they\u2019ll now see fund fees in both dollar and percentage terms, as they did with advice fees with CRM2.<\/p>\n
\u201cIf they\u2019re seeing $10,000 versus 1%, that\u2019s psychologically impactful,\u201d she said.<\/p>\n
Williams, meanwhile, pointed out that disclosures have inherent limitations, and that excessive disclosure can sometimes create its own challenges.<\/p>\n
\u201cAdvisors have an important role to play in ensuring that such disclosures are meaningful,\u201d she said.<\/p>\n
\u201cThis means encouraging clients to ask questions and helping clients interpret the information, including in the context of other information such as the client\u2019s investment performance and overall goals.\u201d<\/p>\n
Client expectations<\/p>\n
There are some fears that CRM3 will change advisors\u2019 relationships with clients, Testani said, but most clients are \u201cgetting more and more savvy\u201d and are able to work out in their heads how much they\u2019re being roughly charged for products in dollar terms already, based on the percentages currently shown in their annual statements.<\/p>\n
Instead of fixating on these details, she recommended advisors focus on delivering holistic financial planning to meet evolving client needs.<\/p>\n
\u201cPeople are asking us, \u2018Well, what are the other services you do, like do you do a will review? Do you do estate planning? Do you look at tax strategies to help pass assets from one generation to another in the most tax efficient way?\u201d Testani said.<\/p>\n
She added that advisors must invest in their business model, along with their partners, vendors and digital client experience, to meet growing expectations.<\/p>\n
\u201cStatus quo is not an option. You have to be constantly evolving, because client expectations are being influenced, not just within the financial industry, but across all sectors,\u201d Testani said.<\/p>\n
In a similar vein, Lawson said multiple studies have found that the total perceived value of financial advice is made up of both emotional outcomes and functional aspects of the advisor-client relationship, such as portfolio management, financial planning and other services. Advisors should lean into the value they\u2019ve delivered, not just in investment returns, \u201cbut also return on life.\u201d<\/p>\n
\u201cSometimes clients aren\u2019t seeing all that behind-the-scenes work, [so] let\u2019s show you where we\u2019re going together and continue to give that look back in the rear-view mirror and also focusing out the front windshield on where we\u2019re going,\u201d she said.<\/p>\n
\u201cFor advisors who can tell that story of impact to the client over time, we see clients becoming a lot more comfortable with that cost and exchange of value.\u201d<\/p>\n
Investors, on the other hand, should be reminded that they\u2019ll receive the annual fee disclosures from their dealer at the beginning of every year, Williams said, urging them to \u201copen them, take the time to review, and ask their advisor (or in the case of a [do-it-yourself] investor, their dealer) if they don\u2019t understand something.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Here\u2019s what advisors need to know. What will clients see? On Jan. 1, 2026, dealers will begin collecting…\n","protected":false},"author":2,"featured_media":119436,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[45,49,48,133,131,132],"class_list":["post-378063","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-ca","tag-canada","tag-finance","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/378063","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=378063"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/378063\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/119436"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=378063"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=378063"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=378063"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}