Are your clients prepared for the new wave of reports?

Are your clients prepared for the new wave of reports?

Are your clients prepared for the new wave of reports? As the next phase of CRM2 kicks in this month, Canadian investors are set to receive a new set of reports detailing exactly how much they’re paying for investment advice and services. A recent poll conducted by Tangerine Investments found that 83% of Canadian investors surveyed are not aware this information would be included in their reports. The survey also found that, of those who know they pay fees to invest, 48% did not know how much they pay in dollar amounts.
 
“I started working towards CRM2 a little over two years ago and have approached it as a multi stage process,” says Steve Tate, an advisor at Tate Financial. “I moved the majority of my clients over to self-directed accounts and, over the past 18 months, I’ve been in the process of moving everyone over to fee-based. I was really just trying to get ahead. I may not agree with it or like it, but I knew this was coming.”
 
Tate has been initiating discussions on fees, transparency and the new reporting requirements for some time. He’s been explaining to clients that, in most cases, moving to a fee-based model will result in a reduction in fees. “For most clients, I’ll present the combined average MER based on assets under management and then calculate the overall fee,” Tate says. “I’ve built an excel spreadsheet that calculates the new MER that goes to the mutual fund company, the fee that goes to the dealer and then eventually the fee that goes to me. In almost 100% of cases, that’s enabled us to reduce fees.”
 
Despite his proactive approach, Tate does expect to get some calls and emails from clients when they start to receive their new reports. “As best prepared as you can be, there’s still going to be some confusion; it’s new,” he says. “We’ve already had one call, but the good thing about moving to the fee-based option is that clients are seeing their fees come out each month already. So, for a lot of people, we’ve had that discussion already and there have been two or three steps of explanation. We’ve had one client come into the office twice since moving to fee-based just so that we can explain exactly what’s happening.”
 
In an increasingly competitive and tightly regulated industry, Tate is aware of the importance of highlighting his value proposition to his clients on an ongoing basis. He sends out a quarterly or semi-annual letter, depending on the year, in an attempt to show his value above and beyond what’s available in the asset manager sector.  “We’ve got someone in the office who’s just completed their CEA (certified executor advisor) qualifications and we’re opening up complimentary seminars to all of our clients,” Tate says. “Our person in-office will sit down with our clients and work through what exactly their executor should be doing and try to help them when the time does come.”


Related stories:
5 ETF trends to watch out for in 2017
CRM2 rules spur pay-for-performance model adoption