CRM2 has officially been implemented, and while investors won’t be receiving their first reports until early next year, there’s plenty advisors should do now do help the transition.
Carol Lynde, president and COO of Bridgehouse Asset Management, says it’s vital that advisors pick up the phone and connect with clients to properly prep them for the information they’re about to receive.
“Clients want to hear from their advisors… they should be talking to them about the fees that they pay - and I don’t care if they’re in an embedded trail-type commission structure, or if they’re fee-based, I think those conversations should be had, and they should do that now,” she says. “They should be contacting every client and setting those expectations now so when those reports do come out, it’s not a surprise.”
She adds that as fees come to light for investors, advisors are wise to elaborate on the services – and value – they provide.
“They need to think of the services that they provide the client; every advisor is unique in terms of what they offer, so they need to identify those items. That includes the tangible services they provide, but also the intangible; the support, keeping people invested when they want to do the wrong thing at the wrong time, and their strengths, and what their clients appreciate about them,” Lynde says.
Above all, she emphasizes that advisors make the effort to ensure that when clients do receive their fee and return reports, they can actually understand what’s included.
“There is a lot of regulation out there, but it is typically written by lawyers, and it’s not understandable. What we’ve tried to do with CRM2 is prepare the information in a way that’s easy to understand, and you don’t have to be a CFA,” she says.
“With this particular piece of regulation, the industry has come together in a way that I’ve never seen in a long time, in terms of making sure that they really communicate to people to make sure they understand.”
And the conversation isn’t likely to end with mutual funds – Lynde foresees additional regulation for investment disclosure is on the way, especially as investors question why details are provided for only part of their portfolios.
“We’ve always talked about a level playing field – CRM2 is for securities and mutual funds but we need to think about other products that advisors and investors are using: things like segregated funds and GICs. I think - and I am an investor – when I get my report, I will wonder why certain products that I own are not included.”
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