How did CRM2 affect you?

How did CRM2 affect you?

The first wave of mandatory CRM2 changes came into effect more than a month ago, but some planners tell their clients remain largely unaware of the new regulations – casting their advisors in the same proactive role they already played.

As the first of three stages, the initial CRM2 changes were designed to improve the availability of fee and performance information to investors. However, Vicki Lungu, of the ECC group, said she had always felt “ethically obligated” to make this information readily available to all investors, long before the CRM2 changes came into play. A sentiment she feels is shared by most financial planners.

Senior consultant for T.E Wealth, Marcy Ages said the CRM2 simply led her to ask, “Why hasn’t everyone been doing this from the start?” Ages said the new regulations were already standard practice but formalizing them could only be a positive thing in forcing everyone to be open and honest. It may, as expected, prompt further changes in the business models of many players.

One way of ensuring clients are fully aware of any charges from a very early stage is to offer fee-based advice over commission based advice, a practice which Lungu revealed she would soon be adopting. Providing fee-based advice over commission-based advice is a practice which has been growing in popularity over the past few years, with both advisors and investors.

Independent financial planner Marc Lamontagne made the change from commission-based advice to fee-based advice over 15 years ago, convinced it gave investors a clearer understanding of all the costs involved.

With two more batches of CRM2 changes due to be imposed over the next two years and an increased push to provide investors with a more comprehensive understanding of costs, many analysts  expect to see even more advisors switching to a fee-based model.