By Will Ashworth
IA Clarington is the latest to announce cuts, with reduced fees for clients with more than $100,000 invested in a single fund. While it’s definitely a nod to high-net-worth clients for putting their faith in the funds, it’s also back-door recognition, argue some planners, of the challenges associated with CRM’s next and final phase.
Starting July 15, 2016, those regulations
will ensure “Investors must receive annual cost and compensation reports that include: all charges paid directly to the firm, including account operating charges, trading commissions, and compensation on debt securities trades; and compensation received from third parties in conjunction with their accounts.” That includes mutual fund trailer fees, which must be disclosed in dollar terms.
Of course, with that kind of full disclosure prior to any and all trades as well as on an annual basis thereafter, things are going to change for mutual fund guys and gals.
Indeed, Leony DeGraaf, one of Wealth Professional’s Top 50 Advisors
, sees the move to CRM2 as a big reason mutual fund companies are offering discounts to high net worth investors now. After all, with the new regulations placing a greater emphasis on the full disclosure of client costs, pre-emptive moves by companies such as IA Clarington, Manulife
and National Bank
– just three recent examples of those making announcements – signals to investors that the sector is more than prepared for 2016.
While it’s essential for mutual fund companies to comply with the new regulations, it’s equally important they send a message to clients that the future includes lower fees combined with better customer service through easier to understand statements, fuller disclosure, etc.
In the end, CRM2 could end up being a boon rather than a burden to the mutual fund industry. Well, say IIROC advisors, that is the hope.