CRM2 here but real change delayed

CEO of Advocis Greg Pollock discusses what CRM2 means for advisors around Canada and are they adequately prepared

It has been a long time coming, but CRM2 finally takes effect today July 15. The third phase of the reporting requirement has been years in the making, but it will be another while yet before investors really start to notice real change. Greg Pollock, CEO and president of Advocis, explains how CRM2 will continue to be an ongoing process.

“Even though this is being introduced tomorrow, the distributors have up to a year to fully implement this round of CRM2,” he says.  “What we are hearing is that distributors will start releasing reports probably in the first quarter of 2017.”

As the largest association for financial advisors across Canada, the implications of CRM2 have been a major issue for the Advocis membership over the past number of years. Despite this, how advisors’ relationship with clients has changed due of these amendments is still confusing to some.

“I don’t think they have followed it as closely as they ought to have,” says Pollock. “No doubt they know there is change in the wind, but how that is going to affect the client – I think there is still some uncertainty out there.”

The reasoning for CRM2 is that greater transparency will undoubtedly be better for investors, and as a result, the industry as a whole. Critics of the move say that greater regulation will simply impede how advisors do their work, making investment more cumbersome and thus inefficient. That isn’t a view Advocis gives much credence, however.

 “I do think this will add transparency,” says Pollock. “There was a challenge between too little information for investors and too much, making it confusing. I think they have tried to strike a balance and the reports will be readable, but investors will still be able to see in a dollar amount exactly what they are paying in fees.”

With the latest phase of CRM2 coming at a time when various regulatory bodies appear to be steering the industry away from the commission-based system, is the old way of doing things headed the way of the Dodo?

 “There’s no doubt the regulators are pushing in that direction, but we believe that’s the wrong direction,” says Pollock. “We think choice is important, so there’s nothing wrong with fees or commissions. It really depends on the circumstance of the investor. The smaller the investor the more likely a commission would cost less, whereas the larger the investor perhaps a flat fee would work best.”

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