CRM2: What Investors Need to Know

By admin-tmfd on 1 February 17 Retirement Planning

At a dinner party or out on the links, it’s quite common to discuss investment returns with friends and associates. More often than not, the conversation leans towards bragging about the ‘winners’ and staying quiet about the ‘losers’. But how does an investor know the actual performance of their portfolio net of costs once all the trading activity has been considered? Important changes to Canada’s investment industry were ushered in last year, offering more transparency to Canadian investors with regard to portfolio performance and investment fees. CRM2—aka Client Relationship Model, Phase 2—is now in full effect.

The industry changes introduced two new annual reports:

  • Investment Performance Report details the rates-of-return earned by your investments.
  • Charges and Compensation Report details the costs paid to your brokerage or financial institution.


Will CRM2 change the conversation? More likely, it will introduce increased clarity and assurance now that investors can get a better grasp on the performance and costs associated with their investment portfolios.

Standardized performance reporting will provide investors with a better understanding of personalized rates-of-return, especially if this information is not currently reported in any fashion. Investors can assess their results in a fair manner so comparisons can be made to the markets, benchmarks or other portfolios.

The compensation report will provide details about the money received by the brokerage or financial institution over the previous year to provide services to the investor. It does not necessarily indicate how much is paid to the actual advisor or advising team. Each firm determines this amount differently, based on its business model and split in responsibilities between the firm and the advisor. Contrary to what many may think, there are always costs to investing, even for do-ityourselfers. The most common fees include the Management Expense Ratios (MERs) on ETFs and mutual funds, commissions paid for stock/bond trades, or the bid/ask spread on trading securities in a brokerage account.

Many investment advisors, including ourselves, embraced increased transparency years ago using a fee-based model of compensation, meaning the costs of providing financial advice stays separate from investment fees. This new reporting will increase transparency and make it easier for investors to assess the value they receive from their advisors.

Working with an investment advisor should ensure confidence and peace of mind regarding the decisions that are going to grow your wealth as well as protect your nest egg. Our clients have come to appreciate that we consider the entire financial picture within financial planning, not just the investment portfolio. Our goal is always focused on managing cash flow, minimizing taxes and growing your Net Worth to help you achieve your personal long-term objectives. Oscar Wilde, the wellknown novelist and playwright, famously quipped about one “who knows the price of everything and the value of nothing.” We concur: the values cannot be hidden where your finances are concerned and we’re pleased with the introduction of this new enhanced reporting. Not only does it level the playing field across Canada’s investment industry, it makes it easier for you, The Connected Dentist™, to evaluate the service and value you receive from us, your trusted financial advisors.


HOWARDHOWARD J ATKINSON CFA, CIMA® and ICD.D is the President of TMFD Financial (TMFD Financial), focusing on business development and corporate strategy. Prior to joining TMFD Financial he was a founder and president of Horizons ETFs Management Inc. and over his three decades in financial services has held executive positions with Mackenzie Financial Corporation, CI Funds and Barclays Global Investors Canada Ltd. He is the past founding chair of the Canadian ETF Association and a past president of CFA Society Toronto. He is the author of four books including The New Investment Frontier III: A Guide to Exchange Traded Funds for Canadians, (Insomniac Press, 2005).

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