There are new regulations being introduced and implemented across the Canadian investment industry called the Client Relationship Model, Phase 2 (CRM2). As part of this process, we are committed to ensuring investors are aware of what these regulations are and what impact they will have on individuals, as well as on the industry as a whole.
What is CRM2?
CRM2 is a set of new industry-wide regulations developed by the Canadian Securities Administrators (CSA). The main purpose of these regulations is to improve how the financial industry reports and discloses information to investors.
Who does CRM2 apply to?
CRM2 applies to all investment dealers and advisors across the country, including those regulated by the Investment Industry Regulatory Organization of Canada (IIROC), the Mutual Fund Dealers Association (MFDA) and provincial securities commissions in Canada.
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Why are these regulations being introduced?
The driving force behind CRM2 is to enhance the transparency in the investment industry as a whole in regards to both account costs and performance. These regulations are part of a global shift to help investors become better informed about their accounts and to improve their ability to assess and track progress towards their particular financial goals.
How will CRM2 affect you?
First and foremost, it’s important to understand that the introduction of these new regulations will not affect the costs you are paying as an investor. The main impact is additional information that investors will receive about their accounts through two channels: conversations with their advisors, and the two new annual reports on all investment accounts.
- Annual Charges and Compensation Report: This report shows a detailed list of account fees.
- Investment Performance Report: This report provides specific information about how the account is performing, using a “money-weighted” rate of return.
It’s important to note that in regards to the reports, regulators have required that investors receive separate documents for each account they hold. As such, individuals should expect to receive multiple reports.
When will these changes take effect?
The rules associated with the new reports came into effect this past July, and are currently being phased in. Full implementation will take place by early 2017.
Do you have more questions?
As part of our ongoing support for the implementation of CRM2, we are dedicated to helping investors understand these new changes. Please contact your professional advisor to inquire about our supplementary fact sheets that address key questions many investors have regarding the regulations and specific aspects of the reports.
This document has been prepared for use by the RBC Wealth Management member companies, RBC Dominion Securities Inc.*, RBC Phillips, Hager & North Investment Counsel Inc., RBC Global Asset Management Inc., Royal Trust Corporation of Canada and The Royal Trust Company (collectively, the “Companies”) and their affiliate, Royal Mutual Funds Inc. (RMFI). *Member – Canada Investor Protection Fund. Each of the Companies, RMFI and Royal Bank of Canada are separate corporate entities which are affiliates. “RBC advisor” refers to Private Bankers who are employees of Royal Bank of Canada and licensed representatives of RMFI, Investment Counsellors who are employees of RBC Phillips, Hager & North Investment Counsel Inc. and the private client division of RBC Global Asset Management Inc., Senior Trust Advisors and Trust Officers who are employees of The Royal Trust Company or Royal Trust Corporation of Canada, or Investment Advisors who are employees of RBC Dominion Securities Inc. In Quebec, financial planning services are provided by RMFI which is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RMFI, Royal Trust Corporation of Canada, The Royal Trust Company, or RBC Dominion Securities Inc. Estate and trust services are provided by Royal Trust Corporation of Canada and The Royal Trust Company. If specific products or services are not offered by one of the Companies, clients may request a referral to another RBC partner. The strategies, advice and technical content in this publication are provided for the general guidance and benefit of our clients, based on information believed to be accurate and complete, but neither the Companies, RMFI, nor Royal Bank of Canada, nor any of its affiliates nor any other person can guarantee accuracy or completeness. This publication is not intended as nor does it constitute tax or legal advice. Readers should consult a qualified legal, tax or other professional advisor when planning to implement a strategy. This will ensure that their individual circumstances have been considered properly and that action is taken on the latest available information. Interest rates, market conditions, tax rules, and other investment factors are subject to change. This information is not investment advice and should only be used in conjunction with a discussion with your RBC advisor. None of the Companies, RMFI, Royal Bank of Canada nor any of its affiliates nor any other person accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. In certain branch locations, one or more of the Companies may carry on business from premises shared with other Royal Bank of Canada affiliates. Notwithstanding this fact, each of the Companies is a separate business and personal information and confidential information relating to client accounts can only be disclosed to other RBC affiliates if required to service your needs, by law or with your consent. Under the RBC Code of Conduct, RBC Privacy Principles and RBC Conflict of Interest Policy confidential information may not be shared between RBC affiliates without a valid reason.
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