Rob Carrick answers the big-picture questions on CRM2

In 2017, investors will be seeing more comprehensive reporting under Phase 2 of the Canadian Securities Administrators’ (CSA) Client Relationship Model (CRM2). Some see this as a step forward and believe the increased transparency will help investors to better evaluate the value of the advice they’ve been receiving. For many investors, the new reporting may raise some questions. Globe and Mail financial writer, Rob Carrick, helps us understand some of the larger issues at play in the new CRM2 environment.

T.E. Wealth:
  Many Canadians have heard of CRM2 but don’t fully understand what it is or why it might be important for them to understand. What advice do you have for them?

Rob Carrick:  Start paying a lot more attention to your account statements because you’re going to get additional information on the fees you’re paying and the returns you’re getting. It’s a great opportunity to assess the value you’re receiving from your planner or advisor. Note that CRM2 means you’ll see the dollar cost of advice, but not for the investment products you own. Product fees are not included.

TEW:  In your Globe and Mail article, Why won’t Canadians pay for investment advice?, you say that many investment advisors are really just salespeople hustling mutual funds.[1] What steps could a person take to ensure they’re getting quality investment advice?

RC:  Ask what financial planning is done so that the advisor can recommend the right portfolio. If there’s just a perfunctory talk about risk or a short questionnaire to fill out, then you’re probably not going to get true advice.

TEW:  How effective do you think CRM2 will be in levelling the playing field for investment advisors, and what will that mean for investors?

RC:  The playing field will truly be even when investors are shown the dollar cost of their investments and the cost of advice. For now, they will at least have a chance to compare the cost of using various types of planners and advisors.

TEW:  What do you see as the biggest shortcoming of CRM2?

RC:  As mentioned, it’s that product fees aren’t there alongside advice fees. I’m hoping this is addressed fairly quickly by regulators.

TEW:  There’s a lot of complex information found on the new performance and fee reports. What are the key things investors should be looking at, and what questions should they be asking?

RC:  Not just what did I pay and what did I make, but what services did I receive? There’s a risk that investors will focus too much on fees alone and not consider value. Of course, it’s up to advisors to demonstrate value.

TEW:  What should an investor be concerned with in addition to the rate of return on their investments?

RC:  The real question is how people are progressing toward their investment goals. Rate of return over a year is basically trivial. What matters is whether someone is accumulating enough money over the long term to retire comfortably.

TEW:  Goshka Folda, president and CEO of Investor Economics, predicts that regulators will next look at how to unbundle fees.[2] What are your thoughts on that, and do you have any predictions of your own?

RC:  Unbundling[3] would signal a new, more mature phase of investment advice in Canada and I’m all for it. There is no reason any longer to hide the cost of advice in product fees. Unbundling will be a significant change, but I see it helping the advice business to evolve into a true profession offering a valuable service at a transparent cost.

T.E. Wealth welcomes these changes in investor reporting. If you’re a client of T.E. Wealth, you would have received performance reports from us on a quarterly basis along with disclosure about the management fees you pay. In addition, we have always been unbundled and our compensation consists entirely of the fees we charge our clients. We value open communication with our clients through regular annual meetings and welcome every opportunity to speak with you about your investments and goals.

Lucy Conte
T.E. Wealth, Toronto

[1] Rob Carrick, (2016, July 18). Why won’t Canadians pay for investment advice? Retrieved from

[2] Katie Keir, (2014, November 12). Regulators won’t stop at CRM2.
Retrieved from

[3] Bundling is a marketing strategy that joins products or services together in order to sell them as a single combined unit. The products and services are usually related, but they can also consist of dissimilar products.

This article was published in T.E. Wealth’s Strategies newsletter, February 2017 edition. Read the full edition here.

Print Friendly, PDF & Email

These articles are for general informational purposes only. Please obtain professional advice before taking any action based on this information. No endorsement or approval of any third parties or their advice, information, products or services should be implied by any references to third parties contained in any article. Trademarks cited in these articles are the respective properties of their owners.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *

14 − nine =