The Investment Funds Institute of Canada (IFIC) released Tuesday two example investment reports for financial firms and advisers to use as a guide with investors. The reports are in anticipation for major regulatory changes that are coming into effect July of 2016, known as the second phase of the Client Relationship Model 2 (CRM2).
The IFIC reports allow investors to see the two major changes that will be required to appear on their personal account statements, including reporting on investment performance and charges and other compensation paid to the financial firms and advisers.
"At the heart of CRM2 was the objective to give investors the information they needed to understand how their investments are growing and what they are paying for the services related to managing their accounts," says Joanne De Laurentiis, IFIC's president and CEO. "We really approached this initiative with the investor in mind and discovered the best way to communicate that information is through a clearly designed, plain language report. "
IFIC, along with 57 financial companies and the Mutual Fund Dealer's Association of Canada, spent several months working on the initiative, and while the reports are not mandatory for financial firms to use, IFIC is encouraging the industry to adopt a consistent approach as well as similar language in order to promote investor understanding, says Ms. De Laurentiis.
The templates include simplified language and additional explanations of many of the financial terms used on financial statements.
CRM2 is being phased in over three years. Phase 3 of CRM2 comes into effect in 2016. In most cases, the first reports on charges and performance will cover the period January to December 2016.
Earlier this month, IFIC released its CRM2 Dealer Checklist to help financial firms prepare for Phase 2 of CRM2, which takes effect in December 2015. In July 2014, Phase 1 required dealers to disclose pre-trade costs and provide a general description of benchmarks.
Click here to see a sample report on investment performance
Click here to see a sample report on charges and compensation