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The number of mutual-fund investors who believe they pay a direct fee to their investment adviser remains low despite regulatory changes intended to improve transparency in compensation.

In an annual survey released on Thursday, 72 per cent of mutual-fund investors said they were confident that they understand the fees they pay for mutual funds, a statistic that has held relatively steady since 2011.

Yet, of those investors who have advisers, only 13 per cent believe they pay a direct fee to their financial adviser. That is down slightly from the 17 per cent who believed they paid a direct fee last year.

The study, conducted by research firm Pollara on behalf of industry group Investment Funds Institute of Canada, spoke to 1,000 mutual-fund investors across Canada this past summer and has an overall margin of error of plus/minus 3.1 per cent. While the study has been running since 2006, last year’s report serves as a benchmark since major regulatory changes came into effect in July, 2017.

The changes, known as CRM2 or the second phase of the client relationship model, were a three-year industrywide initiative to provide further clarity in the way investments and fees appear on an investor’s annual statement from financial institutions.

All Canadian financial firms have been required since last summer to provide annual statements that highlight how well investments have performed in dollar amounts, as well as the dollar figure an investor has paid for financial advice. Most investment firms began mailing out the yearly reports, known as the annual report on charges and compensation, at the end of 2016.

But while the majority of investors say their financial adviser continues to discuss fees, compensation and management-expense ratios (MERs), the incidence of compensation discussions in general has declined over the past year – dropping to 58 per cent from 64 per cent in 2017.

As well, annual account statements are falling short with the number of investors who say their investment reports are easy to understand, dropping down to 72 per cent from 82 per cent the year prior. Similar declines were seen in the number of investors who say their statements provide all the necessary information they required – dropping by 8 per cent since last year to 74 per cent.

Although there was a slight improvement from last year in in the number of investors who say their statements “clearly show fees I pay to my adviser’s firm or dealer firm,” it remains an overall low number, at 53 per cent.

“Despite positive results in some areas related to fee understanding, there is room for improvement with the annual reports on fees and performance that investors receive,” said Paul Bourque, president and CEO of IFIC. “These results underscore how important it is for us to continue to focus our energies on improving disclosure effectiveness.”

Mutual-fund investors' propensity to read their investment statement right away has also declined over the past two years, with 67 per cent of investors now immediately opening their documents, compared to 86 per cent in 2016.

Melaina Vinski, a behavioural economics lead at PwC Canada, said despite the industry’s efforts, the vast majority of investors haven’t noticed any changes in their reports since CRM2 came out. “Just because information is provided, doesn’t mean people will actually pay attention to it … and it also doesn’t necessarily mean they understand it,” she said on Thursday at the IFIC Annual Leadership Conference in Toronto.

To help improve the disclosure practices of investment dealers, advisers and investment fund managers, IFIC announced a partnership last month with BEworks, a behavioural economics consulting firm.

As part of its 2018 strategic initiative, IFIC will use data provided by BEworks to provide model reports and test them against industry statements. The model reports could be used by investment firms in the future, Mr. Bourque said.

“Effective disclosure plays a critical role in providing investors with the awareness and understanding they need to confidently make investment decisions,” Mr. Bourque said.” We need to do more to provide better disclosure for the over all industry."