Providing Greater Clarity With CRM2
What the Client Relationship Model II means to you
You may have heard about it in the news the Client Relationship Model II, or simply "CRM2. CRM2 is a new set of industry regulations meant to provide investors with more details on their investment costs and performance. It was developed by the Canadian Securities Administrators, an organization representing Canadas investment industry regulators. All investment firms, including RBC Dominion Securities, will be providing these additional details on your existing statements and in two new reports that will be delivered to you.
For our clients, the additional details required on existing statements should be business as usual as RBC Dominion Securities has already been delivering most of this information on our statements. But for some investors in Canada, the new details on statements will provide more information than they are used to receiving.
The more significant changes will occur in early 2017, when two new reports will be delivered to clients:
1. One report will disclose the costs paid by the client to the firm and other compensation received by the firm in relation to services provided to the client from each account annually. Please click on the links to view samples of what the new cost reports might look like:
Sample Cost Report - Transactional Account 25K
Sample Cost Report - Managed Account 25K
2. A second report, an annual performance report, will show an account’s returns over certain time periods. Notably, this report will show "money-weighted” rates of return. This is a different way of calculating investment performance than the "time-weighted” method that is currently used by RBC Dominion Securities and across the industry. Some think of money-weighted as a "personal rate of return” because it factors in the impact of the amount and timing of money you deposit into or take out of your account, whereas time-weighted does not. Please click on the links to view a sample of what the new performance report might look like and to view a video that explains the difference between "money-weighted" and "time-weighted" returns:
Sample Performance Report
Video
The effect of these two new reports will be to provide investors with a better understanding of what they are receiving for the money they are paying their advisor’s firm for the products and services they receive.
As always, our primary objective is for you to achieve your financial goals, but we also want you to understand the value my team and RBC Dominion Securities can provide you with on that journey.
You will hear more about CRM2 over the coming year and in regular updates from me. We fully support these initiatives as they reinforce both RBC Dominion Securities and our teams commitment to transparency and full disclosure.
If you have questions about the new reports or CRM2 in general, please do not hesitate to call us at any time.
