CRM2 Reform: How Will It Impact Financial Firms and Advisors?

7092440_sWhile some people might not be thinking about what 2016 has in store, it’s already at the forefront of financial advisors’ minds in Canada.

CRM2, which is short for “Client Relationship Model – Stage 2,” is undergoing a major overhaul, which began on July 15, 2013. It will be finalized by July 15, 2016, and between now and then, investors will need to go the extra mile to guarantee the utmost transparency to their clients.

The Canadian Securities Administration is asking for more disclosure within the industry. In many cases, investors are still unclear of what they’re investing in and how much their advisors are being paid.

“Research shows that investors across Canada lack vital information about the cost and performance of their investments,” Bill Rice, chair of the CSA and chair and CEO of the Alberta Securities Commission (ASC), told Investment Executive. “These amendments demonstrate the CSA’s commitment to arm investors with sufficient account information to make informed decisions about their investments.”

Adjustments made to the National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations between now and 2016 will help investors get a better grasp on where their money is going, but why are financial firms and advisors concerned?

Transparency and compliance
Since the changes began rolling out in July, financial advisors have already needed to make adjustments to how they do business regularly. For example, they are now required to give quarterly statements to investors, and enhanced disclosure will be necessary beginning in 2015. Performance reports will be required of financial advisors and firms, and compensation disclosure will also be a part of future regulations.

So how can professionals work within the new standards?

Compliance is the name of the game, and software that allows financial advisors to keep business collateral up-to-date will be essential as 2016 quickly approaches. Financial advisors will need to be able to revise documents at a moment’s notice and keep them on point to comply with changing regulations. While there are still three years until the CRM2 reform is complete, financial firms and advisors can benefit from investing in the technology they need to stay on pace starting today.

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