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Canadian Wealth Management Firms To Deliver Fund Facts More Quickly

Following the rollout of CRM-2 in Canada, wealth management firms have been taking a closer look at how they’re going to provide more disclosure to investors to comply with new regulations.

Now, the situation is becoming more in-depth with the second phase of the Point Of Sale Project, which will require mutual fund companies to deliver Fund Facts within two days of purchasing a mutual fund. This new regulation will become mandatory on June 13, 2014.

Similar standards were introduced on January 1, 2011, when mutual fund companies were instructed to prepare and file Fund Facts for every class of funds, then post them on their website. Now, the Canadian Securities Administrators will ask for a quicker turnaround as a part of the POS Project. Some wealth management firms are already taking the initiative to distribute Fund Facts via email and print letters within two days of purchasing funds.

Phase 2 and beyond
The idea behind Phase 2 of the POS Project is to give people more transparency into wealth management firms. However, the two-day deadline isn’t going to be as difficult on firms as one might think. Fund Facts documents are now meant to be short and concise.

“We estimate about a 60 percent cost savings for dealers delivering a printed Fund Facts document in lieu of a prospectus document,” said Anthony Boright, president and co-founder of InvestorPOS, an investor communication solutions firm. “These savings are associated with printing, processing and postage for the shorter 4-page Fund Facts document. When dealers implement e-delivery of the Fund Facts, cost savings are more than 90 percent versus print/mail of the prospectus document. Those dealers who adopt the Stage 2 regulation early, obviously stand to realize these savings sooner.”

Looking ahead to Stage 3, the CSA would like to see Fund Facts provided at the immediate point of sale, rather than two days after the deal has closed. The changes that the CSA is implementing will force wealth management firms to be on top of their game.

It appears that the government as a whole is fixated on the idea of providing more transparency to investors, which could potentially grow trust between these individuals and financial advisors in the future. Although it requires more work on the end of asset management firms, it can yield worthwhile positive results for both sides. Wealth management firms can also make it easier to remain compliant with new CSA regulations by ensuring that their collateral pertaining to investments is always up-to-date.


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