Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

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AltaRed
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Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by AltaRed »

The final phase of IIROC's CRM (Client Relationship Model) 2 will be implemented in January 2017. That means most financial institutions will report, most likely with Dec 2016 account statements, things like:
1. money weighted rate of return on each account. changes in market value, single year vs multi-year, etc.
2. fees received by the FI (from you and from the product vendor) and whether the latter is the entire MER or trailer fee only

Financial Institutions may implement in varying degrees of transparency, completeness and accuracy.

It would be helpful for FWF members to comment on how well your FI(s) have done in this regard, and where you feel there is incompleteness. For example, brokerages may not handle currency effects correctly... .such as: 1) improper forex conversions on journalled assets from/to CAD and USD sub-accounts, 2) rate of return in USD accounts not taking into account changes in forex.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by AltaRed »

I finally got my Dec statement from BMO IL today with the new disclosures. The performance data was already available online (for years?) but not on statements (it is now on statements). The new component is, of course, costs... of which there are two categories disclosed:

1) Costs incurred by you - which was, for me, a few $9.95 commissions paid for stock/ETF buy'sells.

2) Payments to BMO by third parties - this is the new component of full implementation and there was a small unidentified charge shown there. I have no idea what it is for (unidentified) but I assume it may be a portion of the MER of an ETF I hold in this account. It will be a shame if brokerages do not have to identify the source of these costs.

I wait with baited breath to hear from those who have mutual funds with trailer fees. How have those costs been disclosed?

Added later: I have sent a Secure message to BMO IL to ask them why they have not idenitified the source(s) of the "payments received by BMO from third parties" and that clients should have an expectation of knowing the source in order to make intelligent decisions about their holdings. I suspect the brokerages will be inundated with queries from clients that had no clue about ANY of this performance return and cost data and that there will be no quick response.

I will be asking Scotia iTrade the same question if they don't break it out when I get the data.
Last edited by AltaRed on 21 Jan 2017 12:24, edited 1 time in total.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by DanH »

This recent article of mine explains the difference between TWRR and IRR (not needed for FWF regulars) but also touches on the issue of start-date bias and the lack of any industry standard on performance measurement start dates. Short take: they're all over the place.

You're also right about not the entire MER showing up on your statement. I first wrote about this in October 2014. I hadn't seen it in print prior to my piece (giving myself a small pat on the back) but there have since been several articles pointing this out.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by AltaRed »

I finally figured it out from BMO IL. I actually held their in-house HISA for about 3 months in 2016 and of course, it (Series A) pays a trailer. It is not from ETFs. That said, the query to BMOIL still stands.... the source should be identified to allow clients to make informed decisions on their holdings.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by ockham »

Today, received report from RBCDI on one account. It's a non-registered account with four holdings, being four US domiciled Vanguard ETFs. The report showed, under "Withdrawals and transfers-out", the sum of $1265.56.

My own records for 2016 show zero withdrawals and transfers out. A quick online scan of 2016 account activity showed no withdrawals and transfers out.

A telephone inquiry to RBCDI indicated that non-resident withholding taxes are included in the "Withdrawals and transfers out" column. Confusing, I thought, as did the DI rep.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by optionable68 »

Mrs. Optionable68's statement came from CIBC Investors Edge and am sharing the new CRM2 disclosure related to rates of return and fees

CIBC language:

"Your Average Annual Rates of Return
This year = 12.90% ; since Jan 1, 2016 = 12.90%"

(footnoted as money-weighted rate of return)

Portfolio is entirely ETFs and had 15 x $6.95 = $104.25 in actual trading commissions during 2016 (confirmed correctly on statement)

Her statement also says additional charge of $1.15 in Service Fee*

CIBC's definition of "Service Fee":
* An investment fund pays a management fee to its manager from the assets of the fund. Out of
that fee the manager pays us an ongoing Service Fee, also known as a trailing commission, for
the services we provide you. The amount of the Service Fee depends on the sales charge option
you chose when you purchased the fund. Although you don't pay this fee directly, it does
reduce the fund's return to you. For more information about this fee, see the Fund Facts
document for the specific fund or contact us for more information.




At times throughout the year, as dividend distributions accumulated, Mrs. O would purchase Renaissance HISA and TD Index funds with the residual dollars until enough cash to buy additional ETFs accumulated (thats the $1.15 service fee)- And no mention of the MER or TER within the ETFs as that disclosure is not a requirement for CRM2
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by brucecohen »

I see no disclosure on my Dec 31 TDDI hard copy statements.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by GreatLaker »

brucecohen wrote:I see no disclosure on my Dec 31 TDDI hard copy statements.
A poster over on CMF got the following answer from TDDI in response to his email:
TD Direct Investing statements updates for CRM2 disclosure will be coming in March/April 2017. I've included some additional information. Please feel free to contact an Investment Representative (1-800-465-5463 or 416-982-7686, available 24/7) for further assistance. By phone they can securely access your account and assist you with any additional inquiries.

Thank you for contacting TD Direct Investing.
Here is a link to the thread:
http://canadianmoneyforum.com/showthrea ... ost1436034
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by Shakespeare »

Got my Annual Report from RBCDI today. Fees seem to be for me a bit less than .1%.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by AltaRed »

MoneySense reports on less than satisfactory transparency on CRM2 disclosures. Course we knew this disclosure wouldn't show any above the trailing commission line, i.e. money management fees, etc. Only those incurred at the brokerage level. BMO IL and Scotia iTrade both show 3 years of performance data versus the 1 year minimum. The more disappointing part is lack of breakdown of incurred costs beyond cost type.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by tightwad »

AltaRed wrote:I wait with baited breath to hear from those who have mutual funds with trailer fees. How have those costs been disclosed?
.... the source [of fees] should be identified to allow clients to make informed decisions on their holdings.
CIBC Investor's Edge reports mutual fund trailer fees in their statement as a lump sum under the heading 'Service Fee'. It would have been much more useful if it was broken down by cost incurred by each fund. Case in point, there's only one investment in my TFSA and it's a high-interest savings account. Had there been other holdings I wouldn't have been able to spot a potential problem. But because it's my only holding I can see that the trailer fee consumed a little more than a quarter of the fund's (already meagre) earnings. Yikes!

By the way, is this typical for an HISA? If so, it may be better to leave the safety of cash and invest in a slightly higher risk investment.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by AltaRed »

Yes, HISAs pay 25bp trailer fee unless you go through an advisor and get F class in which the return is 1%. I agree that the lack of a breakdown by fund/entity doesn't help investors decode (drill down) to find the various sources. Imagine someone with maybe 10 actively managed mutual funds, some with trailer fees of 1%. Talk about sticker shock. At least this is a small step in the right direction.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by cannew »

Checked our stmts, zero fee, and zero commissions. Only entries were dividends in and dividend reinvested.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by GreatLaker »

I got the following message from TDDI today. Performance reporting and fees will be reported in April.
Enhanced personal account statements will be available in early April for the period ending March 31, 2017. The improvements made to your account statements will help you stay informed by providing a summary of:
  • Investments held in your account and any activity occurring during the reporting period
  • Performance of your account and your personal rates of return
  • Related investment costs
These changes reflect our commitment to you and to improve the quality and consistency of your reporting – from what's displayed online in WebBroker to your new account statements. We’ve prepared a video outlining the upcoming statement changes, so you’ll know what you can expect when they arrive in April.

If you have any questions, please contact an Investment Representative at 1-800-465-5463. We are here to assist you any time, 24 hours a day, seven days a week

Thanks for choosing TD Direct Investing.
Here's the link to the video: http://players.brightcove.net/361256558 ... 1184245001
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by big easy »

GreatLaker wrote:I got the following message from TDDI today. Performance reporting and fees will be reported in April.
2017?

I wonder if there are any penalties for late compliance. TD lagging behind the pack yet again. Too busy training their tellers to push expensive products to unsuspecting seniors?
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by tightwad »

big easy wrote:TD...busy training their tellers to push expensive products to unsuspecting seniors?
Perhaps your comment is in reference to this article: 'I will do anything I can to make my goal': TD teller says customers pay price for 'unrealistic' sales targets
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by AltaRed »

Let's try to keep this thread on-topic. There's a separate thread for venting/ragging on TD in particular.

Added: Got my February PDF statement from BMO IL today. Looks like they will continue to show performance and cost data on a month and YTD basis as well. Not that any of that matters to me specifically but for those who still only ever look at paper and are not online, this seems to be a good addition to monthly reporting.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by Spudd »

From TD today:

Recently, we shared an update regarding your new enhanced account statements which included a video preview. In the short time that followed, feedback we received helped us identify an opportunity to further improve the richness and clarity of our reporting. With this goal in mind, we have chosen to postpone the launch of your new statement from March 31 to June 30, 2017 to incorporate this feedback.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by big easy »

Wow. :shock:
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by IdOp »

The new-format statements from TDDI are now out. For some reason I didn't get the usual e-mail saying they were available, but as it seemed about time I checked and they were there.

Gone is the old Cover Page for multiple sub-accounts. YeeHaww! ;)

The old Portfolio Summary has been replaced by a page with slightly different information, as well new items: a graph of portfolio value by time and rates of return. Having the broker provide this information is fairly useless to me, but I'm sure others find it helpful.

Next come the usual Holdings and Activity sections. These are laid out a bit differently, so I think will take a little getting used to, but nothing major.

The big change is in the Details Of Fees And Charges. This shows dollar amounts of trailer fees and other commissions (e.g., on GICs) if any. I knew of course in which of my accounts these are of any significance, relatively, but seeing the dollar figures is a good prompt to stop procrastinating about making some improvements.

Most on FWF are well informed about the effect of fees. The questions will be I guess whether or not more typical investors (a) read this material, (b) understand it and its significance, and (c) make sensible changes where possible.

Throughout there is more use of colour; the colour is, of course, green. The PDFs have also gotten about 4-5 times bigger, but since the old ones were quite small, it's still ok. Overall the new statements seem fine, and I'll get used to them.
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Re: Observations of Full Implementation (Jan 2017) of CRM2 on Your Accounts

Post by DanH »

In 2017, optionable gave his review of the then-new CRM2 reports, ending with...
optionable68 wrote: 26 Jan 2017 20:15 And no mention of the MER or TER within the ETFs as that disclosure is not a requirement for CRM2
Fast forward to two days ago, which was the deadline for comments in response to the proposal that has been dubbed "CRM3" because it proposes to report total costs - the full MER, TER (trading expense ratio), and all of the other components included on those CRM2 reports.

- Here is a PDF of the proposal (which is a joint proposal from securities and insurance regulators)
- Comments received since late April when this proposal was published (they all arrive near the deadline - including the one from yours truly)

I posted this on Twitter regarding the typical industry response vs what a more investor-friendly industry would do. It also highlights the challenge facing regulators. I also include screenshots of my proposed simplified solution in case the industry is actual correct in its claim that it's a very complex project (which I don't buy, but I could be wrong).

For now, we wait to see how regulators respond and where they land between extremes of the industry's "can't do it, too complex" stance and advocates' "make it happen yesterday" pleas.
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