Wrap Up with Susan Silma

May 02, 2016 / Mackenzie Investments

For the past few weeks, the Mackenzie Investments Blog has been lucky to have Susan Silma of CRM2 Navigator, provide insight into various aspects of CRM2. As her series comes to a close, Susan offers her final thoughts and advice.

On investors’ lack of CRM2 awareness:

Research shows that if clients know anything about the changes that CRM2 will bring, they are primarily aware of the coming fee disclosure. CRM2 is the industry’s chance to also help clients understand how their investments are doing. As advisors, give your clients the context they need to appreciate this information – help them understand and articulate their goals, so that they can check their progress toward those goals over time.

On additional regulation in the future:

It is certainly possible. Some advisors have expressed concern that CRM2 disclosure only covers a portion of the MER, as they believe it will lead to difficult conversations with their clients and to an unlevel playing field. One regulator is considering a move to expanded CRM2 type disclosure. There has also been considerable discussion about other potential initiatives, such as a ban on embedded commissions or imposing a fiduciary duty on advisors. It is clear that the regulators are very focused on the advisor-client relationship and that we should be prepared for more changes to come.

On the potential of advisors leaving the industry as a result of CRM2:

Unlike the changes that were implemented in the UK and Australia, CRM2 is not forcing advisors to change their business models. Some advisors ask me about converting to a fee-based platform. It is certainly an option, but I do not think it is necessary. Instead, with whatever fee model they have, advisors should communicate clearly and candidly about fees with their clients and then demonstrate to clients the value they receive for those fees. It is important to try and understand what matters most to clients and articulate value in those terms. I would hope that advisors do not feel the need to run from the industry. In fact, I believe that advisors and firms that best articulate their value will be able to leverage CRM2 as an opportunity.

On additional sources for support:

Advisors who want additional CRM2 support should ask their firms or seek practical tools. CRM2 is a unique regulatory initiative because it was designed to impact clients very directly. It is much more than a process change. As a result, a standard compliance training program will not be enough to prepare advisors to have comfortable, confident conversations with their clients about information that will surprise many. CRM2 preparations must be informed by how we know clients will react.