5 Lessons learned from CRM2 on fees with clients.

In January 2027, Canadian investors will receive enhanced investment statements under the Client Relationship Model Phase 3 (CRM3), also known as Total Cost Reporting (TCR), which will disclose all investment costs including direct charges and embedded fees.  This initiative, mandated by Canadian securities regulators, will provide Canadian investors with a comprehensive breakdown of all investment costs, covering both direct charges (e.g., commissions) and embedded fees (e.g., fund management expenses).

The Annual Report on Charges and other Compensation (ARCC) will be expanded to include these embedded costs. The updated statements will detail the total costs of owning investment funds and their effect on returns. Investors will receive updated annual statements that:

• Detail the total dollar value of fees paid.
• Include the Fund Expense Ratio (FER), combining Management Expense Ratios (MER) and Trade Expense Ratio (TER).
• Show the impact of fees on portfolio returns.

This level of transparency may initiate discussions regarding the nature of these fees, and the added value the investor receives in return

This can be seen as an opportunity for advisors to highlight the value they offer their clients. Drawing on lessons from CRM2 and a major investor language study on fees, there is value in clear, transparent and meaningful conversations with investors about investment strategies and the value of advice.

Here are five key insights to help advisors explain costs, engage clients, and show their value.

5 lessons learned from CRM2 in 2016

01. Inform your clients as soon as possible

Clients prefer that fees are discussed as early as possible in a face-to-face meeting, rather than an e-mail, a letter or even a phone call. 

02. Avoid a combative or negative language

Be transparent with new disclosures, as investors value accountability. But remain sincere and remind them that every Canadian investor will be getting the updated statements to provide clear and informed choices.

03. Review the terminology with them

With several new acronyms and terms, investors may perceive the changes as more complex than they are. Use companion terms to explain CRM3 / Total Cost Reporting and Fund Expense Ratio.

Use the NBI articles From MER to FER as well as the most frequently asked questions as a reference. 

04. Highlight the added value

As an advisor, it’s essential to showcase the services and products that directly support your clients’ long-term financial goals—whether it’s planning for retirement or navigating tax-efficient investment strategies. Active management is a key differentiator in this process. By leveraging deep research, market insights, and professional judgment, active strategies aim to outperform passive benchmarks. This approach allows you to respond to market inefficiencies, adjust portfolios proactively, and align investments with each client’s evolving needs. Highlighting this value helps reinforce your role in delivering personalized, results-driven guidance.

05. Provide examples

If the meeting is in-person, use visuals to demonstrate the changes. Emphasize these are not new fees…FER is the familiar MER plus trading expenses.

Example of FER for some NBI Funds:

For answers to your questions on CRM3 and total cost reporting, check out:  The most frequently asked questions about CRM3

For a deep dive on fees and the new Fund Expense ratio : From MER to FER