Our investment reports meet the highest standards for transparency and information
As a registered securities company, Educators Financial Group adheres to regulations established by the Canadian Securities Administrators (CSA) that are designed to improve the industry. One recent example is the Client Relationship Model (CRM2), which was established in 2017 to improve how financial information is disclosed to investors.
How did CRM2 change financial reports?
CRM2 required Canadian investment dealers and advisors to provide greater transparency about the cost and performance of client accounts. Specifically, it required:
- An “Investment Performance Report” to help investors see their portfolio’s performance and how it relates to their financial goals
- A “Cost Report” with the last 12 months of fees, including an itemized list of any charges to the account. Fees are represented as dollars rather than percentages.
To comply with these requirements and to provide transparency to our clients, the reports provided by Educators Financial Group include:
1. More detail
These reports provide the additional details about your account fees and performance required by industry regulators. They follow guidelines provided by the Investment Funds Institute of Canada (IFIC), to:
- provide an annual report on charges and other compensation that shows, in dollars, what the dealer or advisor was paid for the products and services it provided (such as fee-based account fees, MER, GIC commissions, 3rd party mutual fun and HISA trailing commissions); and
- provide an annual investment performance report that covers
- deposits, withdrawals, and change in value in a client’s account for both the 12-month period and since inception
- the percentage returns for the previous year.*
2. Simplified language
The reports use simplified language, and have explanations of many of the financial terms used on financial statements.
3. A change in how your return is calculated
Previously, Educators Quarterly Account Statements used a “time-weighted” rate of return calculation method. This changed to the “money-weighted” method, which is required by the OSC and which is consistent within the industry.
One method of return calculation isn’t ‘better’ than the other. The time-weighted calculation method provided the rate of return of an investment without taking into account the size or timing of contributions and withdrawals, and was more appropriate for assessing fund manager performance. The money-weighted method includes the size and timing of contributions and withdrawals, as well as the investment performance of the funds. With this method, periods in which more money is invested contribute more heavily to the overall return.
How CRM2 affects investors
CRM2 helps investors understand the value of the investment advice they are receiving, and to make informed decisions. Before CRM2 and the changes it made to reports, investors could figure out performance and costs, but the process was long and complex. CRM2 provides direct and indirect costs, making it easier for investors to determine the value of the investment advice they receive.
Anything that encourages conversation with your advisor is good.
Educators Financial Group is proud of the quality of investment advice we offer, which reflects the knowledge of our advisors, a dedication to understanding the unique needs of the education community, and the latest regulatory standards. CRM2 makes your investments easier for you to understand and make your conversations with your financial advisor even more valuable for you. Please give us a call at 1.800.263.9541 at any time with your questions.
For more information on the value of advice, read our other articles in The Learning Centre.
- Protect your future with professional advice.
- Fund managers and advisors – more than meets the eye.
- How is your financial advisor paid?
*Return values are not available for ten years as they are calculated as of the conversion date to our current operating system (January 31, 2014) or the account hasn’t been opened for that period of time.
