New regulations promote simpler, clearer information for mutual funds investors
"These new rules are putting us firmly ahead of the rest of the world in providing clear information to mutual funds investors," said
The changes that take effect today involve providing a clear description of benchmarks and disclosing fees before trades are made. By 2016, investors will receive statements showing, in dollar amounts, the costs associated with each of their products. On the performance side, investors will see how well their investments have performed in dollar terms since they started to invest and their percentage rate of return over several time periods.
The new rules, dubbed "CRM2", are the culmination of a journey that began in 1995 with the Stromberg report, leading to a series of regulatory improvements over time in a wide range of areas. Disclosure practices have developed over time, as the industry and its products have evolved along with our understanding of investors' information needs.
"CRM2 will lead to more informed investors, which will result in better conversations between investors and advisors," noted IFIC's second vice-chair
According to recent research, 94% of mutual funds investors indicate they trust their advisor to give them sound advice. Those working with an advisor are twice as likely to save regularly for retirement.
The successful implementation of CRM2 will help investors understand the value they get from their advisors. Having a financial advisor contributes positively and significantly to the accumulation of financial wealth. Households receiving financial advice for at least four years accumulate more than 1.5 times more assets than those who do not have an advisor, after all costs have been taken into account. After 15 years or more, households accumulate more than 2.7 times more assets, compared to those that do not have an advisor.
"It is important to investors and to the industry that CRM2 be implemented effectively, to empower investors through better information and education," De Laurentiis stated. "That is why the industry is actively seeking ways to create a new era in investor information by delivering on the spirit of the new rules."
About the Mutual Funds Industry in
The first Canadian mutual fund was launched in 1932 with a goal of attracting