What’s it all about?
What’s the impact?
How can you get ready?
Amendments to the National Instrument 31-103 Client
Relationship Model commenced July 15th, 2013
Implementation will be phased in over three years
and must be adopted by all MFDA & IIROC advisors
All clients will receive clear and complete fee disclosure
and more thorough performance reporting
Investor’s low
awareness
of all fees
and charges
paid
New
Fee
Disclosure
New
Performance
Reporting
Investor’s low
awareness
of investment
performance
net of all fees
and charges
Transaction and
administrative
charges
Initial
commissions,
DSC,
Trailing
commissions
New
Fee
Disclosure
New
Performance
Reporting
Net value
of securities
after all charges
Shown in dollars
and as
percentage
returns
Fee
Sensitive
Return
Focused
Transaction and
administrative
charges
Initial
commissions,
DSC,
Trailing
commissions
New Fee
Disclosure
Trade
Transaction
Trade
Confirmation
Fee
Reporting
Changes
to charges
Account
Opening
July
2013
July
2016
Effective date:
July 15, 2016
• All costs paid out
by the client
• All compensation
received
As prescribed by CSA
Charges
As prescribed by CSA
Compensation
As prescribed by CSA
New
Performance
Reporting
Net value
of securities
after all charges
Shown in dollars
and as
percentage
returns
Annual
Reports
Quarterly
Statements
Monthly
Statements
(if requested)
July
2013
July
2016
Effective Date:
July 15, 2016
Text, tables
and charts
Capital
Contributions
Returns
Capital
As prescribed by CSA
Contributions
As prescribed by CSA
Returns
As prescribed by CSA
Clients
will
be
fully
...of the numbers
but not
necessarily
the value!
aware...
Source: Adapted from Dr. J Grubman – SPDR University
Evaluate
your
practice
Assess
your
top clients
Formulate
a game
plan
Prepare
for the
conversation
Where are you now?
Evaluate
your
Assess
practice
Your
Practice
Where do you need to be?
Source: Adapted from Dr. J Grubman – SPDR University
Evaluate
Assess
your
Your
Practice
Assess
practice
Your
Practice
Evaluate
your
practice
A Clients
• Personal relationship
• Utilize the majority of your services
• Consistent and robust communication
• Top priority for face to face conversation
B Clients
• Business relationship
• Utilize many of your services
• Consistent communication
• Priority for face to face conversation
C & D Clients
• Transactional Relationship
• Utilize your core services
• Limited communication
• Priority for letter, then telephone call
Evaluate
your
practice
Assess
your
top clients
Formulate
a game
plan
Prepare
for the
conversation
Assess
your
top clients
Source: Adapted from Dr. J Grubman – SPDR University
Assess
your
top clients
Conduct the “Litmus Test” on a client-by-client basis
Assess
your
top clients
Prioritize clients in terms of fee sensitivity
Use the results to develop your game plan
Assess
your
top clients
What if my test results indicate
I’m not providing enough services
or value to a client?
Assess
your
top clients
Evaluate
your
practice
Assess
your
top clients
Formulate
a game
plan
Prepare
for the
conversation
For clients you believe are not
receiving sufficient services or value:
Be pro-active and set up a comprehensive re-discovery meeting
Highlight your services and expertise not currently being utilized
Formulate
a Game
Plan
Assess ways you can provide additional concrete or intangible value
Delay the fee conversation for 6 to 12 months if necessary
Formulate
a Game
Plan
Formulate
a Game
Plan
Evaluate
your
practice
Assess
your
top clients
Formulate
a game
plan
Prepare
for the
conversation
Opportunity to build loyalty
If you don’t raise the subject, your clients will
Prepare
for the
conversation
Details of the new legislation are appearing in the media
If you don’t initiate the conversation, your competition will
Initiate the conversation
Demonstrate initiative and leadership
by being first to address fees.
Exhibit confidence in
discussing all topics to build trust.
Keep it simple; have well-rehearsed answers to
potential client questions and focus on clarity.
Source: Adapted from Dr. J Grubman – SPDR University
Start with a
simple Introduction
Prepare
for the
conversation
Open the conversation with
a well-prepared statement.
Best phrases…
“I wanted to speak to you about some interesting changes to
enhance the level of service we provide.”
“I’m excited to tell you about some adjustments we’ve made
to improve your investment experience.”
What not to say…
“I’m being legislated to tell you how much you pay me.”
“The regulators say I have to provide more information to you
than I used to.”
Prepare
for the
conversation
Start with a
simple Introduction
Open the conversation with
a well-prepared statement.
Focus on the value
you provide
Use the Value Summary tool to demonstrate
the impact of your advice so far.
Prepare
for the
conversation
Focus on concrete services
& intangible value
Be specific about the range of services you offer
Demonstrate the concrete services
provided since your relationship began
Highlight your intangible value
Source: Adapted from Dr. J Grubman – SPDR University
Prepare
for the
conversation
Start with a
simple Introduction
Open the conversation with
a well-prepared statement.
Focus on the value
you provide
Use the Value Summary tool to demonstrate
the impact of your advice so far.
Highlight the
changes
Explain to the client how the changes will affect
them, what they can expect and the benefits.
More information
prior to trades
Improved
Clarity
More detailed
account statements
More thorough
performance reports
Prepare
for the
conversation
Start with a
simple Introduction
Open the conversation with
a well-prepared statement.
Focus on the value
you provide
Use the Value Summary tool to demonstrate
the impact of your advice so far.
Highlight the
changes
Explain to the client how the changes will affect
them, what they can expect and the benefits.
State your fees
Discuss your fees with the client.
Be confident and concise.
State your fees
Establish an easy-to-read fee schedule
Use terminology which is simple to understand
Be confident in describing the
fees charged/commissions earned
Source: Adapted from Dr. J Grubman – SPDR University
Prepare
for the
conversation
Start with a
simple Introduction
Open the conversation with
a well-prepared statement.
Focus on the value
you provide
Use the Value Summary tool to demonstrate
the impact of your advice so far.
Highlight the
changes
Explain to the client how the changes will affect
them, what they can expect and the benefits.
State your fees
Discuss your fees with the client.
Be confident and concise.
Summarize the
benefits
Highlight the benefits going forward:
how it’s better for both of you
A better
understanding of
fees, performance
and value
A more open
relationship with
a greater level
of trust
Increased
confidence when
making investment
decisions
Prepare
for the
conversation
Practice makes perfect
PRACTICE: Rehearse your delivery in a comfortable environment
ROLE PLAY: Conduct a role play with a member of your team
Prepare
for the
conversation
PERFECT: Ensure your responses are clear and concise. Be confident
Preparation
Runway
Now*
2013*
Requirements
•
•
•
Regular quarterly account statements (or monthly if requested)
60 days notice for clients regarding new or increased operating charges
Relationship Disclosure Information (RDI) containing a complete description
of operating and transaction charges for new and existing clients
July 15, 2013
•
•
Pre-trade disclosure of all charges, DSC or trailing commissions
Enhanced content of trade confirmations (disclosure of all charges)
July 15, 2014
•
More thorough account statements to include:
- registration information
- market value of each security
- whether the account is covered under an investor protection
fund and which
- securities in the account might be subject to a DSC if sold
- position cost information
July 15, 2015
Increased information on trade confirmation (transaction charges, DSC
or other charges, includes fixed income spreads)
Report summary on charges and other compensation
Annual performance reporting: money-weighted basis
July 15, 2016
2014*
•
2015*
Implementation Date
•
•
*All requirements are ongoing
Advisor Actions
Account
Opening
Familiarize yourself with new RDI requirements
Be prepared to discuss changes at account opening
Segment your clients to decide best mode of communication
July
2013
Explain all reports to clients in a simple way
Keep a record of your oral communication with clients
Changes to
Charges
July
2013
Advisor Actions
Be prepared to discuss changes to operating expenses with clients
and follow-up with them to make sure they have received, read and
understood the changes
Advisor Actions
Trade
Transaction
July
2014
Familiarize yourself with new pre-trade requirements
Discuss all applicable charges and compensation with client prior to
trading of securities
Be prepared to address client’s response
Keep record of discussion using notes & CRM
Trade
Confirmation
July
2014
Advisor Actions
Familiarize yourself with new requirements
After a trade confirmation of debt securities has been sent to a client:
• follow-up with client to confirm understanding of DSC charges
• follow-up with clients to confirm understanding of annual yield
Practice
Evaluation
Segmentation
Game Plan
(Client)
Equilibrium Test
Client
re-discovery
No
Game Plan
(Practice)
Value Summary
Litmus Test
Conversation
Planner
Fee
Conversation
Yes
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