New regulations promote simpler, clearer information for mutual funds investors
TORONTO, July 15, 2014 /CNW/ - A new era of investor disclosure has begun with the first set of rules coming into effect today that make it easier for Canadians to understand their investments.
"These new rules are putting us firmly ahead of the rest of the world in providing clear information to mutual funds investors," said Joanne De Laurentiis, president and CEO of the Investment Funds Institute of Canada (IFIC). "The industry is embracing these changes and collaborating to ensure their smooth implementation. Canada's regulators and the industry should take pride in what we are working to accomplish."
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 John Adams, CEO, PFSL Investments Canada. "Informed investors are more committed to saving, resulting in a much improved financial future for themselves and their families. This supports the industry's vision to help Canadians plan and save for a secure retirement."
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 Canada:
The first Canadian mutual fund was launched in 1932 with a goal of attracting $50,000 in savings. The real growth surge of mutual funds began in the early 1990s as Canadians saw interest rates on traditional savings accounts fall and began looking for new ways to grow their wealth. Investments in mutual funds have grown tenfold in Canada since 1990 and are a cornerstone of Canadians' retirement savings. Today, they are the #1 investment choice of Canadian savers as some 117 mutual funds companies offer close to 3,000 funds. Current AUM of more than $1 trillion represents about five times the assets being managed for Canadians by the CPP Investment Board ($193 billion as of September 2013) and is significantly higher than the reported $775 billion in assets held in 2013 by the top 10 Canadian pension funds (including CPP).
By connecting Canada's savers to Canada's economy, the mutual funds industry contributes significantly to Canadian economic growth and job creation.
The Investment Funds Institute of Canada is the voice of Canada's investment funds industry. IFIC brings together 150 organizations, including fund managers, distributors and industry service organizations, to foster a strong, stable investment sector where investors can realize their financial goals. The organization is proud to have served Canada's mutual funds industry and its investors for more than 50 years.
SOURCE: Investment Funds Institute of Canada
For further information: Sara Clodman, [email protected], 416-309-2317