Portfolio managers will be spending more time face-to-face with clients so as to meet the new regulatory requirements of the Client Relationship Model (CRM 2), which could mean significant changes for teams working with retail investors in managed accounts, suggests Prema Thiele, partner, Borden Ladner Gervais LLP.

Thiele addressed the impact of new requirements in a presentation at the 2013 MMI Canadian Wealth Advisory Solutions Conference in Toronto on Thursday.

In addition to having more details on the relationship disclosure information (RDI) document, simply handing over a copy of the form to clients for them to read is not enough in the eyes of regulators.

Instead, the expectation is that portfolio managers are having in-person conversations with clients when the account is opened, said Thiele, and during ongoing annual meetings.

More specifically, it is a registered portfolio manager that must meet with the client, said Thiele, not a dealing representative as is often the case.

“Portfolio managers are not supposed to just be sitting in an ivory tower picking stocks for the pooled funds that your clients are being put into,” said Thiele. “That’s not the way it’s supposed to be happening.”

Complicating the matter, in Thiele’s opinion, is that there is no clear guidance on what exactly would be considered a significant conversation about the RDI, or how best to document that such a discussion occurred.

“That’s going to be something that’s very difficult,” said Thiele. “That’s going to be something you’re going to have to talk with compliance about.”

In order to make sure the right person is meeting with clients, Thiele said firms are likely going to have to make changes to their managed account teams to ensure there are enough registered portfolio managers available to speak with clients.

As such, Thiele believes the industry needs to take action to bring this issue to the attention of regulators. “We have to talk as an industry,” she said, “and it may require the large managed platforms to have a discussion with the Ontario Securities Commission now because I think they don’t understand [the issue].”