New disclosure initiatives from regulators are meant to enhance the investor-client relationship and not simply create a duplication of paperwork, according to an expert panel speaking at OSC Dialogue 2012 in Toronto on Tuesday.
Fund Facts and the second phase of the client relationship model (CRM 2) program each play a role in making sure investors understand their investment products and the overall cost and performance of their portfolios, said Rhonda Goldberg, director, investment funds branch, Ontario Securities Commission (OSC).
“We really seen these initiatives as complimentary,” said Goldberg, “and what we’re trying to do is step back and look holistically at the investor experience.”
Fund Facts is intended for product level disclosure, said Goldberg, meaning it is used when a mutual fund is first brought to a client. CRM 2, on the other hand, provides cost and performance reporting on an ongoing process at the individual portfolio level.
The implementation of both Fund Facts and CRM 2 will modernize disclosure practices for the industry, said Chris Jepson, senior legal counsel, compliance and registrant regulation branch, OSC. “They can be said to be projects, which aim to fill in gaps and bring disclosure up to date,” said Jepson, “and reflect the needs of today’s investors.”
For example, CRM 2 will help investors learn important information about their investments and overall portfolio, said Jepson, by answering such questions as: What is on offer? What does it cost? What does my portfolio cost me on an ongoing basis? How is my portfolio doing? Am I meeting my investment goals?
Every new regulation policy, including Fund Facts and CRM 2, will come with some kind of additional cost. However, the information provided by these two initiatives is important enough, said Jepson, that the new expense should be born by advisors and their firms.
“[Finding] this kind of core information is part of the cost of doing business,” he said, “and we don’t think it should be passed on to investors.”