Enhanced Transparency: Upcoming Changes With Total Cost Reporting

Across the investment industry, ongoing changes are helping investors better understand the fees associated with their investments. These reforms have been introduced over more than a decade as part of the “Client Relationship Model” (CRM). We have supported these initiatives in keeping with a commitment to transparency, integrity and fairness. Greater transparency benefits both clients and advisors by supporting informed decisions and a clearer understanding of the value of professional advice.

Our role extends well beyond investment selection. We help clients navigate financial decisions through planning, behavioural guidance, tax-efficient strategies and ongoing oversight. This can be particularly valuable during changing market conditions and periods of uncertainty, helping investors remain focused on their longer- term goals. More broadly, we provide guidance across the wealth management journey, from wealth accumulation to retirement and estate planning. This newsletter is one way we share strategies and insights to support your overall financial well-being.

The industry is now entering another phase of enhanced disclosure, commonly referred to as CRM3. This phase introduces enhanced Total Cost Reporting (TCR), designed to provide investors with a more complete view of the costs associated with certain investment funds.

Beginning with annual reports delivered in 2027, you will see additional information reflecting certain costs associated with investments held during 2026. Importantly, this enhanced reporting does not change the actual cost of your investments. Rather, it provides a more detailed breakdown of existing fees. This will generally include an annual summary of embedded, ongoing, direct and indirect fees associated with owning investment funds, including mutual funds, ETFs and scholarship plans, with similar requirements for segregated funds.

What Are the New Disclosure Requirements?

Investment dealers are now required to provide greater disclosure of the costs associated with investment funds. This includes:‍

• Embedded expenses of the investment fund paid indirectly by investors, including management fees, operating expenses and trading costs; ‍

• Direct investment fund charges, such as switching fees, redemption fees or short-term trading fees; and

• The fund expense ratio (FER) for each investment fund class or series of securities.

The FER provides a standardized measure of a fund’s ongoing expenses as a percentage of its assets and comprises two components:

• Management expense ratio (MER): Management fees and operating expenses; and

• Trading expense ratio (TER): Costs associated with trading securities within the fund. ‍

Why Is This Beneficial? ‍

Total Cost Reporting provides investors with a more comprehensive view of the costs associated with their investment funds by making embedded fund expenses more visible. This can help clients better understand what they are paying and support more informed decision-making. Greater transparency may also promote competition within the investment industry and encourage greater focus on the value investors receive for the fees they pay. At the same time, as with any professional service, investment management and advice involve costs associated with providing ongoing expertise, planning, oversight and support. If you have questions when you receive the enhanced reporting, please reach out and we would be pleased to walk you through them in greater detail.

‍