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
New Fee Disclosure
NewPerformanceReporting
Investor’s low awarenessof all fees
and chargespaid
Investor’s low awareness
of investmentperformancenet of all feesand charges
New Fee Disclosure
NewPerformanceReporting
Transaction and administrative
charges
Initial commissions,
DSC,Trailing
commissions
Net value of securities
after all charges
Shown in dollarsand as
percentagereturns
Fee Sensitive
ReturnFocused
New Fee Disclosure
Transaction and administrative
charges
Initialcommissions,
DSC,Trailing
commissions
Account Opening
TradeTransaction
FeeReporting
Changes to charges
TradeConfirmation
July2013
July2016
Effective date: July 15, 2016
•All costs paid out by the client•All compensation received
As prescribed by CSA
As prescribed by CSA
As prescribed by CSA
New PerformanceReporting
Net value of securities
after all charges
Shown in dollarsand as
percentagereturns
QuarterlyStatements
Annual Reports
MonthlyStatements
(if requested)
July2013
July2016
Effective Date:July 15, 2016
Text, tablesand charts
As prescribed by CSA
As prescribed by CSA
As prescribed by CSA
...of the numbers but not
necessarily the value!
Clients will be fully aware...Clients will be fully aware...
Source: Adapted from Dr. J Grubman – SPDR University
Where do you need to be?Assess
Your Practice
Evaluate your
practice
Source: Adapted from Dr. J Grubman – SPDR University
Assess Your
Practice
Assess Your Practice
Evaluateyour
practiceSAMPLE
Evaluateyour
practice
Source: Adapted from Dr. J Grubman – SPDR University
Assess your
top clients
Assess your
top clients
Conduct the “Litmus Test” on a client-by-client basis
Prioritize clients in terms of fee sensitivity
Use the results to develop your game plan
Assess your
top clients
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
For clients you believe are not receiving sufficient services or value:
Delay the fee conversation for 6 to 12 months if necessary
Be pro-active and set up a comprehensive re-discovery meeting
Highlight your services and expertise not currently being utilized
Assess ways you can provide additional concrete or intangible value
Formulate a Game
Plan
Formulate a Game
Plan
SAMPLE
Formulate a Game
Plan
If you don’t raise the subject, your clients will
Details of the new legislation are appearing in the media
If you don’t initiate the conversation, your competition will
Prepare for the
conversation
Opportunity to build loyalty
Initiate the conversation
Exhibit confidence in discussing all topics to build trust.
Demonstrate initiative and leadership by being first to address fees.
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
Open the conversation with a well-prepared statement.
Prepare for the
conversation
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.”
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.”
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
Prepare for the
conversation
Demonstrate the concrete services provided since your relationship began
Be specific about the range of services you offer
Highlight your intangible value
Focus on concrete services & intangible value
Source: Adapted from Dr. J Grubman – SPDR University
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.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 feesDiscuss your fees with the client.
Be confident and concise.
Prepare for the
conversation
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
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 feesDiscuss 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
Prepare for the
conversation
A more open relationship with a greater level
of trust
Increased confidence when
making investment decisions
A better understanding of
fees, performance and value
Prepare for the
conversation
Practice makes perfect
ROLE PLAY: Conduct a role play with a member of your team
PRACTICE: Rehearse your delivery in a comfortable environment
PERFECT: Ensure your responses are clear and concise. Be confidentPrepare for the
conversation
*All requirements are ongoing
PreparationRunway
Requirements Implementation Date
Now*
• 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
2013*• Pre-trade disclosure of all charges, DSC or trailing commissions• Enhanced content of trade confirmations (disclosure of all charges)
July 15, 2014
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
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
Account Opening
July2013
Advisor Actions
Familiarize yourself with new RDI requirements
Be prepared to discuss changes at account opening
Segment your clients to decide best mode of communication
Explain all reports to clients in a simple way
Keep a record of your oral communication with clients
Changes to Charges
July2013
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
Trade Transaction
July2014
Advisor Actions
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
July2014
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
Client re-discovery
Game Plan(Practice)
Game Plan(Client)
ConversationPlanner
Fee Conversation
Equilibrium Test Litmus TestPractice
EvaluationSegmentation
No Yes
Value Summary
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