5 ways to use CRM2 for better conversations

The Investment Funds Institute of Canada (IFIC) has released a three-part series aimed at helping advisors ensure clients get the most from the new reports they will soon receive under CRM2.

The first part, An opportunity to strengthen your relationships with clients, provides guiding principles to help frame advisors’ conversations with clients:

1. Put yourself in clients’ shoes. Imagine you’re the client, choosing an investment with limited financial knowledge. What information do you need to make an informed decision?

2. Be a financial coach. Provide relevant information and encourage your client to ask questions.

3. Focus on key concepts. Provide details tailored to your client’s knowledge level so you don’t overwhelm the client.

4. Use plain language. For help, see IFIC’s glossary.

5. Prompt clients to ask questions. That way, you can assess client comprehension and provide further information as required, as well as build client confidence.

Read: It’s you: Clients leave insensitive advisors

Specific talking points

For the report on performance:

• Let your client know the basis for the personal rate of return.
• Explain the benchmark comparison and why it’s not relevant to the personal rate of return.

For the report on charges and compensation:

• Explain that the fees shown are received by the dealer firm, not by you, and explain how the fees are determined.
• Explain what fees aren’t included — for example, mutual fund fees paid to the fund manager.

Read: What regulators are telling clients about fees

• To help clients understand the total cost of a mutual fund, review the fund’s MER and trading costs. Be prepared to explain the total amount clients pay for their accounts.
• Explain that the report is not an invoice and that amounts are paid directly or indirectly to the dealer.

For further client resources, see the websites of the provincial regulators, as well as IFIC’s member centre. IFIC’s investor resource centre is here. In 2017, IFIC will release new materials so investors can better understand their investments.

Also read: CE Course: 34 ways to be a better advisor