Nancy Graham CPA, CA, CIM, CFP, TEP

Portfolio Manager
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Getting to the Heart of the Client Relationship Model (CRM)

May 29, 2015 - 6 comments

If you’ve been reading much financial press lately, you may have noticed more conversation about how the financial services industry generates revenues from your investments. In fact the regulators in many developed countries are driving a quiet, global revolution by requiring increased disclosure to investors. Inside the investment industry it is known as Client Relationship Model Phase 2 (CRM2).

By July 2016, all financial advisors will be required to provide every client with both performance and cost reports, so investors gain a clear view of: (1) how their investments are doing, and (2) how much it’s costing along the way.

So far, so good. The disclosures should help investors make improved, apples-to-apples decisions about the financial products and providers available to them. But there is an important component glaringly missing from CRM2. “Glaringly,” at least, once you know to look for it:

How do you ensure that your adviser is always acting in your best financial interests?

Although a Best Interest Duty was considered, such as in this October 2012 CSA paper, “The Standard of Conduct for Advisers and Dealers,” CRM2 left the requirement on the cutting-room floor. As an investor it is still caveat emptor (“buyer beware”). There is no requirement for the advisor to put your interests ahead of their own when making a recommendation.  While this may be hard to believe, it is true, and not well known. While we at PWL have long served our clients as if the requirement already existed, we believe the CSA’s work is not yet done.

By: Nancy Graham with 6 comments.
  15/06/2015 4:02:35 PM
Jim, we are paid by our clients. Our fee is charged based on asset under management. The fee is agreed to in advance when we jointly sign an investment policy statement with our clients.
  15/06/2015 3:07:56 PM
Nancy how are you compensated for your services?
  13/06/2015 10:26:31 AM
@Linda Bernfeld Thank you for your interest, please contact me directly to discuss.
  13/06/2015 8:24:56 AM
@Arthur Galwin I completely agree with your commentary- that unlike today, the financial services industry should be structured, and those in it need to be incentivized, to act in investors' best interest.
  09/06/2015 7:58:46 PM
Arthur Galwin
Interesting article Nancy
coincidentally I received an opinion piece on this very same topic that I'll forward separately ( very brief one page !)
  08/06/2015 8:11:57 PM
linda bernfeld
Is there a minimum amount of money necessary to invest with PWL?

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