BCSC Study Finds Improved Investor Knowledge Following New CRM2 Reports

A study commissioned by the British Columbia Securities Commission (BCSC) shows that new fee disclosure reports have produced a positive overall effect on investor knowledge and behaviour. Canadian investors began receiving new annual charges and compensation reports, required under securities rules known as the Client Relationship Model, Phase 2 (CRM2), in January 2017. The three-part longitudinal study tracked investor knowledge and behaviour before and after receiving the new reports.

Read the full report: Investor Readiness For Better Investing (Part 3 and Final Report)

Key Findings from the Study

The study showed that 52 per cent of investors who expressed less confidence and investment knowledge at the outset of the study increased their general understanding of fees after receiving their CRM2 reports. Investors who expressed more confidence and investment knowledge at the beginning of the study took action following the receipt of the new reports, with 16 per cent engaging in new communication with their advisor, 25 per cent making a change to their fees or mix of investment products, and 11 per cent changing their firm or advisor.

Among investors who reported receiving their new CRM2 statements, trust in advisors remained high, dropping only three per cent from the beginning of the study to 83 per cent. For investors who reported not receiving their new CRM2 statements, trust in advisors dropped 10 per cent, from 83 per cent to 73 per cent. These investors also had a 15 per cent decline in satisfaction with the overall relationship with their advisor and a 20 per cent decline in satisfaction with advisor communication.

The BCSC commissioned the three-part longitudinal Investor Readiness for Better Investing study to measure how well B.C. investors understand the investment fees they pay and how the new fee reports affected investor knowledge, attitudes, and behaviour. The study was conducted by Innovative Research Group Inc. from November 2016 to June 2017.

Learn More About Investment Fees

In addition to the research results, the BCSC released tools to help investors navigate and understand the new reports, including a short video and usability improvements to a fee calculator. The video and the revised calculator are available on the Take a Look at Your Investment Fees page on the investor education website InvestRight.org.

If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Inquiries at 604-899-6854 or 1-800-373-6393 or through e-mail at [email protected]. You can also file a complaint or submit a tip anonymously using BCSC’s online complaint form.

InvestRight.org is the British Columbia Securities Commission’s investor education website.

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