New document aims to improve scholarship plan disclosure
New rule changes that aim to give investors better disclosure about scholarship plans came into effect across the country today. Included in the changes is a new document called the Plan Summary, which regulators tailored to meet the needs of investors who have little or no experience purchasing investment products.
A scholarship plan is one of several types of Registered Education Savings Plans. In a scholarship plan, a fund company pools your money with that of other families with children of a similar age, and a trustee manages the fund. When the plan matures, each child is eligible to receive Educational Assistance Payments (EAPs) towards tuition.
Scholarship plans disclose a great deal of information through documents that tend to be long and complex. These documents provide critical information, but are difficult for less experienced investors to understand.
Central to the new disclosure requirements Canadian securities regulators are introducing is the Plan Summary. This short, concise document provides investors with key information in a simple, accessible and comparable format. The Plan Summary provides important information about the potential risks and costs of investing in a scholarship plan in easy-to-understand language.
We encourage people to ask questions about a scholarship plan, or any other investment, before you invest. The person who is selling you the fund is required to provide you with the Plan Summary, and they can answer any questions you may have about the fund. You can ask for the Plan Summary before you make a decision to invest.
Take time to review this information and consider the answers to your questions, especially if you have just brought a new child into the world. This is a busy time, and there is a lot going on.
Having a family is as big step, and it is good to plan. It is also a good time to create or rework your overall financial plan.