by Salman Ahmed

This has been a busy news year: war, inflation, and politics have dominated. Lost in those headlines is a major regulatory proposal that has been making waves in the investment industry. The proposition has a lot in it, but the most impactful parts call for enhancing the fee disclosure Canadians receive from their investment providers and expanding the reporting on insurance investments.

The enhancements make a ton of sense. In our comments to the regulators, we’ve welcomed the proposal. The new disclosure requirements would arm investors with information they need to judge the value of the service they receive. Unfortunately, this type of disclosure is rare. Steadyhand clients are unique in Canada in that they’ve always seen the total fees they pay us in dollar and percentage terms every quarter on their account statement. We’re not required to do it, but we believe it’s the right thing to do.

Under the current rules, investment providers are only required to disclose fees paid for advice, which can be just half the total fees charged, as this figure excludes product costs (e.g., the investment management fees for mutual funds, ETFs or other investment products). Even this incomplete disclosure is required just annually and was forced on the industry in 2016. In our view, the proposal gives investors the information they should’ve already been receiving: the total explicit costs of investing.

Most other investment providers that submitted comments to the regulators (see here) disagree with our stance and are pushing back against the proposed changes. Their reasons are predictable: they claim the disclosure would confuse not simplify, they need more time to implement (yet they have all the time in the world when rolling out expensive investment products), and it’s complicated to build these statements (I’m sorry, but how is this even an excuse?).

In fighting the enhancements, the investment industry is missing a golden opportunity to improve the investor experience. Instead, they’ve revealed what they care about most: themselves, not their clients.