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Significant improvements in investor knowledge following new fee disclosure documents, BCSC study finds



VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct. 2, 2017) - 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 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. 

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.

"This initial research on CRM2 shows that change in investor knowledge and behaviour has started, but we still have a long way to go," said Peter Brady, Executive Director of the BCSC. "We want more investors to feel empowered and have important conversations with their advisors about their financial futures. We plan to continue our educational campaigns started last year that encourage investors to 'Take a Look' at their CRM2 reports."

Among investors who reported receiving their new CRM2 statements, trust in advisors remained high, dropping only three percent 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.

"CRM2 provides a great opportunity to strengthen the client-advisor relationship," said Brady. "Advisors should take the opportunity to help their clients be more aware of the new reports and help them understand the impact of fees on investments. Having a greater understanding of fees and investment performance benefits both parties."

The BCSC commissioned the three-part longitudinal Investor Readiness for Better Investing study to measure how well B.C. investors understand the 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. For more information on the research findings, visit the BCSC's investor education website InvestRight.org.

In addition to the research results, the BCSC is releasing tools to help investors navigate and understand the new reports, including a short video and an improved fee calculator. The video and calculator are available on the Take a Look at Your Investment Fees page on InvestRight.org.

The Canadian Securities Administrators is also conducting a longer-term study on the outcomes of CRM2 on investor knowledge, attitudes, and behaviour. The study, which also considers the impact of other policy amendments, will cover activity from 2016 to 2019, and is expected to be completed by 2021.

About the British Columbia Securities Commission (www.bcsc.bc.ca)

The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:

Learn how to protect yourself and become a more informed investor at www.investright.org


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