CRM2: Sounds mysterious but it simply stands for Client Relationship Model 2. CRM2 was the regulatory organizations’ response to the 2008 financial crisis.
CRMII has mandated clear disclosure to investors. The process of CRM2 has already begun, and if it stays on schedule will be complete in mid 2016. The first stage is reporting on the cost to invest. Every purchase or switch in funds must disclose whether there is a cost involved on the investment statement.
The first stage of CRM2 also saw the introduction of the fund fact document, which replaced the tree unfriendly, unwieldy prospectus. The fund fact document is written in non technical language and helps investors compare costs and performance. Investors must receive the fund facts document within 2 days of a new purchase or switch into a fund.
Part of the cost of investing will also include details on how financial advisors get paid.
CRMII will also include clearer information on the rate of return of your investment. As your partner in your financial success, I will explain each new disclosure so at the end you are well informed of each aspect of the investment process. The premise of CRM2 is that an informed educated investor will be an investor that makes wise choices.