November 03, 2025
Navigating CRM3: Increasing Transparency, Increasing Trust
The Client Relationship Model Phase 3 (CRM3), or Total Cost Reporting (TCR) will come into effect January 1, 2026, and will introduce more changes for advisors and investors as the next phase of CRM regulations come into effect.
Unlike CRM2, which focused on advisor compensation, CRM3 mandates personalized, comprehensive cost reporting to disclose embedded investment costs, such as management expense ratios (MERs) and trading expense ratios (TERs.) This would potentially be exposing fees clients haven’t fully noticed before. Advisors may feel apprehensive about how transparent cost disclosures in dollar terms could affect client perception and business stability.
However, by preparing proactively, advisors can transform these mandatory disclosures into opportunities for better communication, deeper client trust, and stronger relationships.
ADDRESSING ADVISOR CONCERNS ABOUT INCREASED FEE DISCLOSURE
Advisors may worry that CRM3’s requirement to disclose embedded investment costs, such as management expense ratios (MERs) and trading expense ratios (TERs), in dollar amounts will lead to client surprise or skepticism about the value an advisor provides. This shift, set to begin with data collection in 2026 and first reports due in early 2027, has sparked fears of strained relationships or client churn in a competitive market.
However, these concerns can be mitigated. Morningstar’s global research study, “The Value of Advice: What Investors Think, What Advisors Think” (2023) found that clients place greater value on relationships, emotional guidance, and tailored advice over isolated cost metrics – particularly during times of volatility. Rather than changing their strategies or products, advisors can focus on effective, proactive communication to frame costs as part of the broader value delivered. What’s more, preparing for these reporting changes in advance can alleviate any concerns, turning transparency into a tool to strengthen client loyalty and differentiate practices.
UNDERSTANDING CRM3 REQUIREMENTS
CRM3, finalized by the Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO), enhances cost transparency for mutual funds, ETFs, segregated funds, and similar products without necessitating changes to advisors’ core approaches. Effective January 1, 2026, with annual reports covering 2026 due in early 2027, the rules build on existing frameworks to ensure clarity.
Core Reporting Obligations
Dealers must expand the Annual Cost and Compensation Report (ACCR) to include:
- Fund Expenses: Embedded costs like MERs and TERs (net of waivers) in dollars.
- Direct Investment Fund Charges: Fees such as switches or redemptions (excluding fund expenses or dealer charges) in dollars.
- Aggregates: Total fund costs and overall investment costs in dollars.
- Fund Expense Ratio (FER): MER + TER as a percentage per fund class.
These must be client-specific, explained in plain language, and linked to fund documents like Fund Facts.
Flexibilities and Disclosures
Regulators allow reasonable estimates for unavailable data (e.g., foreign ETFs), with clear disclosure of limitations. Exemptions cover certain structured products and prospectus-exempt funds. Annual reporting reduces frequency burdens, and third-party charges can be noted as excluded.
CRM3 ADVISOR RESPONSIBILITIES
While dealers are responsible for integrating technical reporting changes, advisors are responsible for interpreting and communicating the reports in a meaningful way.
Specifically, advisor responsibilities as part of CRM3 include:
- Clarifying the difference between product cost and advisor compensation
- Helping clients understand how fees relate to performance and value
- Incorporating cost-related data into ongoing financial planning conversations with clients
INCREASING TRUST THROUGH TRANSPARENCY
CRM3 presents challenges, including data collection for foreign funds and potential system upgrades, which may strain smaller practices. Clients with multi-custodial assets add complexity, and on-demand cost queries may arise anytime. Yet, fears of client loss are often overstated. Europe’s MiFID II demonstrated that transparency, when communicated effectively, can enhance loyalty without forcing fee reductions or product changes.
Moreover, research shows that 45% of perceived value investors receive from financial advisors comes from emotional outcomes like trust, peace of mind, and personal connection, and is not as heavily weighted to performance and technical outcomes as advisors might think. (Source: Vanguard, Assessing the Value of Advice, 2019.)
PERCEPTION OF VALUE
FOR ADVISOR ONLY - NOT FOR DISTRIBUTION TO INVESTORS
Research also confirms that clients value intangible services like behavioural coaching, emotional support, and advice personalization – but only when those services are explained in relatable, outcome-driven language. (Source: Morningstar, Understanding What Investors Value in a Financial Advisor, 2018 & 2024.) Advisors who have difficulty articulating their intangible value may be shortchanging themselves.
The opportunity for advisors lies in leveraging CRM3 to highlight their unique value: personalized guidance, strategic planning, and behavioural support. By framing costs within the context of these benefits, advisors can address concerns and deepen trust without altering their approach – increasing the client’s perception of their value in the process.
TRUST-BUILDING CONVERSATIONS SHOULD BEGIN NOW
Advisors need not wait until CRM3 reporting changes arrive before broaching this subject with their clients. Raising the topic now creates a longer runway for success once changes are enforced and will increase confidence in the advisor’s guidance.
Early conversations with clients can include:
Introduce increased transparency: Bring the topic of future enhanced fee disclosures into current conversations.
Example: “A new reporting standard called CRM3 will begin in 2026. I want to start talking about it now, so you are fully prepared and can ask any questions that may arise over time.”
Emphasize the industry standard: Emphasize that this is a national standard, not unique to the advisor’s practice or firm.
Example: “Every advisor in Canada will be providing these detailed cost reports. My role is to make sure you understand them clearly and see how these disclosures fit into your long-term plan.”
Reinforce tangible and intangible value: Advisors can refresh clients on their investment philosophy and value proposition, while illustrating how fees enable the services being provided.
Example: “These reports will show investment costs in more detail. They also give us a chance to review how our advice and strategy is supporting you to make better financial decision, feel financially secure and achieve your long-term goals.”
Invite questions early: Encourage open dialogue before clients receive the first report.
Example: “Questions might cross your mind about fees over the next couple of years, which I hope you will take note of and share with me during our meetings. I welcome your questions and look forward to giving you more clarity as needed.”
By raising CRM3 proactively, advisors demonstrate their leadership and create an environment of trust and transparency, long before the new rules take effect.
CONCLUSION
While the arrival of CRM3 may understandably raise concerns for advisors—particularly around fee transparency and perceived value—it also presents a meaningful opportunity. Rather than viewing the new regulations as a disruption, forward-looking advisors can treat CRM3 as a springboard to deepen client trust, reinforce their value, and future-proof their practices.
By proactively engaging with the new rules, collaborating with dealers on internal integration, and initiating thoughtful client conversations now, advisors can transform compliance into connection. Importantly, learning to articulate the full spectrum of value—especially the intangible elements like behavioral coaching, peace of mind, and strategic guidance—is not a gimmick. It’s a legitimate, evidence-backed approach to making the invisible visible. Research consistently shows that these intangible services have a measurable impact on client outcomes and satisfaction. By naming and framing them clearly, advisors help clients recognize he full value they receive—making it easier to justify fees and mitigate reputational risk.
CRM3 doesn’t just demand transparency—it rewards clarity. Advisors who embrace value-focused dialogue will find themselves not only navigating change but thriving through it. For tailored support, advisors are encouraged to connect with their internal compliance teams and begin shaping their proactive CRM3 strategy today.
To work with a consultant on navigating CRM3 conversations with clients, please reach out to your CI sales team.
Sources:
1. AdvisorAnalyst, "CRM3 Countdown: Transparency Gets Real, But the Clock Is Ticking," June 23, 2025
2. AdvisorAnalyst, "What CRM3 Means for Advisors: More Than Just Numbers on a Statement," June 23, 2025
3. Rory Galvin, "The Impact of CRM3 on Canadian Financial Services: What to Expect," Navirum, 2025
4. Canadian Securities Administrators (CSA), "Enhanced Cost Reporting Rule," July 2025
5. Canadian Investment Regulatory Organization (CIRO), "CRM3 Guidance," October 2024
6. Vanguard, "Advisor’s Alpha: Putting a Value on Your Value," 2019–2024
7. Morningstar, "The Value of Advice: What Investors Think, What Advisors Think," 2023
8. CFA Institute, "Investor Trust in the Investment Profession," 2024
9. FP Canada, "Client Expectations and Advisor Value," 2025
10. Cerulli Associates, "North American Wealth Management: Client-Advisory Relationships," 2024
11. Vanguard, “Assessing the Value of Advice,” 2019
12. Morningstar, “Understanding What Investors Value in a Financial Advisor,” 2018 & 2024
To become familiar with the intended changes to client statements, we have created a sample resource. To view the Sample CRM3 Annual Cost and Compensation Report, please click here.
Visit us at www.cifinancial.com
For more information, speak to your CI sales team.
About the Author
Kaitlyn Lawson brings over 16 years of industry experience to her role as Director, Advisor Development with CI Advisor Consulting. Kaitlyn has a proven track record for helping advisor teams across Canada get to the next level, both through 1:1 consulting and broader speaking engagements, like this one.
Throughout her career, Kaitlyn has leveraged her expertise in behavioural finance to help advisors consistently turn prospects into clients and grow their businesses with intention. For her focus on helping women advance in finance, and for providing financial literacy education to women across Canada, Kaitlyn was recognized in 2022 as one of Wealth Professional Canada’s Leading Women in Wealth.
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