Understanding TCR and the value of advice

Canadians have access to a broad array of investment products, and fees are an inherent part of the equation. These fees, charged by investment firms, help cover the costs related to advice, account administration, investment product management, and transactions carried out on your behalf.

Under new rules starting in 2026, clients will see a more detailed picture of the fees they pay for investment services. We believe this is a good thing, as the clear disclosure of fees and performance is an important aspect of the advisor-client relationship. It also starts a conversation about the value of advice, not just because of transparency, but because these conversations naturally happen when clients see the impact of your guidance.

What is TCR?

Also known as the Client Relationship Model, Phase 3 (CRM3), total cost reporting (TCR) is the latest in a series of initiatives by Canadian securities regulators aimed at improving how financial information is disclosed to investors.

The previous enhancement, CRM2, was implemented in 2017 and focused on disclosing performance and fees paid to investment advisors. CRM3 expands on this, adding new transparency requirements for costs paid by clients but embedded in the funds themselves.

Under the new rules, the annual report on charges and other compensation will include a breakdown of total ongoing costs investors paid for mutual funds, exchange-traded funds (ETFs), and some other financial products. This includes fund management fees that have traditionally been embedded in the total cost of the fund, rather than separated out.

Investment costs will also have to be disclosed in dollar value, not just as a percentage of the total investment. This information in dollars will represent the aggregate amount paid for by all the funds held in the client’s account.

Among the changes, client statements will have to show in dollar terms:

• The amount of expenses for all investment funds, including management fees, trading costs, and operating expenses
• The amount the advisor was compensated for providing advice and service
• A total that reflects the overall investment costs for the year

Statements will also reveal the fund expense ratio, a figure that combines the management expense ratio with the trading expense ratio to provide a more complete picture of fund costs.To be clear, these disclosures aren’t additional charges; they’ve always been part of the cost of the investments. They’ll simply be presented differently, which should provide a better understanding of the investment experience. This information is also generally found in the Fund Facts or ETF Facts that are reviewed with clients.

When does TCR come into effect?

TCR requirements will begin applying to funds in 2026, which means the information will begin to show up on annual statements received by investors in 2027.

While this is still a ways off, we believe it’s important to begin discussing these changes with clients well ahead of time. These new disclosures are a great opportunity to help investors get a better sense of what they’re paying for and why good investment advice has real value.

What does this mean for your clients?

Starting in 2027, clients will see all the costs they pay, broken down into dollar amounts, on their annual reports. They may ask what these numbers mean, what’s included, and how they’re calculated. To help you prepare, a sample report will be available in August 2026 for your review. It’s a great way to get familiar with the format and feel confident in your client conversations.

Coming August 2026 – TCR sample report