What’s it all about? What’s the impact? How can you get ready?

What’s it all about?

What’s the impact?

How can you get ready?

Amendments to the National Instrument 31-103 Client Relationship Model commenced July 15th, 2013

Implementation will be phased in over three years and must be adopted by all MFDA & IIROC advisors

All clients will receive clear and complete fee disclosure and more thorough performance reporting

New Fee Disclosure

NewPerformanceReporting

Investor’s low awarenessof all fees

and chargespaid

Investor’s low awareness

of investmentperformancenet of all feesand charges

New Fee Disclosure

NewPerformanceReporting

Transaction and administrative

charges

Initial commissions,

DSC,Trailing

commissions

Net value of securities

after all charges

Shown in dollarsand as

percentagereturns

Fee Sensitive

ReturnFocused

New Fee Disclosure

Transaction and administrative

charges

Initialcommissions,

DSC,Trailing

commissions

Account Opening

TradeTransaction

FeeReporting

Changes to charges

TradeConfirmation

July2013

July2016

Effective date: July 15, 2016

•All costs paid out by the client•All compensation received

As prescribed by CSA

As prescribed by CSA

As prescribed by CSA

New PerformanceReporting

Net value of securities

after all charges

Shown in dollarsand as

percentagereturns

QuarterlyStatements

Annual Reports

MonthlyStatements

(if requested)

July2013

July2016

Effective Date:July 15, 2016

Text, tablesand charts

As prescribed by CSA

As prescribed by CSA

As prescribed by CSA

...of the numbers but not

necessarily the value!

Clients will be fully aware...Clients will be fully aware...

Source: Adapted from Dr. J Grubman – SPDR University

Where do you need to be?Assess

Your Practice

Evaluate your

practice

Source: Adapted from Dr. J Grubman – SPDR University

Assess Your

Practice

Assess Your Practice

Evaluateyour

practiceSAMPLE

Evaluateyour

practice

Source: Adapted from Dr. J Grubman – SPDR University

Assess your

top clients

Assess your

top clients

Conduct the “Litmus Test” on a client-by-client basis

Prioritize clients in terms of fee sensitivity

Use the results to develop your game plan

Assess your

top clients

Assess your

top clients

What if my test results indicate I’m not providing enough services

or value to a client?

Assess your

top clients

For clients you believe are not receiving sufficient services or value:

Delay the fee conversation for 6 to 12 months if necessary

Be pro-active and set up a comprehensive re-discovery meeting

Highlight your services and expertise not currently being utilized

Assess ways you can provide additional concrete or intangible value

Formulate a Game

Plan

Formulate a Game

Plan

SAMPLE

Formulate a Game

Plan

If you don’t raise the subject, your clients will

Details of the new legislation are appearing in the media

If you don’t initiate the conversation, your competition will

Prepare for the

conversation

Opportunity to build loyalty

Initiate the conversation

Exhibit confidence in discussing all topics to build trust.

Demonstrate initiative and leadership by being first to address fees.

Keep it simple; have well-rehearsed answers to potential client questions and focus on clarity.

Source: Adapted from Dr. J Grubman – SPDR University

Start with a simple Introduction

Open the conversation with a well-prepared statement.

Prepare for the

conversation

What not to say…

“I’m being legislated to tell you how much you pay me.”

“The regulators say I have to provide more information to you than I used to.”

Best phrases…

“I wanted to speak to you about some interesting changes to enhance the level of service we provide.”

“I’m excited to tell you about some adjustments we’ve made to improve your investment experience.”

Start with a simple Introduction

Open the conversation with a well-prepared statement.

Focus on the value you provide

Use the Value Summary tool to demonstrate the impact of your advice so far.

Prepare for the

conversation

Prepare for the

conversation

Demonstrate the concrete services provided since your relationship began

Be specific about the range of services you offer

Highlight your intangible value

Focus on concrete services & intangible value

Source: Adapted from Dr. J Grubman – SPDR University

Start with a simple Introduction

Open the conversation with a well-prepared statement.

Focus on the value you provide

Use the Value Summary tool to demonstrate the impact of your advice so far.

Highlight the changes

Explain to the client how the changes will affect them, what they can expect and the benefits.Prepare

for the conversation

Start with a simple Introduction

Open the conversation with a well-prepared statement.

Focus on the value you provide

Use the Value Summary tool to demonstrate the impact of your advice so far.

Highlight the changes

Explain to the client how the changes will affect them, what they can expect and the benefits.

State your feesDiscuss your fees with the client.

Be confident and concise.

Prepare for the

conversation

State your fees

Establish an easy-to-read fee schedule

Use terminology which is simple to understand

Be confident in describing the fees charged/commissions earned

Source: Adapted from Dr. J Grubman – SPDR University

Start with a simple Introduction

Open the conversation with a well-prepared statement.

Focus on the value you provide

Use the Value Summary tool to demonstrate the impact of your advice so far.

Highlight the changes

Explain to the client how the changes will affect them, what they can expect and the benefits.

State your feesDiscuss your fees with the client.

Be confident and concise.

Summarize the benefits

Highlight the benefits going forward: how it’s better for both of you

Prepare for the

conversation

A more open relationship with a greater level

of trust

Increased confidence when

making investment decisions

A better understanding of

fees, performance and value

Prepare for the

conversation

Practice makes perfect

ROLE PLAY: Conduct a role play with a member of your team

PRACTICE: Rehearse your delivery in a comfortable environment

PERFECT: Ensure your responses are clear and concise. Be confidentPrepare for the

conversation

*All requirements are ongoing

PreparationRunway

Requirements Implementation Date

Now*

• Regular quarterly account statements (or monthly if requested)• 60 days notice for clients regarding new or increased operating charges• Relationship Disclosure Information (RDI) containing a complete description of

operating and transaction charges for new and existing clients

July 15, 2013

2013*• Pre-trade disclosure of all charges, DSC or trailing commissions• Enhanced content of trade confirmations (disclosure of all charges)

July 15, 2014

2014*

• More thorough account statements to include: - registration information - market value of each security - whether the account is covered under an investor protection fund and which - securities in the account might be subject to a DSC if sold - position cost information

July 15, 2015

2015*

• Increased information on trade confirmation (transaction charges, DSC or other charges, includes fixed income spreads)• Report summary on charges and other compensation• Annual performance reporting: money-weighted basis

July 15, 2016

Account Opening

July2013

Advisor Actions

Familiarize yourself with new RDI requirements

Be prepared to discuss changes at account opening

Segment your clients to decide best mode of communication

Explain all reports to clients in a simple way

Keep a record of your oral communication with clients

Changes to Charges

July2013

Advisor Actions

Be prepared to discuss changes to operating expenses with clients and follow-up with them to make sure they have received, read and understood the changes

Trade Transaction

July2014

Advisor Actions

Familiarize yourself with new pre-trade requirements

Discuss all applicable charges and compensation with client prior to trading of securities

Be prepared to address client’s response

Keep record of discussion using notes & CRM

Trade Confirmation

July2014

Advisor Actions

Familiarize yourself with new requirements

After a trade confirmation of debt securities has been sent to a client:•follow-up with client to confirm understanding of DSC charges•follow-up with clients to confirm understanding of annual yield

Client re-discovery

Game Plan(Practice)

Game Plan(Client)

ConversationPlanner

Fee Conversation

Equilibrium Test Litmus TestPractice

EvaluationSegmentation

No Yes

Value Summary

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