Championing improved investor outcomes

Guest column for Investment Executive

By: Andy Mitchell, President and CEO, The Investment Funds Institute of Canada

Members of the investment funds industry can succeed only when their clients also benefit. That is why the industry continually strives to raise confidence in the sector and works diligently to improve investor outcomes.

Since its inception over 60 years ago, the Investment Funds Institute of Canada (IFIC) has championed positive investor outcomes. Recently, we were pleased to see the launch of the Canadian Investment Regulatory Organization, or CIRO, which will carry on the functions of the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada. This newly minted national self-regulatory organization (SRO) oversees all investment dealers, mutual fund dealers and trading activity on Canada’s debt and equity marketplaces. It aims to provide efficient and consistent regulation, protect investors and build Canadians’ trust in financial regulation as well as the people who manage their investments to help them achieve their retirement and life goals.

At IFIC, we believe the SRO model provides long-term, cost-effective dealer regulation and investor protection, and works for the benefit of governments, investors and the industry.

To underscore our support for the new SRO, IFIC is striking a CIRO task force with a mandate to discuss and assess CIRO’s strategic/tactical plans and targeted outcomes, comment on CIRO consultations, address issues and questions, proactively identify and advocate on matters of importance to members, and deal with other matters that arise.

Another important way we stand for improving investor outcomes is through our long-time advocacy for expanded total cost reporting (TCR) to investors. Providing investors with more complete cost information about their investment funds is a key goal for both regulators and the industry. At IFIC, we were pleased with the extension of the implementation timeline to three and a half years from the date of final rule, which is in keeping with the time provided to implement CRM2.

IFIC has launched a TCR task force, which is focused on addressing the substantive requirements of the new TCR rules. The Canadian Securities Administrators (CSA) and Canadian Council of Insurance Regulators have also created a TCR implementation committee, with the participation of CIRO and IFIC. The committee will include both securities and insurance representation.

As you may know, every year IFIC surveys investors to better understand Canadian mutual fund holders and, for the last four years, ETF holders to identify their attitudes, opinions, needs, expectations and behaviours, and to track these over time. The survey is conducted by a third party, Pollara Strategic Insights, and updated every year to ensure we are asking the right questions — those that will elicit the most informative, useful and relevant responses.

New survey themes this year will include investor use of social media and other non-traditional sources of investing information; investor experience with direct investing in stocks, bonds and cryptocurrencies; investor understanding of MERs in annual fee statements (to track this before and after the implementation of TCR); and questions exploring investor use of, and preferences for, digital document delivery. This year’s survey results will be released at IFIC’s annual conference on Oct. 5.

Finally, we were pleased to make a submission to the CSA in 2022 to show our endorsement of the CSA’s intention to introduce an access-based or “access equals delivery” (paperless) model of financial statements. We commend the CSA’s efforts to create a more cost-efficient, timely and environmentally friendly process for disclosing financial statements. In our submission, we focused on a series of recommendations to further streamline the delivery process in order to both reduce the regulatory burden for firms and improve the investor experience.

IFIC will continue to support the implementation of these important investor initiatives, and we look forward to their development and success, which will benefit all stakeholders.