In January 2017, clients of Hemisphere Capital Management (HCM) will get their first taste of the Client Relationship Model, Phase 2 (known commonly as CRM2). CRM2 introduces standardized reporting requirements for regulated Canadian financial advisors. Not surprisingly, HCM already meets the bulk of CRM2’s reporting requirements. Although well-intentioned, CRM2 will likely create confusion for most HCM clients rather than improve reporting transparency.
CRM2 represents the second component of the Client Relationship Model (CRM) regulatory initiative. Originally called the Fair Dealing Model, CRM was proposed by the various Canadian Provincial securities regulators over a decade ago. After a number of regulatory amendments, the first phase of CRM (CRM1) was introduced in 2012. CRM1 formalized industry best practices for financial advisors related to reporting on new client account types, services and costs, standards for investor suitability and risk levels and comprehensive conflict of interest disclosure.