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

Amendments to the National Instrument Client Relationship Model commenced July 15 th, 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 New Performance Reporting Investor’s low awareness of all fees and charges paid Investor’s low awareness of investment performance net of all fees and charges

New Fee Disclosure New Performance Reporting Transaction and administrative charges Initial commissions, DSC, Trailing commissions Net value of securities after all charges Shown in dollars and as percentage returns

Fee Sensitive Return Focused

New Fee Disclosure Transaction and administrative charges Initial commissions, DSC, Trailing commissions

Account Opening Trade Transaction Fee Reporting Changes to charges Trade Confirmation July 2013 July 2016

Effective date: July 15, 2016 All costs paid out by the client All compensation received As prescribed by CSA

Charges As prescribed by CSA

Compensation As prescribed by CSA

New Performance Reporting Net value of securities after all charges Shown in dollars and as percentage returns

Quarterly Statements Annual Reports Monthly Statements (if requested) July 2013 July 2016

Effective Date: July 15, 2016 Text, tables and charts

Capital ContributionsReturns

Capital As prescribed by CSA

Contributions As prescribed by CSA

Returns As prescribed by CSA

...of the numbers but not necessarily the value! Clients will be fully aware...

Source: Adapted from Dr. J Grubman – SPDR University

Evaluate your practice Assess your top clients Formulate a game plan Prepare for the conversation

Where do you need to be? Where are you now? Assess Your Practice Evaluate your practice

Source: Adapted from Dr. J Grubman – SPDR University

Assess Your Practice Assess Your Practice Evaluate your practice SAMPLE

Personal relationship Utilize the majority of your services Consistent and robust communication Top priority for face to face conversation A Clients Business relationship Utilize many of your services Consistent communication Priority for face to face conversation B Clients Transactional Relationship Utilize your core services Limited communication Priority for letter, then telephone call C & D Clients Evaluate your practice

Evaluate your practice Assess your top clients Formulate a game plan Prepare for the conversation

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

Evaluate your practice Assess your top clients Formulate a game plan Prepare for the conversation

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

Evaluate your practice Assess your top clients Formulate a game plan Prepare for the conversation

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

Improved Clarity More information prior to trades More thorough performance reports More detailed account statements

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 fees Discuss 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 fees Discuss 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 confident Prepare for the conversation

*All requirements are ongoing Preparation Runway RequirementsImplementation 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, * Pre-trade disclosure of all charges, DSC or trailing commissions Enhanced content of trade confirmations (disclosure of all charges) July 15, * 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, * 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 July 2013 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 July 2013 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 July 2014 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 July 2014 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) Conversation Planner Fee Conversation Equilibrium Test Litmus Test Practice Evaluation Segmentation No Yes Value Summary

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