Turning transparency into opportunity with Total Cost Reporting
With Total Cost Reporting regulations set to reshape Canada’s investment industry, advisors are standing at a pivotal crossroads. Rather than viewing these changes as just another compliance box to check, advisors should see this as an opportunity to lead the conversation and distinguish their practice in a rapidly evolving landscape.
What is Total Cost Reporting?
Total Cost Reporting (TCR) is a regulatory initiative that will require investment firms to disclose, in clear dollar terms, the full spectrum of costs clients pay. These changes will shine a light on every layer of expense, from management fees to trading costs, ensuring clients see a full and complete picture of their investment costs.
The goal is simple but powerful: Empower investors to make informed decisions with a clear and transparent understanding of how costs affect their portfolios.
What steps should advisors take to prepare for TCR?
Although the official implementation date isn’t until 2026, proactive advisors have a unique opportunity to get ahead of the curve. When clients eventually receive their first TCR statements in 2027, they’ll likely have questions and be searching for clarity. Advisors who wait until the last minute risk being caught flat-footed, while those who prepare early will be ready to engage in meaningful, trust-building conversations.
Forward-thinking advisors recognize that TCR isn’t just a regulatory hurdle, but an opportunity to clearly communicate their value. To prepare, advisors should review how they discuss costs, doing so as part of a broader dialogue about the strategies and outcomes that matter most to clients. Transparent reporting is only the first step, with advisors’ expertise being a necessary component to contextualize those numbers in a way that will truly resonate with their clients.
How can advisors put costs into perspective?
TCR will undoubtedly bring fees into sharper focus, but it’s important to remember that numbers alone can’t tell the whole story. The real differentiator will be advisors who can explain how these costs translate into tangible benefits, or, in other words, why these costs are necessary to achieve the steady income, robust risk management, and long-term growth potential that clients are seeking.
At the end of the day, a portfolio’s value isn’t defined solely by its price tag, but by its ability to help clients achieve their financial goals across their investment horizon. Advisors who can clearly articulate the why behind each investment choice, demonstrating how every dollar spent supports a client’s unique objectives, will be best positioned to foster confidence and loyalty.
While these regulatory advancements will likely see clients becoming more fee-conscious than ever, it also provides an opportunity for advisors to provide reassurance and affirm their commitment to results. Advisors who can confidently discuss costs, and connect them to the value they provide, will benefit from this transparency. In an era in which information is readily available, clients will gravitate toward professionals who are open, proactive, and able to clearly explain both the costs and the benefits of their investment approach.
How can active ETFs support advisor transparency?
This is where exchange-traded funds (ETFs), particularly those employing disciplined active strategies, become invaluable. ETFs allow advisors to craft portfolios that are both cost efficient and performance driven, offering clients the best of both worlds.
As cost transparency becomes the industry standard, clients may naturally wonder whether opting for lower-cost, passive ETFs might be the best solution. Advisors should be prepared to explain why active ETFs offer a compelling value proposition, highlighting the benefits of investments that can go beyond merely tracking an index.
Active ETFs empower skilled portfolio managers to respond dynamically to changing market conditions, seek out opportunities for income, and manage risk in ways that passive strategies don’t have the flexibility to do. By actively selecting securities, adjusting sector exposures, and managing duration or credit risk, active ETFs can help smooth out volatility and protect capital during market downturns, potentially delivering enhanced risk-adjusted returns over the long term.
Active ETFs can also target specific outcomes, such as higher income generation or enhanced diversification, which can be especially valuable in uncertain or rapidly shifting markets. This flexibility enables advisors to construct portfolios that aren’t just cost efficient but that are aligned with each client’s unique goals and risk tolerance.
The value of active ETFs
Ultimately, the true value of active ETFs lies in their potential to deliver enhanced risk-adjusted returns. By balancing income, stability, and diversification, these funds aim to provide a smoother ride for investors, helping them stay invested for the long term and achieve their long-term investment goals.
In a world in which every dollar of cost is clearly visible, advisors who can clearly articulate and deliver meaningful value will elevate their practice and distinguish themselves in a crowded marketplace.
Interested in learning more about Total Cost Reporting? Visit our TCR landing page, where we take a deep dive into what these regulatory changes mean for you and your clients.
Important disclosures
Important disclosures
Commissions, management fees and expenses all may be associated with exchange traded funds (ETFs). Please read the ETF Facts and prospectus before investing. ETFs are not guaranteed, their values change frequently, and past performance may not be repeated.
Investing involves risks, including the potential loss of principal. There is no guarantee that a fund’s investment strategy will be successful. Foreign investing has additional risks, such as currency and market volatility and political and social instability. Large company stocks could fall out of favor, and illiquid securities may be difficult to sell at a price approximating their value. Shares may trade at a premium or discount to their NAV in the secondary market, and a fund’s holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions. Errors in the construction or calculation of a fund’s index may occur from time to time. Please see the fund’s prospectus for additional risks.
Manulife ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce returns.
Manulife Investments shall not assume any liability or responsibility for any direct or indirect loss or damage or any other consequence of any person acting or not acting in reliance on the information contained here. This material was prepared solely for informational purposes, does not constitute a recommendation, professional advice, an offer or an invitation by or on behalf of Manulife Investments to any person to buy or sell any security or adopt any investment approach, and is no indication of trading intent in any fund or account managed by Manulife Investments. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Diversification or asset allocation does not guarantee a profit or protect against the risk of loss in any market. The information provided does not take into account the suitability, investment objectives, financial situation, or particular needs of any specific person. You should consider the suitability of any type of investment for your circumstances and, if necessary, seek professional advice.
Manulife ETFs are managed by Manulife Investments. Manulife Investments is a trade name of Manulife Investment Management Limited.
Manulife, Manulife & Design, Stylized M Design, and Manulife Investments are trademarks of The Manufacturers Life Insurance Company and are used by it and by its affiliates under license
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