Submitted by nsscadmin on
Client Relationship Model Phase 3 (CRM3) came into effect on January 1, 2026, which means investors will see a difference in investment cost reporting for 2026 and beyond.
CRM3 continues the work done in the first CRM phases with a goal of delivering greater transparency into the total costs and fees associated with investments, specifically mutual funds and exchange-traded funds (ETFs).
The main changes that will come from CRM3 are an enhancement of the scope of cost disclosures and the format of cost disclosures.
Let’s focus on the enhanced scope first. The CRM2 reports required firms to disclose the direct costs paid to dealers by investors. Under CRM3, the reports are being expanded to also include all the costs that can be embedded within some investment products, (specifically mutual funds and ETFs), including fund management fees, operating costs, and trailing commissions. These new reports will show all embedded costs and fees you are paying on any mutual fund or ETF.
Now let’s talk about the format of cost disclosures. Under CRM2, your Annual Fees and Charges Report provided the total direct costs charged to you by your firm for your investments. Under CRM3, the report will continue to show total direct costs, and must also include:
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total embedded costs of the investment product itself, and
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a new Fund Expense Ratio, written as a percentage that must be included for each fund owned and purchased.
The Fund Expense Ratio will combine a fund’s Management Expense Ratio (MER), and Trading Expense Ratio (TER) into one total reported cost.
Investors will continue to receive an Annual Performance Report and an Annual Fees and Charges Report at the end of each year. Starting in 2027 these reports will include the fee disclosure requirements of CRM3 for your investments during the 2026 calendar year.