The CSA wants leaner, simpler fund disclosures

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Securities regulators are trying to simplify the documents investors receive about investment funds by reducing the amount of information and presenting it in a user-friendly way. Incidentally, the Globe Advisor team has a similar goal for our weekly newsletter.

Understanding that readers of Management Reports of Fund Performance (MRFP) and weekly investment newsletters may face similar limits when it comes to attention and “cognitive load,” to use the CSA report’s language, we’ll attempt to save time by tackling the proposed disclosure regime and our new weekly newsletter approach all at once.

The report recommends:

• placing important information at the top;
• shorter paragraphs and more bullets (check!), section headers (see below!) and “call out” text boxes (we’ve got those too);
• a “layered” approach that prioritizes key information with additional information on a different page or through links (read the full report here – it’s long, though, despite what it preaches);
• more charts and graphs (working on it…);
• “thematic chunking” to keep related topics together.

What about presenting fee information, specifically?

The report says to:

• use dollars rather than percentages to show how fees add up over time;
• use a fund expense ratio – which combines the management expense ratio and the trading expense ratio – in the Fund Facts and ETF Facts documents;
• include a statement on the importance of fees and their long-term effect on investment returns.

So, what does this mean for advisors?

Nothing yet. The proposal is out for comment until Jan. 17, 2025, and we know these things take time (see CRM3). But the momentum toward simplified fund fee disclosure isn’t about to let up, so advisors should already be making sure clients understand the funds they own and how much they’re paying for them.

Also new this week: Behind The Advice podcast

Our popular Behind the Advice series, in which advisors discuss money issues both personal and professional, is now a podcast. Globe Advisor reporter Brenda Bouw is hosting the series. Check out the first episode, featuring Jackie Porter from Carte Wealth Management.

What do you think of the podcast? What do you think of our newsletter? What do you think of disinheriting children (see below), screen time for retirees (ditto), or anything else we reported on this week? Let me know at mburgess@globeandmail.com.

– Mark Burgess, Globe Advisor assistant editor

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