Total cost reporting

Implementation solutions to maximize your financial efficiency

The Total Cost Reporting (TCR) regulation

The Total Cost Reporting (TCR) regulation is designed to improve transparency and give investors a clearer view of the actual costs associated with investment funds.

Given the operational challenges and pressure on back-office teams to maintain a non-differentiated service, it is important to understand the impacts of TCR and how to remain compliant.

In response to TCR, investment fund managers and dealers will need to complete the following activities while also identifying and disclosing exceptions. With the right action plan, firms can also use this as an opportunity to redesign how they interact with advisors.

Source market data
Calculate fees
Manage daily positions and backdated adjustments

Redesign your interactions with advisors

With the proper action plan, firms can view this as an opportunity to redesign their interactions with advisors.

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Objectives of TCR regulation

Firms are required to offer comprehensive disclosure of all expenses related to investing in a fund, including management fees, operating expenses, and other charges that may affect investment returns.

The regulation enforces a standardized format for presenting cost information, facilitating easier comparison of the total costs of investment products.

Investors will receive an annual report breakdown that clearly explains the total costs incurred throughout the year.

Investors must be informed about how these costs affect their overall investment returns, including a net performance figure.

Any changes in the cost structure of an investment must be communicated to investors beforehand, allowing for informed decision making.

Compliance is monitored by Canadian securities regulators to ensure adherence and accuracy in reporting: The Canadian Securities Administrators (CSA) and the Canadian Council of Insurance Regulators (CCIR)

Key steps to compliance

Capture fund expenses

Accurately record the total amount of fund expenses associated with the issuer of the investment.

Additional investment charges

Document direct investment fund charges not covered by CRM2, such as short-term trading fees

Fund Expense Ratio Disclosure

Reveal the FER, expressed as a percentage, for each class or series of securities

Implementation steps

Additional considerations

CRM2 and TCR integration: Plan for future state reporting and seamless integration of CRM2 and TCR
Cost/benefit analysis: Evaluate the merits of separate mailings versus consolidated reporting
Project planning: Consider project planning, testing, and risk management for successful implementation
Scalable infrastructure: Develop scalable infrastructure to support long-term compliance
Ongoing monitoring: Establish a framework for continuous compliance monitoring

Challenges of TCR

Fee reporting strategy and redesign: Integrate CRM2 and TCR reporting for improved customer readability and transparency

Client reporting framework: How should CRM2 and TCR reporting be designed? Consider client experience, operations, and compliance

Separate vs. consolidated reporting feasibility: Analyze costs and benefits of separate CRM2 and TCR mailings

Regulatory cost impact assessment: Evaluate financial and regulatory impacts of reporting methods, including long-term savings

Project Management and Agile Implementation: Identify key delivery and compliance challenges, define a practical agile plan, and manage TCR compliance through clear requirements, sprint tracking, governance, and regular review checkpoints

Testing Support and Simulation Runs: Support mock simulations to test fee calculation accuracy by creating realistic scenarios, validating expected outcomes, and identifying gaps in calculation logic before production release

Stakeholder Alignment and Risk Mitigation: Align stakeholders on TCR regulatory priorities, key risks, mitigation strategies, and decision-making responsibilities to ensure smooth implementation and compliance readiness

Technology Design: Support the redesign of technology for TCR requirements, including updates to fee calculation logic, processing workflows, and system controls to improve compliance, accuracy, and operational efficiency

System Integrations with Broadridge Enhanced TCR: Integrate Broadridge’s enhanced TCR solution into the client’s existing systems by aligning data flows, interfaces, validation rules, and downstream reporting processes to ensure seamless compliance operations

Scalable Infrastructure for Long-Term Compliance: Build scalable infrastructure that can support future regulatory changes, increased transaction volumes, and daily data processing needs while maintaining performance, traceability, and control

Ongoing compliance and monitoring framework: Advise ongoing TCR compliance for data integrity and risk

Work with a trusted partner

Many clients choose our industry utility, agnostic solution due to our complete end-to-end capabilities, combined with our trusted partnership, to ensure that they can navigate complex compliance requirements with confidence and ease.

TCR regulation: Regulatory

Broadridge’s response

Teams completed analysis, drafted requirements, and are finalizing layouts for extracts of positions and position adjustments.

How your firm benefits

We will meet with our clients to provide updates via the Regulatory Program quarterly meetings.

TCR regulation: Enhanced TCR Service

Broadridge’s response

Creation of team to work on analysis needed to define the requirements for the daily and monthly processes, as well as the underlying technology.
Ongoing discussions with market data providers to source cost and expense data for Canadian, U.S., and international funds and ETFs.

How your firm benefits

Further work will be done to integrate into Broadridge CRM2 systems for a single source of fee data for downstream statement composition, e-delivery, and print.
We are meeting regularly with committed clients, both to share details as we work through them and jointly gain insights

Broadridge Consulting Services

Customized advisor reporting templates and statement design

Custom statements, clear charts, fee transparency

Advisor brand customization and branding consistency

Custom branding for advisors
Premium experience, consistency

Data-driven advisor insights within client statements

Performance insights integration
Custom client call-to-actions
Pre-trade analysis for cost-effective securities

Modular reporting for sophisticated investors

Dynamic modules: performance, fees, tax
Customized reports: tailored by client profiles

Consolidated household reporting for advisors

Custom household statements and fees

White-glove service for high-touch advisors

Elite client customization
Pre-trade analysis, premium support

CRM2 and TCR-enhanced client communication

Strategies for clear TCR fee communication

Predictive reporting and personalization

Predictive insights
Future portfolio changes
Personalized communication & analytics

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