Starting with 2026 year-end statements, clients will receive more detailed information about the costs associated with owning mutual funds, ETFs and segregated funds. These enhanced disclosures are part of Total Cost Reporting (TCR), a regulatory initiative designed to give clients a more complete view of the cost of investing. TCR is part of a broader move toward greater transparency in financial services. Regulators want clients to better understand the costs associated with their investments and make more informed decisions. They also believe clearer reporting can support more meaningful conversations between clients and advisors. While the changes will ultimately appear on client statements, TCR represents much more than a reporting update. It introduces new disclosure requirements, new terminology and new reporting processes across the industry. Understanding what regulators are requiring and how those changes may affect advisor practices can help advisors prepare for the changes ahead. What will clients see that they don't see today? Until now, clients received information about investment performance and certain charges paid directly to their advisor. However, some ongoing investment costs were embedded within investment products and were less visible to clients. Moving forward, clients will receive a more complete picture of the cost of investing. Annual reports will include investment fund expenses, the total annual cost of investing, and a Fund Expense Ratio (FER) for each fund held. Plus, costs will be disclosed in both percentage and dollar terms. Rather than requiring clients to gather information from several documents, TCR will bring key cost information together in one annual report. What new language will clients encounter? One of the biggest changes for clients will be the introduction of the FER. While Management Expense Ratios (MERs) and Trading Expense Ratios (TERs) are already familiar terms for many advisors, many clients may have never encountered them. FER combines: MER The ongoing cost of managing and operating a fund. TER The costs associated with buying and selling securities within a fund. What is happening behind the scenes? The new reporting requirements involve much more than updating statements. Investment fund manufacturers must calculate and provide new cost information to dealers and insurers. This includes data used to calculate a fund's FER and Daily Cost Factor (DCF), which supports the reporting of investment fund expenses. Dealers, insurers and service providers must then incorporate that information into their reporting systems. As a result, TCR represents one of the most significant reporting changes the industry has seen in recent history, requiring coordination across fund companies, insurers, dealers and technology providers. What makes this more than just another compliance change? At first glance, TCR may look like another compliance or reporting change. But its impact goes beyond adding new information to client statements. Advisors will also need to understand how costs are calculated, how products differ and how those products support a client's goals. Many firms are updating training, client materials and internal processes to help advisors explain these changes clearly and consistently. While TCR is a regulatory requirement, it’s also a readiness challenge. Advisors who prepare early may be better positioned to support their clients when enhanced reporting begins. What should advisors be doing to prepare? Although clients will not receive their first enhanced reports until early 2027, preparation should already be well underway. Strengthen your understanding of TCR terminology Advisors should be comfortable discussing embedded costs, MERs, TERs, FERs and DCFs in simple, client-friendly language. Review product knowledge Understanding how costs differ across mutual funds, ETFs and segregated funds will become increasingly important. Prepare for common questions Clients may ask: • Are my costs increasing? • Why haven't I seen this information before? • Why does this product cost more than another? • Should I switch to a lower-cost option? What are the next steps? For advisors, understanding the regulations is only the first step. The next step is understanding the operational implications: new reporting formats, new terminology, more informed client questions and a greater need for clear explanations. Advisors who prepare early may find that TCR becomes less about explaining a new report and more about helping clients understand the information it contains. Looking for more support? You can find additional guidance, common questions and practical implementation resources in Equitable's TCR Resource Hub.