With Total Cost Reporting (TCR), clients will see more detailed information about investment costs on their end-of-year statements. While this information may look different, the fees themselves are not changing. TCR simply makes existing costs more visible. For many clients, this added visibility will be helpful. For others, it may raise questions and lead them to reach out to their advisor for clarity.

Many advisors are already familiar with Management Expense Ratios (MERs) and Trading Expense Ratios (TERs). With the introduction of the Fund Expense Ratio (FER), and a more visible display of cost information, the way clients see and talk about costs may evolve.

TCR is not just a reporting change. It is also a change in how cost conversations happen. So, what does this mean for clients?

From familiar concepts to new client expectations

At its core, TCR is a new industry-wide regulatory initiative from the Canadian Securities Administrators and the Canadian Council of Insurance Regulators. It builds on Equitable’s commitment to clarity and transparency by giving investors a more complete, standardized view of the total cost of investing, including: 

•    Previously embedded product-level costs 
•    Itemized product-level costs 
•    More personalized and detailed performance information  

In the past, many investment costs were built into performance results and shown mainly as percentages. Under TCR, these same costs will also be shown in dollar amounts. This shift may change how clients understand what they see, even though the costs themselves have not changed.

What’s included in an MER and TER?

As clients see more detailed cost information, it becomes more important to explain what an MER and a TER include.

MER

TER

The MER reflects the ongoing cost associated with managing and operating in a segregated  fund. These costs are deducted from the fund’s returns and include the following expenses: •    Investment management and portfolio advisory services •    Administrative and recordkeeping services •    Custodial, audit, legal and regulatory expenses •    Fund accounting and reporting costs For segregated funds, an MER may also reflect costs associated with insurance features and fund administration. All of these expenses are embedded in the daily value of the fund and impact net returns.

The TER represents the costs associated with buying and selling securities within the fund’s portfolio. These expenses may include: •    Brokerage commissions •    Transaction and market impact costs •    Other costs incurred when executing trades

MER, TER and FER: what’s changing?

Under TCR, fund costs are added together and shown to clients in a more transparent, standardized format. The introduction of FER brings these pieces together.

FER, calculated as MER + TER, shows the total fund-level cost of investing. It does not add new fees. It simply provides a clearer, more consolidated view of costs clients are already paying. 

For clients, FER will provide a clearer view of total fund costs. Instead of reviewing separate percentages or embedded costs, clients will see one number that captures the full impact of fund level expenses.

From disclosure to conversation

One of the most important implications of TCR is that transparency does not reduce the advisor’s role. It strengthens it. Without context, transparency can create hesitation. With guidance, it can create confidence. The challenge for advisors will be translating numbers into clear, confident client conversations. 

As cost information becomes more visible, clients may ask: 

“How much am I paying?”
“What am I getting in return?”

This is where advisors can add value by speaking about total costs more holistically and connecting them to the client’s goals and investment strategy.

Preparing for the conversations ahead

Advisors who feel confident explaining MER, TER and FER, and more importantly putting them in context of long-term financial planning, will be better prepared for client conversations.

Preparation may include:

•    Anticipating common client questions
•    Explaining costs in plain language
•    Connecting cost discussions to long-term outcomes
•    Reinforcing the role of professional advice in navigating financial decisions

Looking ahead

The broader impact of TCR is behavioural. 

Clients will see more information. They may ask more questions. And they will rely on their advisor to help them understand what it all means.

At Equitable, our focus is on supporting advisors through this transition with practical tools, education, and resources designed to support real client conversations. For more guidance, advisors can visit our TCR Resource Hub to access the latest materials.