Not Another TCR Email

With Total Cost Reporting (TCR) coming down the pipeline on the Segregated Fund side, we want to equip you to have the conversation with your clients. I’ve attached a client friendly piece that explains what TCR is, in a simple way you can share with your clients.

As we receive more clarity on the regulatory requirements for statements, we will be providing a mock statement.

This way you can show your clients what to expect when they receive their new statements come January 2027.

If you’re looking to include a “Reasons Why” letter in your practice as you do client reviews, we have an editable framework letter on our website.

Forms and Materials for Advisors - BMO Insurance. You can also directly access it here: Reasons Why Letter

If you’d like to discuss how to prepare your client’s for the TCR discussion, please click here to schedule a time to connect: Book Meeting with Me

If you’re still looking for more information on TCR, please see below:

What Will Be Included on Client Statements?

Starting with statements delivered in early 2027 (covering the 2026 calendar year), clients will see:

1. Total Cost of Ownership

• The sum of all embedded fund expenses (management fees, operating expenses, trading costs) and direct charges (front-end loads, advisory service fees, transfer/switch fees, reset fees, etc.), shown in dollars.
  • These will include instances where we withdraw units to directly pay a cost, for BMO Insurance these include:
    • Death Guarantee Reset Option (DGRO) rider on the 100/100
    • Death Guarantee Reset Enhancement (DRGE) rider on the 75/100
    • Client Name Class F accounts

2. Fund Expense Ratio (FER)

• The FER (MER + TER) will be shown as a percentage for each segregated fund held.
  • Management Expense Ratio (MER): The percentage covering management and administration costs.
  • Trading Expense Ratio (TER): The percentage covering the costs of buying and selling investments inside the fund.

3. Performance Reporting

• Personal, money-weighted rates of return since contract inception and for standard periods (10, 5, 3, and 1 year).

4. Guarantee Information

• Maturity and death benefit guarantees, including dollar values and dates.
• For contracts with guaranteed withdrawals: annual guaranteed withdrawal amounts and related details.

5. Fund Details

• For each fund: name, market value, deposits/withdrawals, number of units, FER, and whether deferred sales charges apply.

6. Explanatory Notes

• Plain language explanations of fees, how they affect returns, and actions clients can take.

What Will Not Be Included?

• Advisor Compensation Breakdown: Statements will not show a separate breakdown of upfront commissions or trailer fees paid to advisors, except for costs paid directly by the policyholder and not included in embedded management costs.
• New Funds: Funds less than 12 months old are exempt from TCR reporting (a footnote will be provided).
• Direct Advisor Fees: Any fees paid directly to an advisor (not through the insurer or fund) are not included in the total cost figure.
  • Note, Client Name Class F is paid through the insurer.  Nominee is not.

Key Points for Advisors

• No New Fees: TCR does not introduce new or additional charges; it simply discloses existing costs more transparently.
• Dual Reporting: If segregated funds are held in a dealer account, clients may receive both insurer and dealer statements, with slight differences due to rounding or data sources.
• Scope: Applies to most segregated funds, mutual funds, ETFs, and some foreign funds purchased on an exchange or transferred into a Canadian account.