Frequently Asked Questions

Transcription

1 Frequently Asked Questions

2 1. What is CI Preferred Pricing? CI Preferred Pricing is a new process where CI will automatically assess clients qualifying Class A (ISC) and Class F (including T-Class) fund assets to determine their most appropriately priced mutual fund class. Once client assets meet various asset thresholds that qualify for CI Preferred Pricing, CI will automatically process reclassification switches of those assets to another class of the same fund to reflect the appropriate pricing. In addition to the automatic application of fee discounts on eligible assets through automatic reclassification switches, this new process will also offer: A high watermark methodology to establish fees, giving clients the benefit of locking in market-driven asset level increases for fee reductions but not penalizing them for negative performance; and Family Group pricing. 2. What fees are discounted? The fee discounts apply to management and administration fees. 3. Which client assets are being automatically reclassified as part of CI Preferred Pricing? All qualifying mutual fund assets in Class A (ISC) and Class F will be switched automatically through reclassification switch transactions to take advantage of discount pricing. Qualifying Class A (ISC) assets will automatically be reclassified into the appropriate Class A tier and qualifying Class F assets will be reclassified to the appropriate Class F tier. As part of the launch of CI Preferred Pricing, we will be creating a new fund class, Class P. Class P funds will have management and investment advisory fees charged externally from the funds as quarterly redemptions of securities. These fees are calculated and administered by CI. Since the appropriate fees will automatically be applied at the time of fee redemption, Class P assets will not be a part of the automatic reclassification process. As with Class A (ISC) and Class F assets, Class P assets are also included for the purposes of determining the client s qualification for price discounting and for the high watermark calculation. 4. Are fund securities mature of the DSC and LL schedules included in the automatic reclassifications under CI Preferred Pricing? Yes, fund securities mature of the DSC and LL schedules are included if your client qualifies for CI Preferred Pricing. On a quarterly basis, units that qualify for CI Preferred Pricing will automatically be switched by CI to the Class A (ISC) equivalent. This will occur in the last month of each calendar quarter. Once units are switched to the Class A (ISC) version of the fund, they will be subject to automatic reclassifications based on the next High Watermark Assessment. 5. Do automatic reclassification switches or switches of securities mature of DSC and LL schedules to Class A (ISC) affect trailer fees paid out to me? No, automatic reclassification switches do not affect trailer fees. However, switches of securities mature of DSC and LL schedules to Class A (ISC), if your client qualifies, will increase trailer fees as reflected in the simplified prospectus. 1

3 6. Which assets are included in CI s determination of a client s appropriate pricing tier? The client s CI mutual fund, corporate class, T-Class and segregated fund assets, of any series, are included in our determination of a client s appropriate pricing tier, and contribute to the client s high watermark value. This includes non-registered assets, as well as registered assets such as RESPs, RRSPS, RRIFs, spousal RRSPs, LIFs, LIRAs and TFSAs. Please note that labour-sponsored funds and closed-end funds are excluded from CI Preferred Pricing and these assets do not contribute to the high watermark calculation. 9. What do advisors need to do to make sure eligible clients are included in the program? No paperwork or notifications are required to apply CI Preferred Pricing for client assets. As soon as clients qualify at the account level, CI takes care of the automatic reclassification of their Class A (ISC) and Class F fund units into the discount pricing tier. However, if an individual client holds multiple accounts, and not all of which qualify individually, the advisor will have to complete an Account Linking Form for the client if he or she has $250,000 or more in aggregate CI assets. CI will continue to assess clients asset levels and will automatically reclassify assets to other tiers as they become eligible. 7. What are the asset levels for each discount pricing tier? Fund Class Asset Range A / F / P $500 $149, A1 / F1 / P $150,000 $499, A2 / F2 / P $500,000 $999, A3 / F3 / P $1,000,000 $2,499, A4 / F4 / P $2,500,000 $4,999, A5 / F5 / P $5,000,000 + Please note that some pricing tiers may not be available for certain funds. 8. How are the new fund classes identified? CI will be launching a new fund class for each pricing tier. Each tier will be identified in the fund class name. For example, an asset level of less than $150,000 in an embedded class would still reside in Class A. Examples: $100,000 in A $151,000 in A1 $100,000 in AT5 $151,000 in A1T5 $100,000 in F $151,000 in F1 $100,000 in FT5 $151,000 in F1T5 10. Is the automatic reclassification to CI Preferred Pricing a taxable event? When securities mature of DSC and LL schedules are switched to Class A (ISC), is that taxable? No, these are not taxable events because clients will remain in the same fund. These events will not result in any deemed gain or loss. If the client decides to move to Class P, it will be a switch and also not a taxable event, as long he or she remains in the same fund. 11. With $250,000 in aggregate CI assets, pricing discounts can be extended to other accounts belonging to the same client or to family members, if a Family Group has been established. What do advisors need to do to make this happen? In order to establish a Family Group, advisors will need to complete an Account Linking Form and submit it to CI. Once an advisor has defined the accounts belonging to a single Family Group, the advisor can instruct CI to link the accounts for pricing purposes. 12. What branding will clients see on client-facing documents (i.e. statements)? If assets qualify for CI Preferred Pricing ($150,000 per account or $250,000 per Family Group), client-facing documents, including statements, will automatically reflect the CI Private Wealth brand. For more information on CI Private Wealth, see page 5. 2

4 High watermark pricing 13. What is the high watermark? The high watermark is the highest peak in value of an individual account or aggregated assets of a Family Group achieved since the launch of CI Preferred Pricing. CI conducts an assessment each Friday to determine the week s highest daily total market value of all assets in an account or all linked accounts of a Family Group. If the market value exceeds the previously established high watermark, a new high watermark will be set. The high watermark will not be impacted by negative market fluctuations. The high watermark will decrease proportionately if redemptions (including fee redemptions) and/or transfers are made. 14. What transactions will affect a client s high watermark? High watermark goes higher High watermark goes lower - Purchases, including PACs - Redemptions - New account linking - Unlinking accounts - Transfers in - Transfers out - Inter-fund exchange switch in (IFE) - Inter-fund exchange switch out - Reinvested distributions - SWPs and T-Class distributions - Positive market action - Cash distributions - Fee redemptions (for investment advisory fees and management fees) 15. When is the high watermark determined? It is determined at the launch date of CI Preferred Pricing and is assessed every Friday, taking into consideration the week s highest daily market value of all qualifying assets in the account or linked accounts of the Family Group. Automatic reclassification 16. When does the automatic reclassification happen? Automatic reclassification trades will occur after a new high watermark is set and if the high watermark meets a new higher or lower fee tier s qualifying investments amounts. The High Watermark Assessment takes into consideration all settled trades in an account or linked accounts of the Family Group. 17. Do I need to sign anything with CI to make sure my clients get fee reductions accessible through CI Preferred Pricing? No. CI will automatically reclassify qualifying assets, subject to receiving a signed agreement between CI and the dealer*. 18. Will systematic redemptions and distributions received in cash (including T-Class) be considered redemptions? Yes. Also, these redemptions could move a client s assets into a lower pricing tier. We suggest that advisors meet with clients to plan for these occurrences. 19. Are there circumstances where a client s assets would move from discount pricing back to Class A or Class F? Yes. If the client s assets fall below the minimum threshold of $150,000 per account, those assets would be switched back to their original investment in either Class A (ISC) or Class F. This could happen following redemptions or the unlinking of Family Group accounts. Negative market action would not cause the client s assets to move to a lower pricing tier. *Advisors should ensure that they have access to CI Preferred Pricing by confirming that the program has been approved by their dealer. Additionally, an advisor can notify CI to initiate a High Watermark Assessment at any time by submitting a letter of direction to CI. Client signatures are not required to initiate this assessment. 3

5 Extended Family Pricing 20. What family members assets can be linked to establish a Family Group? A Family Group can be comprised of accounts held by family members consisting of: parents children and/or siblings grandparents or grandchildren great-grandchildren the spouses of each of these persons, and a corporation of which any of the members owns more than 50% voting equity. 21. Is there a limit to how many family members can be included? No, there is no limit. The individuals just need to be related and be in one of the categories outlined above. 22. What is required to establish a Family Group? In order for individuals to link or group separate accounts, the advisor must complete and sign an Account Linking Form attesting to the relationship of each member. It s a simple process, and CI can take care of the back-end administration. 23. Are clients required to sign an Account Linking Form to qualify for discount pricing? No. Client signatures are not required. Only the advisor s signature is needed. 4

6 24. Does CI Private Wealth include CI Preferred Pricing? Yes. CI Private Wealth is designed for affluent and high net worth clients and includes all the benefits of CI Preferred Pricing for Class A (ISC), Class F and Class P assets. 25. What is the difference between CI Preferred Pricing and CI Private Wealth? In addition to all the benefits of CI Preferred Pricing and extended Family Groups, CI Private Wealth provides enhanced, flexible reporting options. It also reinforces the advisor s value and brand while helping the advisor to consolidate assets. CI Private Wealth is designed for affluent and high net clients. 26. What branding will clients see on client-facing documents (i.e. statements)? If assets qualify for CI Preferred Pricing ($150,000 per account or $250,000 per Family Group), client-facing documents, including statements, will automatically reflect the CI Private Wealth brand. Automatic enrollment in CI Private Wealth 27. Why are eligible CI clients automatically being enrolled in CI Private Wealth? We want to ensure that clients with significant CI assets have access to all the advantages and features of CI Private Wealth. In addition to all the benefits of CI Preferred Pricing and Family Groups, CI Private Wealth provides enhanced, flexible reporting options. It also reinforces the advisor s value and brand while helping the advisor to consolidate assets. 28. What asset level qualifies clients for CI Private Wealth? The account minimum is $150,000. For a Family Group, the minimum is $250, What fund classes are available in CI Private Wealth? Class A (ISC), Class F and Class P (including all T-Class versions of these funds). 5

7 30. Will my CI Private Wealth clients receive the same statement as my other CI clients? No, CI Private Wealth will have distinct, quarterly statements. CI Private Wealth gives clients the option to receive: Individualized statements: a specific statement is generated for each account. This is the default option; no action is required for your clients to receive individualized statements, or Consolidated statements: allowing all accounts in a Family Group to be reported on one statement. Clients have the option, along with creating a Family Group, to elect consolidated reporting. All account owners signatures are required to opt in for consolidated reporting. There will be one primary account that dictates which mailing address all documentation, including tax slips, will go to. 31. When will the automatic enrollment take effect? CI is planning to launch CI Private Wealth in May Class P will be launched at the same time. CI Preferred Pricing on Class A (ISC) and Class F will be available to advisors once their respective dealer has approved CI Preferred Pricing and has entered into the relevant agreement with CI. 32. Are the automatic switches within CI Private Wealth taxable events? No. An automatic switch within CI Private Wealth is not a taxable event because clients will remain in the same fund. If the client decides to move to Class P, it will be a switch and it is also not a taxable event, as long as the client remains in the same fund. 6

8 For more information on CI Preferred Pricing or CI Private Wealth, please contact your CI Sales Representative or visit: or FOR ADVISOR USE ONLY NOT FOR DISTRIBUTION TO CLIENTS Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. CI Investments and the CI Investments design are registered trademarks of CI Investments Inc. CI Preferred Pricing and CI Private Wealth are trademarks of CI Investments Inc. 2 Queen Street East, Twentieth Floor, Toronto, Ontario M5C 3G7 I Head Office / Toronto Calgary Montreal Vancouver Client Services English: French: _E (04/17)