As a former RCMP officer, Norm Massie spent years dealing with shady characters. Which is why the ex-Mountie was surprised to discover some shady dealings in his own investment portfolio.

They came to light when he decided to leave his investment adviser a few years ago, and move his money to another company. The decision meant he had to sell his mutual funds and transfer them to other investments — a move that triggered a hefty fee known as a deferred sales charge from the original fund company.

"They had taken $44,000 out of my account," Massie says, "that nobody told me about for over two years."

While his new investment firm, Edward Jones, was able to assist him in getting those funds reimbursed, not all investors are so lucky.

But new rules coming into effect on Jan. 1, 2017 aim to change all that, by forcing investment firms and advisers to give their clients much more information about what's in their portfolios. And most important of all, they have to be much more open about the fees attached to those investments and services.

Stan Buell

Stan Buell of the Small Investor Protection Association says new CRM2 rules are a step in the right direction. (CBC News)

"Like everybody else, I trusted my adviser," Massie says, which is why some experts hope the new rules — officially known as the Client Relationship Model Phase 2 or CRM2 — will help make his tale of woe a thing of the past. The new rules will force investment firms to lay out exactly what they are buying on behalf of their clients.

2 reports a year

Under the new rules, investors will get two reports a year from their money managers.

The first must clearly outline the costs of any funds they are in. The second lays out performance. Put together, the aim of CRM2 rules is that they will make it easier for investors to know exactly how much their investments made for them this year, and what they paid for them.

From trailer fees, deferred sales charges and management expense ratios, nebulous and arcane charges are rampant in Canadian portfolios, and often buried deep within incomprehensible prospectuses that investors rarely read — if they're even given them. But the alphabet soup of investment fees often spells trouble for investors' long-term returns.

Which is why one small-investor advocate says CRM2 is a long overdue step in the right direction.

"I think the industry and regulators in particular really need to look at what it is the industry should be doing," says Stan Buell of the Small Investor Protection Association. "Are they supposed to be providing financial advice or are they there simply to sell financial products?"

"At present it seems that they're here to sell financial products," he suggests.

While he welcomes CRM2, Buell says one of the investment industry's problems is that it is fundamentally "transaction-based," where the people dealing out investment advice are in fact merely sales people who have a financial incentive to put clients into certain products, whether they are suitable investments or not.

The new CRM2 rules are already changing behaviour, Buell says, but not necessarily in a positive way.

The rules only apply to mutual funds, not other similar products such as segregated funds which are a form of insurance. "There's already been a transition from selling mutual funds to selling segregated funds as a way of escaping the new rules," Buell says.

"If there's no rule that says it can't be done, it tends to get done," Buell laments.

While the new rules are far from perfect, Massie agrees that giving investors clearer information is long overdue.

"It flabbergasted me," he says. "How could this happen in Canada?"

With files from Aaron Saltzman