SEC's Clayton Says Sales Contests Must Die

"They want to be able to select a brokerage account, an investment advisory relationship, or in some cases both."

It's also clear, he continued, "that the key differences between broker-dealers and investment advisors are not well understood by many of our Main Street investors."

The agency's proposed rules "are intended to address this confusion head-on by mandating a customer relationship summary that would highlight the services offered, the legal standards of conduct that apply, the fees a customer might pay and conflicts of interest that may exist," Clayton added.

Betterment Suggests Changes to Form CRS

CEO Jon Stein of the robo-advisor Betterment urged Clayton in his Aug. 7 comment letter on the advice proposal to make changes to Form CRS, which will provide a summary of the client relationship.

"The commission has, for the most part, identified the key issues that Form CRS should cover, including firms' differing legal obligations, fee structures and conflicts," Stein said.

However, Stein said the agency should improve the form in the following ways:

● more clearly highlight how firms differ with respect to conflicts arising from product-level revenue and should clearly identify all forms of revenue associated with particular accounts.

● better organize, streamline and clarify the form; and

● better implement design principles that have been shown to facilitate visual appeal and comprehension.

Betterment doesn't "just believe that these changes would make Form CRS more effective, we've confirmed it through our own investor testing," Stein said. "That testing indicates that our proposed form, which makes the enhancements listed above, materially improves the form's value to investors."