4161 / What is the Form CRS that would be required under the SEC best interest proposal?

The SEC version of a fiduciary standard (known as regulation best interest) creates a new Form CRS, which will function as a client relationship summary to avoid confusion among clients as to the relationship between the parties and the duties of the advisor.

The final version of Form CRS was modified to contain less information which, according to the SEC, was deemed appropriate in order to avoid “information overload” for retail clients. The form will be required for investment advisors and broker dealers, and will contain the following information, in addition to a standardized introductory paragraph: |

1. description of relationship and services offered by the firm and advisors,
2. information about fees and costs, as well as information regarding any conflicts of interest and the standard of conduct associated with services provided by the advisor,
3. whether the firm and advisors have a reportable legal or disciplinary history,
4. where the client can find additional information about the firm, and contact information for clients to register complaints, and

The relationship summary will also be required to link to Investor.gov/CRS on the SEC website, where the client can obtain educational information. Form CRS will follow a question-and-answer format, and is limited in length to two pages for investment advisors and broker-dealers, and four pages for dual registrants.

The Form CRS must be filed with the SEC, and clients would be allowed to access any firm’s Form CRS, which are available to the public at investor.gov.