The Ultimate Guide to Form CRS

THE COUNTDOWN TO FORM CRS IS ON!

WE’VE GOT THE SOLUTION.

On June 5, 2019, the Securities and Exchange Commission adopted new rules requiring all SEC-registered investment advisers and broker-dealers with retail clients to create a new Form ADV, Part 3, also known as a Client Relationship Summary (Form CRS). The new Form CRS plays a role in the SEC’s broader rulemaking efforts to protect Main Street investors and to help solve investor confusion over the differences between IAs and BDs.

The Form CRS compliance deadline is rapidly approaching. Read on to learn more about this important regulation, as well as our technological solution.

FORM CRS FAQs

1. Who needs to file Form CRS?
Every broker-dealer and investment adviser registered with the U.S. Securities and Exchange Commission is required to deliver to retail investors a relationship summary (Form CRS a/k/a Form ADV Part 3) disclosing summary information about the firm. If you do not have any retail investors, you are not required to prepare or file one.

2. Who is a retail investor?
A “retail investor” is a “natural person, or the legal representative of such natural person, who seeks to receive or receives services primarily for personal, family or household purposes.” High net worth individuals are retail investors. The definition does not distinguish based on net worth. Hedge funds, private equity funds and venture capital funds do not meet the definition of “retail investor.”

3. When is the filing date?
Investment advisers’ initial relationship summaries can be filed on or after May 1, 2020 and by no later than June 30, 2020 on IARD either as: (1) an other-than-annual amendment or (2) part of your initial application or annual updating amendment. Broker-dealers can file Form CRS on CRD beginning May 1, 2020 and also must file no later than June 30, 2020.

4. Is there an SEC or FINRA filing fee?
There is no regulatory fee for filing Form CRS.

5. Do I need to make ongoing filings and deliver changes to retail investors?
You must update your relationship summary and file it in accordance with Form CRS Instruction 7.A. within 30 days whenever any information in the relationship summary becomes materially inaccurate. The filing must include an exhibit highlighting changes required by Instruction 8.C.

You must communicate any changes in the updated relationship summary to retail investors who are existing clients or customers within 60 days after the updates are required to be made and without charge. You can make the communication by delivering the amended relationship summary or by communicating the information through another disclosure that is delivered to the retail investor. Each amended relationship summary that is delivered to a retail investor who is an existing client or customer must highlight the most recent changes by, for example, marking the revised text or including a summary of material changes. The additional disclosure showing revised text or summarizing the material changes must be attached as an exhibit to the unmarked amended relationship summary.

You must deliver the most recent relationship summary to a retail investor who is an existing client or customer before or at the time you: (i) open a new account that is different from the retail investor’s existing account(s); (ii) recommend that the retail investor roll over assets from a retirement account into a new or existing account or investment; or (iii) recommend or provide a new brokerage or investment advisory service or investment that does not necessarily involve the opening of a new account and would not be held in an existing account, for example, the first-time purchase of a direct-sold mutual fund or insurance product that is a security through a “check and application” process (i.e., not held directly within an account). You also must deliver the relationship summary to a retail investor within 30 days upon the retail investor’s request.

6. Do I need to give new clients or prospective clients a copy of Form CRS?
Yes. You must begin to deliver your relationship summary to new and prospective clients and customers who are retail investors as of the date you are first required to file (June 30, 2020).

7. When is Form CRS delivery due to existing clients and customers?
You must deliver Form CRS to each of your existing clients and customers who are retail clients within 30 days after June 30, 2020 (the date you are first required to electronically file your relationship summary with the SEC or CRD).

Webinar: Form CRS & Conversation Starters Made Easy: Practical Application & Tips for Investment Advisers, Dual Registrants & Broker-Dealers

 

Regulation Best Interest and Form CRS: Understanding the Obligations

Regulation Best Interest (“Reg BI”) applies to broker-dealers that service natural person clients and raises the standard of care by imposing a “General Obligation” to act in a retail client’s best interest and to not place its own interest ahead of its retail client. The General Obligation is satisfied only if the broker-dealer complies with four specific component obligations. Compliance with Reg BI is required by June 30, 2020.

The four component obligations define what it means to “act in the best interest” and are outlined as follows:

Disclosure Obligation

Provide certain prescribed disclosure before or at the time of the recommendations, about the recommendation and the relationship between the retail customer and the broker-dealer.  Such disclosures must address all material facts relating to the scope and terms of the relationship with the retail customer, including capacity as a broker-dealer, material fees and costs, and type and scope of services.

 

Care Obligation

Exercise reasonable diligence, care and skill in making a recommendation to understand the associated potential risks rewards and costs, have a reasonable basis to believe the recommendation is in the best interest of the customer and have a reasonable basis to believe that a series of recommended transactions is not excessive.

 

 

Conflicts of Interest Obligation

Establish, maintain and enforce policies and procedures reasonably designed to address conflicts of interest associated with its recommendations to retail customers.

Addressing the conflict of interest obligation requires broker-dealers to identify and at a minimum disclose or eliminate, all conflicts of interest associated with such recommendations and to mitigate certain identified conflicts, assuming that those conflicts were not otherwise eliminated.

Compliance Obligation

Establish, maintain and enforce policies and procedures reasonably designed to achieve compliance with Reg BI.  The SEC believes that a broker-dealer “should consider the nature of that firm’s operations and how to design such policies and procedures to prevent violations from occurring, detect violations that have occurred, and to correct promptly any violations that have occurred.”

 

In preparing for Reg BI, broker-dealers must conduct a comprehensive review of their business and client disclosures, including the development of new Form CRS. Key considerations include:

  • Form CRS and other client disclosures
  • Conflicts of Interest
  • Product offerings
  • Conflicting lines of business
  • Investment recommendations
  • Compensation systems
  • Supervision
  • Training

FORM CRS Timeline

Form CRS and Its Impact on State-Registered Advisers

While many investment advisers are starting to plan for Form CRS/Form ADV Part 3, one group of investment advisers can breathe a sigh of relief that this is a project that does not need to be on their ‘To Do’ list. As of now, no state regulator has adopted this disclosure document for state-registered advisers. And based on the North American Securities Administrators Association’s (NASAA) initial comment letter to the SEC related to Form CRS, it is unlikely this will be advocated for.

As of now, it is too early to tell if NASAA will present a Form CRS model rule. Frankly, since state advisers are already required to submit Form ADV Part 1A, Part 1B, Part 2A and Part 2B, it can be argued they provide sufficient disclosure already! And while CSS will continue to track the status of any state adoption of the Form CRS, we believe this is not on the near horizon. It might be more likely that NASAA will focus on revising the Form ADV Part 1A and 1B instead.

Remember though that if a state-registered adviser is also dually registered, Form CRS may still be necessary to disclose your brokerage practices. And finally, should a state-registered adviser voluntarily choose to create and maintain a Form CRS, they should seek guidance from their State Regulator on any concerns of adopting a document not required by their regulator!

 

"Distinct" Purpose of Form CRS

To help retail investors select or determine whether to remain with a firm or financial professional by:

  1. Providing better transparency and
  2. Summarizing in one place selected information about a particular broker-dealer or investment adviser.

Both broker-dealers and investment advisers must provide disclosures on the same topics under standardized headings in a prescribed order to retail investors

  • …which should benefit retail investors by allowing them to more easily compare services by comparing different firms’ relationship summaries.

Summary of Form CRS

The relationship summary is intended to inform retail investors about:

  • The types of client and customer relationships and services the firm offers;
  • The fees, costs, conflicts of interest, and required standard of conduct associated with those relationships and services;
  • Whether the firm and its financial professionals currently have reportable legal or disciplinary history; and
  • How to obtain additional information about the firm
  • Encourage a dialogue to ask questions (Conversation Starters).

To Whom? Retail Investor

A natural person, or the legal representative of such natural person, who seeks to receive or receives services primarily for personal, family or household purposes.

By Whom:

  • 8,000 + SEC registered advisers who indicate clients in Form ADV Part 1, Item 5.D.(a) or 5.D.(b) (retail investors)
  • Most of 4,000 broker-dealers

 

Challenges

  • Identifying retail investors (process, recordkeeping)
  • Identifying conflicts of interest
  • Identifying other disclosures and content references
  • Managing Conversation Starters (more later…)
  • Getting it within 2/4 pages – ensure complying with the instructions and addressing the contents of 5 items, 16 sub-sections, 24 tertiary matters, and 11 4th and 5th level requirements.

 

What’s Required at Initial Filing and Delivery?

Investment advisers who are already registered or have an application for registration pending, and broker-dealers already registered with the SEC must file with IARD or CRD, respectively between May May 1 – June 30, 2020.

Retail investors will receive a relationship summary:

  • At the beginning of a relationship with a firm,
  • Following a material change to the relationship summary, and
  • An updated relationship summary upon certain events.

 

 

Deliver Form CRS to Retail Clients at the Earliest of...

For Advisers:

  • Before or at the same time you enter into an investment advisory contract (written or oral) with that retail investor and before or at the time you recommend an account type

For Broker-Dealers:

  • Before or at the earliest of recommending an account type, securities transaction, or an investment strategy involving securities; (ii) placing an order for the investor, or (iii) opening a brokerage account for the investor.

Additional Delivery Requirements to Existing Clients & Customers

Deliver Form CRS to existing clients and customers before or at the time of:

  • Opening a new account that is different from the client’s existing account(s);
  • Recommending that the client roll over assets from a retirement account into a new or existing account or investment; or
  • Recommend or provide a new brokerage or investment advisory service or investment that does not necessarily involve the opening of a new account and would not be held in an existing account. Examples include:
    • First-time purchase of a held-away mutual fund or insurance product
    • Providing advice on a held-away 401k account

 

More Requirements

  • Communicate any changes made to Form CRS to each retail investor who is an existing client within 60 days after the amendments are required to be made and without charge.
  • The communication can be made by delivering the amended Form CRS or by communicating the information through another disclosure that is delivered to the retail investor.
  • Deliver a current Form CRS to each retail investor within 30 days upon request.

 

What Else? IA Rule Amendments; Policies & Procedures Amendments

  • Section 204-1. (a) Amend Part 3 at the frequency required by the Instructions. (b) File Part 3 via IARD.
  • File beginning May 1, 2020 and no later than June 30, 2020.
  • Section 204-2. Maintain Books and Records
  • Section 205-5. Delivery of Form CRS

Features of Form CRS

  • Limited prescribed wording
  • Standardized Headings, Electronic and Graphical Formats/ Layered Disclosure/ Additional Information
    • Sub-topics do not need to be in order
    • Drives review of other information and disclosure links
    • Requires references to additional information
  • Concise and direct, plain English; consider retail investors’ level of financial experience
  • Avoid and/or explain legal jargon
  • Avoid double negatives

 

What are Layered Disclosures?

Layered disclosures are a “means of facilitating access” to additional detail and context/ beyond just hyperlinks.

  • They are characterized by the creative use of electronic formats to promote engagement
  • They promote the goals of brevity and fulsome information
  • IAC commented that to encourage a transition to electronic delivery will increase likelihood that investors will see and read important disclosures

 

FORM CRS INSTRUCTIONS

Instruction 1. Format

  • Must include required items 1-5
  • Must respond to each item in the same order
  • Within each item RIAs are not required to respond in the order the info. is requested
  • May not include disclosure not required
  • Should include disclosure that helps explain info., as necessary/ see electronic and graphical formats for layered disclosures
  • Must make Form CRS available free without charge
  • Two (2) page limit for IAs and BDs. Four (4) page limit for dual registrants, and affiliated IAs and BDs who combine.
  • Must use reasonable paper size, font size and margins

 

Paper Size

Unlike the proposed instructions, the final instructions do not prescribe paper size, font size, and margin width, providing instead that they should be reasonable.

  • We believe that 8½” x 11” paper size, at least an 11-point font size, and a minimum of 0.75” margins on all sides, as proposed, could be considered reasonable, but other parameters could also be reasonable.
  • The objective of the proposed paper, font, and margin size limitations was to make the relationship summary easy to read.
  • We expect that a visually engaging and effective design, including in electronic format, could achieve the same objective without the prescriptive limitations.

 

Instruction 2. Plain English; Fair Disclosure

This directive is designed to promote effective communication between RIA and retail investors.

  • Follow principles of Plain English Handbook
  • Information must be:
    • True and factual
    • Complete
    • Not misleading
    • Balanced
    • Without exaggerated or unsubstantiated claims

 

Instruction 3.A. Electronic & Graphic Formats

General instruction 3.A. reads “You are encouraged to use charts, graphs, tables, and other graphics or text features in order to respond to the required disclosures…You are also encouraged to use text features, text colors, and graphical cues, such as dual-column charts, to compare services, account characteristics, investments, fees, and conflicts of interest.”

The goal here is to make the Form CRS easier to read and understand for the retail client.

Instruction 3.B Electronic and Graphic Formats

In a relationship summary that is posted on your website or otherwise provided electronically, you must provide a means of facilitating access to any information that is referenced in the relationship summary if the information is available online, including, for example, hyperlinks to fee schedules, conflicts disclosures, the firm’s narrative brochure required by Part 2A of Form ADV, or other regulatory disclosures.

In a relationship summary that is delivered in paper format, you may include URL addresses, QR codes, or other means of facilitating access to such information.

 

Instruction 3.C.  Electronic and Graphic Formats

Explanatory or supplemental information included in the relationship summary pursuant to General Instructions 3.A. or 3.B.:

  1. must be responsive to and meet the requirements in these instructions for the particular Item in which the information is placed; and
  2. may not, because of the nature, quantity, or manner of presentation, obscure or impede understanding of the information that must be included. When using interactive graphics or tools, you may include instructions on their use and interpretation.

The Rule release emphasizes that supplemental information is good and helpful but Form CRS within its own page limits must cover the required information completely.

Instruction 4. Formatting for Conversation Starters, Additional Information, and Standard of Conduct

Use text features to make the Conversation Starters and Additional Information referenced more noticeable and prominent in relation to other discussion text, for example, by:

Text

Instructions 5-6

  1. Dual Registrants, Affiliates, and Additional Services.
    • Dual Registrants are encouraged to use a single Form CRS, meaning a Form CRS for an adviser and broker-dealer in a single, four-page document. You may do two, two-page Form CRS submissions, but you must reference and facilitate access from one to the other.
    • Duly licensed reps must deliver the firm’s and affiliate’s Form CRS at the same time. Again, they must cross-reference each other and facilitate access to the other entity’s Form CRS.
  2. Preserving Records. A. You must maintain records in accordance with Advisers Act rule 204-2(a)(14)(i) and/or Exchange Act rule 17a-4(e)(10), as applicable.

 

Instruction 8. Updating the Relationship Summary and Filing Amendments

  • You must update and refile within 30 days of any information in Form CRS becoming materially inaccurate
  • You must communicate to existing clients within 60 days after updates are required to be made.You may make the communication by
    • Delivering an amended Form CRS
    • Delivering another explanatory disclosure

Instruction 10. Electronic Posting & Manner of Delivery

“You must post the current version of the relationship summary prominently on your public website, if you have one, in a location and format that is easily accessible for retail investors.”

  • Follow SEC Use of Electronic Media Guidance (1996) regarding appropriate client consent.
  • “If the relationship summary is delivered electronically, it must be presented prominently in the electronic medium, for example, as a direct link or in the body of an email or message, and must be easily accessible for retail investors.”
  • “If the relationship summary is delivered in paper format as part of a package of documents, you must ensure that the relationship summary is the first among any documents that are delivered at that time.”

 

Immediate Review

The Final Rule release states that the SEC will begin to review samples of Form CRS filings immediately upon filings being made to ensure that Form CRS is fulfilling its intended purpose.

 

 

ITEM INSTRUCTIONS

Item 1. Introduction

Include the date prominently at the beginning of the relationship summary (e.g., in the header or footer of the first page or in a similar location for a relationship summary provided electronically). Briefly discuss the following information in an introduction:

A. State your name and whether you are registered with the Securities and Exchange Commission as a broker-dealer, investment adviser, or both. Also indicate that brokerage and investment advisory services and fees differ and that it is important for the retail investor to understand the differences. You may also include a reference to FINRA or Securities Investor Protection Corporation membership in a manner consistent with other rules or regulations (e.g., FINRA rule 2210).

B. State that free and simple tools are available to research firms and financial professionals at Investor.gov/CRS, which also provides educational materials about broker-dealers, investment advisers, and investing.

Firms may use their own words to describe services

  • Broker-dealers are further required to state that they buy and sell securities

Address the following topics:

  1. Monitoring – Explain whether or not you monitor retail investors’ investments, including the frequency and any material limitations. If so, indicate whether or not the services described in response to this Item 2.B.(i) are offered as part of your standard services.
  2. Investment authority
  3. Limited investment offerings
  4. Account minimums and other requirements

 

Item 2.C. Additional Information

Include specific references to more detailed information about your services that, at a minimum, include the same or equivalent information to that required by the Form ADV, Part 2A brochure (Items 4 and 7 of Part 2A or Items 4.A. and 5 of Part 2A Appendix 1) and Regulation Best Interest, as applicable.

You may include hyperlinks, mouse-over windows, or other means of facilitating access to this additional information and to any additional examples or explanations of such services.

 

Items 2.D. Conversation Starters

(i) If you are a broker-dealer and not a dual registrant, include: “Given my financial situation, should I choose a brokerage service? Why or why not?”

(ii) If you are an investment adviser and not a dual registrant, include: “Given my financial situation, should I choose an investment advisory service? Why or why not?”

(iii) If you are a dual registrant, include: “Given my financial situation, should I choose an investment advisory service? Should I choose a brokerage service? Should I choose both types of services? Why or why not?”

(iv) “How will you choose investments to recommend to me?”

(v) “What is your relevant experience, including your licenses, education and other qualifications? What do these qualifications mean?”

 

Item 3. Fees, Costs, Conflicts & Standards of Conduct

A.Use the heading: “What fees will I pay?”

(i) Description of Principal Fees and Costs: Summarize the principal fees and costs that retail investors will incur for your brokerage or investment advisory services, including how frequently they are assessed and the conflicts of interest they create.

  • The fees described by investment advisers should align with the type of fee(s) disclosed in response to Form ADV Part 1A, Item 5.E, but they should be summarized in a way that provides retail investors a high-level overview.
  • Investment advisers with wrap fee program fees are encouraged to explain that asset-based fees associated with the wrap fee program will include most transaction costs and fees to a broker-dealer or bank that has custody of these assets, and therefore are higher than a typical asset-based advisory fee.
  • With respect to addressing conflicts of interest, an investment adviser that charges an asset-based fee could, for example, include a statement that the more assets there are in a retail investor’s advisory account, the more a retail investor will pay in fees, and the firm may therefore have an incentive to encourage the retail investor to increase the assets in his or her account.
  • Broker-dealers must describe their transaction-based fees. With respect to addressing conflicts of interest, a BD could include a statement that a retail investor would be charged more when there are more trades in his or her account, and that the firm may therefore have an incentive to encourage a retail investor to trade often.
  • Standards of conduct and conflicts of interest
  • Financial professional compensation and related conflicts of interest

 

Items 3.A.(ii) Description of Other Fees & Costs

“List examples of the categories of the most common fees and costs applicable to your retail investors (e.g., custodian fees, account maintenance fees, fees related to mutual funds and variable annuities, and other transactional fees and product-level fees).”

Per the Release, in making this determination, firms should consider, for example,

  • The amount of the fee (including whether the fee varies based on options the investor may select such as optional benefits and the investment options that a contract owner may select in the context of variable annuities and variable life insurance products),
  • The likelihood that the fee will be applicable,
  • Whether the fee is ordinarily assessed on a significant number of the firm’s clients,
  • Whether the fee is associated with a product or service that the firm frequently recommends or provides,
  • Whether the fee is contingent upon certain events the investor should be made aware of, the effect on returns, and the magnitude of the conflict of interest it may create.

 

Item 3.A.(iii) Additional Information

  • State “You will pay fees and costs whether you make or lose money on your investments. Fees and costs will reduce any amount of money you make on your investments over time. Please make sure you understand what fees and costs you are paying.”

You must include specific references to more detailed information about your fees and costs that, at a minimum, include the same or equivalent information to that required by the Form ADV, Part 2A brochure (specifically Items 5.A., B., C., and D.) and Regulation Best Interest, as applicable.

 

Item 3.B. Standards of Conduct & Conflicts of Interest

Use the heading: “What are your legal obligations to me when providing recommendations as my broker-dealer or when acting as my investment adviser? How else does your firm make money and what conflicts of interest do you have?”

Standard of Conduct

  • Include (emphasis required): “When we provide you a recommendation as your broker-dealer or act as your investment adviser, we have to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interests. You should understand and ask us about these conflicts because they can affect the recommendations and investment advice we provide you. Here are some examples to help you understand what this means.”
  • If you do not provide recommendations as a broker-dealer: We do not provide recommendations as a broker-dealer. When we act as your investment adviser, we have to act in your best interest and not put our interest ahead of yours…”

 

Fiduciary

SEC eliminated reference to “fiduciary” standard of conduct in adopting release.

However, Advisers are permitted to use the word “fiduciary” in their disclosures, including Form CRS. The IAA received this confirmation June 25, 2019 from senior staff in the SEC’s Division of Investment Management.

The final instructions to Form CRS require investment advisers, broker-dealers, and dual-registrants to include a brief statement of the applicable standard of conduct. Firms are required to use the exact language specified in the form’s instructions, which does not include the word “fiduciary.”

 

Item 3.B. Conversation Starter & Additional Information

“How might your conflicts of interest affect me, and how will you address them?”

You must include specific references to more detailed information about your conflicts of interest that, at a minimum, include the same or equivalent information to that required by the Form ADV, Part 2A brochure and Regulation Best Interest, as applicable.

 

Item 3.C. Financial Professional Compensation

Use the heading: “How do your financial professionals make money?”

(i) Description of How Financial Professionals Make Money: Summarize how your financial professionals are compensated, including cash and non-cash compensation, and the conflicts of interest those payments create.

(ii) Required Topics in the Description: Include, to the extent applicable, whether your financial professionals are compensated based on factors such as: the amount of client assets they service; the time and complexity required to meet a client’s needs; the product sold (i.e., differential compensation); product sales commissions; or revenue the firm earns from the financial professional’s advisory services or recommendations.

 

Item 4. Disciplinary History

A. Use the heading: “Do you or your financial professionals have legal or disciplinary history?”

B. State “Yes” if you or any of your financial professionals currently disclose, or are required to disclose, the following information:

i. Disciplinary information in your Form ADV (Item 11 of Part 1A or Item 9 of Part 2A).

ii. Legal or disciplinary history in your Form BD (Items 11 A–K) (except to the extent such information is not released to BrokerCheck, pursuant to FINRA Rule 8312).

iii. Disclosures for any of your financial professionals in Items 14 A–M on Form U4 (Uniform Application for Securities Industry Registration or Transfer), or in Items 7A or 7C–F of Form U5 (Uniform Termination Notice for Securities Industry Registration), or on Form U6 (Uniform Disciplinary Action Reporting Form) (except to the extent such information is not released to BrokerCheck, pursuant to FINRA Rule 8312).

C. State “No” if neither you nor any of your financial professionals currently discloses, or is required to disclose, the information listed in Item 4.B.

D. Regardless of your response to Item 4.B, you must:

(i) Search Tool: Direct the retail investor to visit Investor.gov/CRS for a free and simple search tool to research you and your financial professionals.

Item 4.D. Conversation Starter: Disciplinary History

Include the following questions for a retail investor to ask a financial professional and start a conversation about the financial professional’s disciplinary history:

  • As a financial professional, do you have any disciplinary history? For what type of conduct?”

Disciplinary History:

  • For “you,” – the firm (Form ADV, Form BD for “yes” responses)
  • For your Financial Professionals? Form U4, U5, U6 “yes” responses

Conversation Starters:

“As a financial professional, do you have any disciplinary history? For what type of conduct?”

Challenge: How to manage dialogue with investors. Training, supervision, documentation, accuracy

 

Challenges: Written Answers to Conversation Starters

The SEC Release states: “All firms could choose to provide written answers to conversation starters, but the final instructions will only require written responses in these limited circumstances* to ensure that retail investors receive responses when they do not have access to a financial professional to ask questions.”

(*CSS note: Written responses are required for investment advisers that provide only automated investment advisory services or broker-dealers that provide services only online.)

The SEC: “We are not establishing new or separate recordkeeping obligations related to the conversation starters or the answers provided by firms in response to the conversation starters.”

 

Item 5. Additional Information

A. State where the retail investor can find additional information about your brokerage or investment advisory services and request a copy of the relationship summary. This information should be disclosed prominently at the end of the relationship summary.

B. Include a telephone number where retail investors can request up-to-date information and request a copy of the relationship summary.

Item 5. Conversation Starters

  • Who is my primary contact person?
  • Is he or she a representative of an investment adviser or a broker-dealer?
  • Who can I talk to if I have concerns about how this person is treating me?”

 

Action Items

  • Identify retail investors
  • Prepare Form CRS
    • Variable: Whether to use electronic document
  • Identify any disclosure referenced in Form CRS that is available online and link the information
  • Amend Policies for Filing and Delivery Requirements
  • Train Personnel to answer Conversation Starters Every one of your reps is subject to handing the Form CRS to customers, and customers may be asking these questions
  • Supervision/Recordkeeping
  • Purchase CSS Form CRS Automator!

 

Helpful Resources

 

Form CRS Automator FAQs

1. How much is the Form CRS Automator tool and how do I purchase it?
Early pricing: $1,395
Q1 pricing: $1,895
Q2 pricing: TBD
Enterprise pricing available for firms with multiple affiliates. Email FormCRS@cssregtech.com
To make sure you receive information on Form CRS Automator when it’s released in January, sign up here.

2. Is there a renewal fee?
Yes. This annual Form CRS Automator user license renews automatically unless cancelled within 30 days of the end of the annual license term.

3. What are the key characteristics and benefits of the software?
The Form CRS Automator takes the stress out of drafting Form CRS at your firm. Model language based on our decades of compliance services experience is embedded that meets all Form CRS instruction requirements. The language you receive is tailored precisely to your business. The Form CRS Automator provides you with answers in Form CRS vernacular based on questions you have already answered in a public format. We have uniquely mapped Form CRS requirements to existing information you have already filed to create for you a regulatory document that fulfills the requirements and contributes to the objectives of the SEC’s Form CRS adoption.
The Form CRS Automator maps directly to your Form ADV Part 1, or Form BD, to produce the correct descriptions applicable to your business.

4. Is the Form CRS Automator secure?
Yes, the Form CRS Automator is secure for its function. The Form CRS Automator is not designed to store or maintain any sensitive, or personal, non-public information. The Form CRS Automator will include only the content necessary to create a relationship summary as mandated by SEC rules passed June 5, 2019. The Form CRS Automator produces a document designed for public consumption. The Form CRS Automator is built with reasonable security measures to protect the confidential nature of draft Form CRS documents by registered broker-dealers and investment advisers.

5. What software configuration do I need to use the Form CRS Automator tool?
All you need is an internet connection and browser. After completing Form CRS in the Form CRS Automator, you will export it into Microsoft Word for final configuration on your end. Final configuration may include adding a company logo or adjusting design features, for example.

6. Can I make multiple drafts of Form CRS?
You can save your edits in the tool. Once you export the Form CRS to Word you will need to save future edits within Word. There is an Archive in Form CRS Automator to maintain your most current version and access future changes to Form CRS instructions and model template language.

7. I have other affiliates who are registered with the SEC as investment advisers or broker-dealers. Can I use this software for all of the firms?
Yes, you may use Form CRS for all of your affiliates, by ordering online and paying the fee for each firm’s CRD number.