Episode 55: Form CRS

On Episode 55 , we will be discussing the new Form CRS. 



CCO Buzz: Hello and welcome back to the Buzz. Summer sure is flying by – it’s hard to believe it’s already September! But we think fall is the perfect time to tune in to the CCO Buzz and learn something new with every episode. Today, on Episode 55, we will be discussing the new Form CRS that is a part of the Security and Exchange Commission’s new Regulation Best Interest. This is an important topic, especially for investment advisers and broker-dealers, so let’s jump right in.

Tina Mitchell: So today I want to talk about the new Form CRS that investment advisers and broker-dealers will need to file by June 2020.

The SEC adopted this new form as part of their issuance of Regulation Best Interest and the reason I am talking about this today is because it’s important that firms begin focusing on this requirement now and not put it off until next year, and I’ll tell you why.

While the Form CRS is limited to only two pages, unless your firm is dually registered, then you get 3 pages, the SEC is requiring firms to pack a lot of disclosures into those pages, AND that disclosure must be concise and in plain English. The form is set up similar[ly] to Form ADV Part 2A in that certain items need to be addressed. But for Form CRS, there are 5 items, and they include:

Item 1, which is the introduction, and that covers company information, including the name, the registration status, and that brokerage and investment advisory services and fees differ and it’s important for the retail investor to understand the differences.

Item 2– Relationship and Services – this need include a description of services, and that must address monitoring of accounts, investment authority, limited investment offerings, and account minimums along with other requirements that are pertaining to retail accounts.

[Item 3 – Fees], Costs, Conflicts and Standards of Conduct- in this section, you need to describe both your principal and other fees and costs associated with the services offered, and that are applicable to retail accounts. You need to talk about the firm’s standard of conduct and give examples of how the firm makes money and the associated conflicts.

Item 4 is Disciplinary History. This section actually speaks for itself, but you’ll also have to direct the reader to visit the SEC Investor.gov[/CRS] website, and direct them to the search tool for researching financial professionals.

Item 5 is Additional Information. In this [section] you need to outline where retail investors can find additional information about your firm and the services, [and] also provide a telephone number where the investors can request current information and also request a copy of Form CRS.

Each of these sections, except for the introduction section, also must include specific “questions” that are geared to start a conversation about that section’s topic.

So the bottom line is that there is a lot of information that goes into [the] only 2 or 3 pages that are allowed.

So if you haven’t already, I strongly suggest you go to the SEC’s website and obtain a copy of [the] Form CRS instructions, as this provides in detail the requirements and the required conversation starter questions.

Core Compliance can help with the drafting and filing of this new form, so feel free to give us a call at 619-278-0020.

Thanks very much!

CCO Buzz: Well that’s it for this week’s episode. If you’d like additional information, please check out our website at www.corecls.com. You can also follow us on Facebook, LinkedIn, or Twitter @CoreCls. Thank you, and we hope you tune-in to next week’s episode of the CCO Buzz.


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