Form CRS – Client Relationship Summary

In the summer of 2019, the SEC adopted Regulation Best Interest (“Reg BI”) and the Form CRS Relationship Summary (“Form CRS”). According to the SEC, the Form CRS, or colloquially known as the “ADV 3” is to provide information to your clients related to:

  • Introduction of the Firm
  • Relationships and Services
  • Fees, Costs, Conflicts, and a disclosure of the firms standard of conduct
  • Disciplinary disclosures
  • Additional disclosures (e.g. contact information, conversation starters)

When introducing the new Form CRS requirement, SEC Chairman, Jay Clayton, stated:

“The relationship summary is designed to help retail investors select or determine whether to remain with a firm or financial professional by providing better transparency and summarizing in one place selected information about a particular broker-dealer or investment adviser. Both broker-dealers and investment advisers must provide plain English disclosures on the same topics under standardized headings in a prescribed order, allowing retail investors to more easily compare services by comparing different firms’ relationship summaries.”

Although the SEC did not provide a comprehensive sample template, they did provide instructions for firms to follow to ensure proper adherence to the content, delivery and update requirements, and retention rules. These instructions provide guidance and clarification of requirements such as Form CRS needing to be:

  • No more than two (2) pages in length.
  • Be written in plain English.
  • Be delivered at the time of or prior to entering into an advisory relationship. That delivery does not need to be on paper but can be delivered via electronic means.

So what should your firm do?

Investment advisers should begin considering the content as it relates to the required sections as shown above, and also the delivery mechanism for Form CRS. Although much of the information that will be drafted within Form CRS can be obtained from language used your current ADV 2A & 2B, it must be drafted pursuant to a separate set of rules as outlined in the SEC Form CRS Instructions.

RIA Registrar is here to help! We are offering assistance in the initial drafting of Form CRS, tailored to your firm’s operation and structure, for a one-time fee. Please reach out to us by clicking “Contact Us” above for more information and pricing.

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