Form CRS: The Latest Tips for Preparing – UPDATE!

WHAT HAPPENED?

On Feb. 11, 2020, the Securities and Exchange Commission released a set of new Frequently Asked Questions about Form CRS. Among other useful information, the FAQs address that adviser affiliates of a registered adviser may jointly file a four-page Form, rather than a two-page disclosure.

KEY TAKEAWAYS

  1. The initial delivery date for Form CRS is 30 days after submission; for example: an adviser who submits on May 2 must deliver the Form on or before June 1.
  2. Proper formatting of Form CRS is extremely important under Commission guidelines. The commission requires that formatting include specific areas of white space, headers, bolded language, and use of plain English in order to increase accessibility for prospective clients.
  3. As part of your firm’s preparation for Form CRS, it is recommended that you perform a “conflicts inventory.” Consider compiling current conflicts and affiliate and compensation disclosures from Form ADV Part 2A and updating if needed. This information must be included in Item 3 of Form CRS.

BACKGROUND

On June 5, 2019, the Commission announced the adoption of a package of rules and interpretations intended to increase transparency for retail investors in their relationships with investment advisers and broker-dealers.

This package included Form CRS, a third component of Form ADV, which calls for easy-to-understand information about advisers and broker-dealers. The summary-style format will provide retail clients simple and straightforward information about investment advisers, written clearly, concisely, and in plain English.

Forms CRS will include information regarding fees, standards of conduct, conflicts of interest, and other details relevant to prospective clients. The relationship summary is designed to increase transparency and understanding among firms and retail investors.

WHAT DOES THIS MEAN FOR ME?

The filing period for Form CRS is open May 1, 2020 through June 30, 2020. The Form must be delivered to all existing retail clients within 30 days of initial filing. If your firm has questions about Form CRS and its requirements, Fairview is available to help you navigate new provisions. Contact Fairview for more information about complying with Form CRS specifications.

About the Author:

Fairview®
Founded in 2005 with the goal of developing streamlined solutions for investment advisers, Fairview® is now servicing investment advisers, foundations, and funds with over $200 billion in collective assets.