Although most advisors seem to have filed their Customer Relationship Summary form, known as Form CRS, by the Securities and Exchange Commission’s June 30 deadline, some stragglers remain, according to Chris DiTata, RIA in a Box vice president and general counsel.
“The vast majority of firms that we work with have done it timely [and] I would expect that is the same for the broader industry,” he told ThinkAdvisor in a recent phone interview.
There are, meanwhile, six facts around Form CRS that advisors should continue to keep in mind, he said:
1. Late Filers
“The only firms that might be filing late are those firms that didn’t have retail clients but are looking to take on retail clients now,” DiTata said, adding: “The trigger for firms that haven’t taken on retail clients is basically meeting with retail prospects.” So, if you have started speaking to a retail client, it’s time to file a Form CRS.
2. Making Edits
Among advisors who filed on time, “we have seen some firms that have already made edits to their Form CRS to disclose new fee structures, new conflicts of interest and other pertinent details,” DiTata noted.
The RIA compliance software provider has helped advisor clients make edits to the form, most of them after June 30, he pointed out, but added it’s only been a “single-digit percentage” of clients who had done that so far.
Edits are “definitely allowed and encouraged,” he said, adding: “When the Form CRS changes in a material manner, you need to update it.”
3. SEC Roundtable
“To provide an additional opportunity to share best practices and general feedback,” the SEC said it “plans to host a roundtable this fall where SEC staff “will be able to share additional thoughts following the Committee’s review of firms’ initial relationship summaries.”
The roundtable date, agenda items and “logistical information will be made public as they are finalized,” the SEC said.
Possible modifications to Form CRS rules could be made, DiTata said. For one thing, “I think advisors would like to be able to see some examples of what the SEC does consider clear and concise disclosure because this is obviously the first time that advisors are completing this form,” he said.
That said, however, the SEC has “done a very nice job of issuing written instruction for the form and I would expect this roundtable to provide some good guidance on what the SEC wants to see,” he said.
Meanwhile, “conflict of interest is an area that the SEC says it will be homing in on and so any guidance as to what conflict of interest disclosure is going to be acceptable would be welcome” from advisors also, he added.
4. Mailing Form CRS
Those advisors who still plan to file Form CRS and intend to do it via the mail instead of electronic delivery should keep in mind that it needs to be the first document delivered in any package, DiTata pointed out.
5. Keeping Records
It is “imperative to keep records of when Form CRS was delivered to each client,” whether it is a receipt attached to an email or a signed copy of Form CRS, DiTata said.
6. Compliance Manuals
“You need an entirely new section … in your compliance manual detailing the need to prepare a Form CRS and then deliver it to all of your retail investors,” he also said.
RIA in a Box has “been counseling clients as to what to insert into their manuals and where to insert it,” he said, noting advisors specifically requested help with that.
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