Breakdown of Form CRS - Part I

We want to begin this post at the beginning. At first glance, you can see some of the similarities between the Brochure (ADV Part 2) and the Form CRS. While one glaring difference is that the Form CRS is also required for Broker-Dealers, this post will focus on the proposed requirements for Investment Advisers.

Item 1: You should state your name and indicate whether you are an Investment Adviser registered with the Securities Exchange Commission or a state commission. If you are a standalone investment adviser, the introductory paragraphs titled “Is an Investment Advisory Account Right For You?”, , requires the following language be included:

“There are different ways you can get help with your investments. You should carefully consider which types of accounts and services are right for you.

We are an investment adviser and provide advisory accounts and services rather than brokerage accounts and services. This document gives you a summary of the types of services we provide and how you pay. Please ask for more information. There are some suggested questions on page [].”

The suggested questions are detailed in Item 8 and are general in nature. This is to make it clear to the client what type of entity they are dealing with, and it is a good chance for you to describe to your clients the differences in services between a B/D and an RIA.

Item 2: This section should be titled “Relationships and Services” and is titled differently if you are a dually registered office. This section will be a summary of the investment advisory services that you provide. There are several points that the SEC wants you to address in this section unless it is clearly not applicable:

1. The type of fee you are charging (A fee based on assets under management, fixed fee, etc.) and the frequency of the fee (e.g., quarterly, monthly).

2. How often you provide investment advice; how frequently you contact retail investors; and the services you provide to clients.

3. If you exercise discretion over your accounts.

4. If you have a limited menu of investments available to your clients, you will need to include the following:

“Our investment advice will cover a limited selection of investments. Other firms could provide advice on a wider range of choices, some of which might have lower costs.”

Finally, if you have affiliates that offer different services, you will need to state those available options to your client.

This seems like a large amount of information to keep within 4 pages, right?! We are just getting started! Next, we will go into standard of conduct, fees and more.

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