Learn more about the filing, posting, and delivery of the new Form CRS.
SEC-registered RIA firms that serve retail investors which are subject to this new regulatory requirement also need to focus on the filing, posting, and delivery of the Form CRS as well as bookkeeping requirements that may require advisory firms to make significant changes to their compliance programs.
How to File, Post, and Deliver the Form CRS
- Where to File: Like the Form ADV Parts 1 and 2, RIA firms subject to the new Form CRS regulatory requirement need to file the new Form ADV Part 3 with the Investment Adviser Registration Depository (“IARD) system. Once filed, the Form CRS will also be publicly accessible via the IARD system much like the firm's existing Form ADV Parts 1 and 2. The new Form CRS will also be accessible on the new investor.gov/CRS website administered by the SEC which provides educational materials about broker-dealers, investment advisers, and investing.
- Website Posting: According to the Form CRS instructions, unlike the Form ADV Parts 1 and 2, investment advisory firms subject to the new Form CRS requirement “must post the current version of the relationship summary prominently on your public website, if you have one, in a location and format that is easily accessible for retail investors.” This is a new and important requirement that should not be overlooked as it will likely be reviewed and scrutinized during regulatory examinations.
- Electronic Delivery: According to the Form CRS instructions, "If the relationship summary is delivered electronically, it must be presented prominently in the electronic medium, for example, as a direct link or in the body of an email or message, and must be easily accessible for retail investors.” In addition, "you must provide a means of facilitating access to any information that is referenced in the relationship summary if the information is available online, including, for example, hyperlinks to fee schedules, conflicts disclosures, the firm’s narrative brochure required by Part 2A of Form ADV, or other regulatory disclosures."
- Paper Delivery: On the other hand, according to the Form CRS instructions, "If the relationship summary is delivered in paper format as part of a package of documents, you must ensure that the relationship summary is the first among any documents that are delivered at that time."
Investment advisory firms subject to the Form CRS requirement need to ensure that relevant policies and procedures are updated to meet these changes to the Books and Record Rule. Firms may also need to utilize existing technology such as the firm's customer relationship management ("CRM"), document storage, and compliance software systems to ensure the new recordkeeping requirements are met.
Updates to Policies and Procedures and other Documents
- Policies and Procedures Manual
Investment advisory firms subject to the new Form CRS requirement may need to create a new section in the firm's policies and procedures manual as it relates to:
- Who: Defining what type of clients served by the firm need to receive the Form CRS
- Initial delivery: Defining when relevant clients need to receive the Form CRS and how this is documented
- Ongoing delivery: Defining when an updated Form CRS needs to be delivered
- Method of delivery: How to properly deliver in paper and/or electronic format
- Posting: If relevant, ensuring the Form CRS is properly posted on the firm's website.
In addition, RIA firms may want to consider updating existing sections of the firm's policies and procedures manual as it relates to: opening new accounts, when to file other-than-annual Form ADV amendments, and other relevant sections impacted by the new Form CRS creation, filing, delivery, posting, and updating requirements.
- Investment Advisory Contract
At RIA in a Box, we assist all MyRIACompliance® subscribers with the creation of the Form CRS and updates to relevant policies and procedures for no additional charge via our automated online Form CRS creation tool.
Find the Securities and Exchange Commission's ("SEC") frequently asked questions on Form CRS here.