Improved CRS form possible under new SEC, experts say
The CRS form does not work, but there is hope under the new SEC.
This was the consensus of fiduciary experts and former regulators at an online press conference yesterday hosted by the Institute for the Fiduciary Standard.
Despite the activation last year of the hyper-focused briefing document, which requires advisers to expose their obligations and conflicts to clients under SEC regulation, the average investor is always likely to be confused by the differences between an investment advisor and a broker and not be clear about specific costs and conflicts, the panel agreed.
“Since the SEC has built its entire regulatory structure around disclosure, the least it can do is make these mandatory disclosures simple and understandable,” said former deputy secretary of the Department of Labor Phyllis Borzi. “And in that regard, it is a failure.”
But the panel, hosted by Knut Rostad, co-founder and president of the institute, was also united in hopes of an improved CRS form, a form that draws sharper contrasts between RIAs and brokers – achieved through to the advice of the SEC and without triggering any regulatory trigger wires.
Panelists included Deborah Bosley, founder of the Plain Language Group; Michelle Richter, Director of Trust Insurance Services; and former SEC commissioner Luis Aguilar. Morningstar’s head of policy research Aron Szapiro also made a statement.
The reason for their optimism is the new chairman of the SEC, Gary Gensler, and his list of SEC commissioners. “I think you have to go back 25 years, frankly, before you find a commission which, we have reason to believe, is as sensitive to investor protection and investor interests as we see it now,” he said. Borzi said.
Rostad said he is currently looking to meet Gensler to discuss these SEC guidance.
“The current disclosures obscure and mislead retail investors, experts and investment professionals as to the difference between brokers and investment advisers. It is shameful,” Rostad said in a statement. “Correcting this disclosure does not require a congressional commission or a new study. It takes courage to tell investors the truth.
He added, and the panel agreed, “We could start with a way to define best interest so we know what that meant.”
Along with the press conference, the institute released a white paper, a sample newsletter for securities firms and a sample CRS form.
Some clients apparently don’t see the CRS form at all. In March, hundreds of companies had failed to file the documents with the SEC, prompting Enforcement Division Director Peter Driscoll to warn that companies were not responding to questions from the commission. . can expect exams.
Borzi noted that while at the Ministry of Labor, the agency first tried to contrast the duties of brokers and investment advisers, an approach that failed “because the [semantic] the landscape has been so muddy over the years. Then, she said, “We’ve moved on to ‘everyone have a basic standard’ and I think we’ve had more success.”
Nonetheless, Borzi says she praises the SEC’s “delineation” approach. “Fiduciary conduct and non-fiduciary conduct – there is a place for both in the market,” she said.