21 July 2021
Main Contributor: Katie Mogan, IACCP® Vice President, Senior Compliance Consultant
The one-year anniversary of Form CRS has come and gone, yet there are still questions about delivery requirements and annual updates. First and foremost, there is NO annual update requirement. However, there are a few important triggers with re-filing your Form CRS, as well as important delivery requirements, which we outline below.
When Updating and Filing Is Required
The Rule requires you update and file your Form CRS within 30 days if any information in the document becomes materially inaccurate. We suggest reviewing your Form CRS any time you update Form ADV Part 1 or 2A to ensure you capture any changes in information.
Important Updating Triggers are:
- fee changes
- new products
- terminating products
- new conflicts in the ways you make money
- changes in disciplinary history
As noted above, annual delivery is NOT required, however there are important delivery requirements beyond the initial delivery, which we list below with some helpful examples. We suggest Compliance review #5-7 below to analyze if those circumstances apply to your business. These are quite different than any ADV Part 2A delivery requirements and may require adjustments to policies and procedures. If any of those circumstances apply, think about updating your workflow process for client document delivery to accommodate the Form CRS delivery requirements.
Delivery of Form CRS is Required Under the Following Circumstances:
- Initially upon engagement
- 60 days following any material changes to the Form CRS itself
- 30 days after a client requests Form CRS
- Upon opening a new account that is different from the client’s existing account (i.e., converting from a brokerage only account to an investment advisory account or vice versa)
- Whenever it is recommended the retail client rollover their assets from a retirement account into a new or existing account
- If the advisor recommends a new service that does not necessarily involve opening a new account (i.e., the initial recommendation or provision of margin capability, options eligibility, account monitoring, or discretionary trading. In contrast, the recommendation or provision of account features such as automatic bill pay, check writing privileges, or technological features, such as offering a chat feature or mobile application are not considered new services)
- If the advisor recommends a new investment that does not necessarily involve opening a new account (i.e., the first-time purchase of a structured product or private placement, direct sold mutual funds, or variable annuities)
Please note that if the client has received the Form CRS within 30 days once of the above circumstances apply, you do not need to send the Form CRS.
You can also visit the SEC’s FAQ on Form CRS and their interpretation of the delivery requirements here: SEC.gov | Frequently Asked Questions on Form CRS
Form CRS delivery requirements are different from ADV delivery requirements, so save yourself the extra work and headache by reviewing our “Important Updating Triggers” to make sure you don’t fall into the updating category.