The SEC wants to minimize the work required from broker-dealers and investment advisors to comply with the customer relationship form requirement of its Regulation Best Interest.

Form CRS, as it’s known, is part of the Reg BI package of rules governing investment advisor and broker-dealer conduct, which went into effect earlier this year. And guidance released by the regulator in the form of an FAQ at the end of November suggests the SEC wants to streamline the process.

The SEC clarifies that both broker-dealers and investment advisors need only prepare one Form CRS summarizing all of their principal relationships and services available to retail investors.

So if an investment advisor offers a wrap fee program, advises 401(k) plan participants and provides discretionary asset management, it still only needs to submit a single Form CRS that would cover all of its services, according to the guidance.

Likewise, broker-dealers offering self-directed, full-service and employer-sponsored retirement plan options would also only need to prepare a single form, the regulator says.


Even firms that are dually registered can submit a single form that would cover both aspects of their services as long as it summarizes all of their brokerage and investment advice relationships and services available to retail investors, according to the guidance.

Additionally, firms that serve as investment advisors to hedge funds, private equity funds, venture capital funds and other types of pooled investment vehicles need not deliver a Form CRS to such clients, as the form is only required for services provided to retail investors, the SEC says.

The regulator’s guidance also includes clarification on creating machine readable text in the form, as well as on satisfying Form CRS delivery requirements, which the SEC says firms can accomplish by sending the form on its own or as part of a package of documents electronically or on paper.