In April 2018, the SEC released a proposed rule which would require investment advisers to provide a relationship summary to prospective clients. Form CRS, or Form 3, is intended to give retail clients simple and straightforward information about investment advisers, written clearly, concisely, and in “plain English.”
Form CRS would be limited to four pages and include information regarding fees, standards of conduct, conflicts of interest, and other details relevant to prospective clients. The relationship summary is designed to increase transparency and understanding among firms and retail investors. Supporters of the rule say that the current format of ADV Forms 1 and 2 can be confusing to new clients. Critics of Form CRS argue that the rule is unnecessary because ample information is provided in the current Form ADV format.
Public comments on the proposed rule closed in August 2018.
WHAT DOES THIS MEAN FOR ME?
Because the rule is still up for debate and is not official, it currently has no effect on SEC requirements or form filings. If Form CRS passes, Fairview will work with clients to establish and maintain compliance with the new rule. Contact Fairview directly with questions about Form ADV and its requirements.