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New SEC Disclosure: What Should You Do With The Form CRS That Just Came In The Mail?

By Julie Jason, originally posted on Forbes.com:

Have you received a Form CRS in the mail from the investment firm(s) you do business with? This is a brand-new disclosure document mandated by the U.S. Securities and Exchange Commission.

Why A New Disclosure Document?

I’ve been talking to my readers about Form CRS since the SEC first came up with the idea of a very short and easy-to-read disclosure document.

The SEC proposed this two-to-four-pager to make life easier for investors to understand services and compare firms — and I believe it will. Let me tell you why.

First, whenever the SEC wants you to get more information about something, it’s to protect you, the “retail” investor.

In a statement a few weeks ago, the chairman of the SEC, Jay Clayton, reiterated that the CRS is intended to “enhance significantly the quality and transparency of relationships between” financial firms (broker-dealers and investment advisers) and you, their clients. That should mean a lot to investors.

Second, the document can’t be easier to navigate. The specific format is mandated by the SEC, following strict guidelines as to specific disclosures and the precise length of the document. There is no question in my mind that the CRS is worth your attention.

Long Or Short: It’s Up To You

Say you have a brokerage account with one of the majors — a name you would recognize instantly.

If you go online to BrokerCheck, a website operated by FINRA (the Financial Industry Regulatory Authority), see what comes up when you look for Merrill Lynch, as an example.

On that page, you’ll find four shaded boxes noting 1,451 disclosures, the date of SEC registration (3/12/1959), company type (corporation) and regulatory filings (10 self-regulatory organizations and 53 U.S. states and territories).

You would see that the firm conducts 21 types of businesses. For more information, the site directs you to a “detailed” BrokerCheck report, in this case, a 1,663-page document. Disclosure events start on page 36, finishing up at page 1,663.

Four Pages vs. 1,663

In comparison, Merrill’s Form CRS is only four pages long. It summarizes the services the firm is offering to you as a client, and most importantly from my point of view, the standards of conduct that apply when the firm does business with you. It also addresses regulatory disclosures in a section under the heading “Do you or your financial professionals have legal or disciplinary history?” Merrill’s CRS answers with a ‘‘yes,” followed by the SEC-required mandate to direct investors to investor.gov “for a free and simple tool to research us and our financial professionals.”

New SEC CRS Website Page

Because the CRS is brand-new, the SEC posted educational materials for you on its website. I recommend a visit. The website is “investor-focused” and helps Main Street investors read and understand how to navigate Form CRS, research firms and financial professionals.


And here is a quick video on the topic from yours truly. Feel free to share it (and this post) with your Facebook, LinkedIn, Twitter and other networks.

Your Thoughts?

After you read the CRS’s you’ve received from your financial firms, write to me with questions or comments you’d like to share. My email is forbes@juliejason.com. Please provide the state you live in. In a subsequent post, I’ll review how to compare the CRS’s of different firms.

To read Julie Jason's books, go to: https://juliejason.com/books/julies-books.