5 Components to the Form CRS Examinations

5 Components To The Form CRS Examinations

  1. What is the OCIE expecting by June 30th?
  2. 5 Compliance Components in the Form CRS Examinations
  3. There’s a lot more to learn about the CRS Form

Form CRS may be the most challenging hurdle for Registered Investment Advisors and Broker-Dealers. Small firms, especially, may struggle to meet the Customer Relationship Summary because they do not have internal compliance offices to build the 2-page document. The SEC knows that most small firms need to consult outside compliance firms and expect the CRS Form, alone, to take around 23 hours to build and cost $6,000.

I wrote before about why Form CRS will be a difficult hurdle, and I don’t want to belabor the point. But, it is becoming more urgent to reach compliance before the June 30th, 2020 deadline. As they state in their April Risk Alert on Form CRS, the SEC has no intention to push the Regulation Best Interest deadline because of the Coronavirus or Pandemic Shutdown.

What is the OCIE expecting by June 30th?

Form CRS and its related rules require firms to prepare and deliver a 2-page summary (4-pages for dual registrants) of the relationship between the retail investor and the firm. Don’t forget to file it too! BDs and RIAs must file their relationship summaries (with amendments) using the Central Registration Depository (“Web CRD”) or Investment Advisor Registration Depository (“IARD”). Firms also need to publish the CRS Form on their website if they have one.

 Just like the other Reg-BI requirements, the OCIE intends to examine firms’ compliance after the June 30th deadline. I wrote a concise article outlining those expectations, and one thing remains consistent for Form CRS. The first examination assesses “whether firms have made a good faith effort to implement Form CRS.” Now, that first assessment may have a relatively low bar, but I think it’s reasonable to assume that the later reviews may be more strict.

5 Compliance Components in the Form CRS Examinations

1.Delivery and Filing: (This is the most lengthy part of the examination, but stay with me here.) 

First, the SEC Staff will review whether your firm filed its CRS Form and any amendments and posted it on your website if you have one. Second, they will evaluate how your firm plans to deliver the summary to your existing and new retail investors. Third, they will review all your policies and procedures to make sure that they include updating and delivery procedures for the CRS Form. The SEC wants explicitly dates to validate when the firm delivers each CRS Form to every retail investor.

            The expectations

Existing Retail Investors: Every firm needs to deliver a CRS Form to their current clients by July 30th, 2020. That’s 30 days after the Form must be filed (June 30th, 2020). The Form must also be delivered before or when:

  • A retail investor opens a new account different from their existing one;
  • A BD, RIA, or agent makes a recommendation of a rollover of assets from a retirement account into a new or existing account or investment; or
  • A recommendation is made of a new brokerage or advisory service or investment (not necessarily involving a new account). (For example, a first time purchase of a direct-sold mutual fund through a “check and application” process.)

New Retail Investors: The CRS Form must be delivered to new retail investors before or at the earliest of:

  • Entering into an advisory contract;
  • Making a recommendation of an account type, security transaction, or investment strategy involving securities;
  • Placing an order for the retail investor; or
  • The opening of a brokerage account for the retail investor.

*Phew* Enough with Delivery and Filing. Hopefully, those expectations are relatively intuitive, but the complexity of the requirement shows that firms need to have proper procedures and accountability to remain compliant.


Ask yourself two questions because the SEC will undoubtedly ask them:

Does your CRS Form contain all the required information?

Is the information true, accurate, and stated clearly without missing any facts necessary to make the disclosures? 

3. Formatting:

The SEC is looking for whether the CRS Form is formatted according to the instructions. The specific requirements are outlined in our e-book (linked below). Ask yourself: Is my Form written in plain English without an excess of legal jargon or anything the SEC may see as misleading.


The SEC Staff will look to see whether your firm has proper policies and procedures for updating the CRS Form. The examination comes down to three questions:

 First: Do your procedures ensure that the CRS Form is updated within 30 days of any change to its contents?

 Second: How will your firm’s policies communicate these changes to your retail investors within 60 days after the updates are made to the CRS Form?

 Third: Does your firm’s process highlight to retail investors the most recent changes and include an exhibit highlighting and summarizing any filed updates? 

5.Recordkeeping: (Last one, here we go!)

The SEC’s staff will make sure that your firm records delivery dates of every CRS Form and has policies and procedures for record-making and recordkeeping. These assessments intend to determine how a firm complies with delivery requirements and recordkeeping obligations throughout the lifetime of the firm and employee turnover.

There’s a lot more to learn about the CRS Form

There you have it! 5 components to the first CRS Form Examinations. Not too bad, I hope. Remember: Good faith efforts to reach compliance are the expectation, but it’s better to be over compliant than under compliant.

This article is by no means a summary of all the CRS Form requirements. We have a free Reg-BI e-book guide that will get your compliance gears turning and a CRS Form Checklist to double-check any form you create.

RiXtrema also offers its proprietary compliance software vetted by a top ERISA Regulatory Law Firm. It’s helping many small firms adopt recordkeeping and compliance procedures, making sure they ask all the questions Reg-BI requires. Click the banner below to receive a quick 20 min demo and see how it can ensure that you have all your procedures and documents in order before the SEC comes knocking.

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