Are you in tune with your finance professional?

Are you sure that the services your finance professional is offering you are what you expect? Ensuring you’re on track with your financial services provider is the goal of the CRS form, the disclosure document the U.S. Securities and Exchange Commission adopted in 2019.

Individual investors will be grateful to know that regulators are prosecuting financial firms that do not follow the rules of the CRS form. The SEC recently announced actions against six investment advisers and six broker-dealers. Another 30 financial companies were sued, then settled, in 2021. (See the SEC’s Feb. 15 release at tinyurl.com/ya4e3bhu.)

Why do investors need the CRS form?

Without this, it is very difficult for an investor to understand how to rate brokers, advisors and the companies they work for.

With it, a “retail investor” (i.e. you) is able to easily assess the services and conflicts of their own financial firm and compare that firm to others. After all, the CRS is user-friendly and only two pages long (four pages if the company is “dual registration” – regulated as both a registered broker and an investment adviser).

If you’re wondering if you’ve ever received a CRS, the first CRS was supposed to be delivered to you in June or July 2020. Some of the companies being sued by the SEC didn’t manage to get the CRS to their customers until much later. . If you haven’t read your financial company’s CRS, you can fix this by going online to the company’s website. Every company is required to display their CRS for you to easily access.

You can also find it by going to BrokerCheck (tinyurl.com/5b8edfsv), which is managed by FINRA, the Financial Industry Regulatory Authority. FINRA regulates the brokerage industry, but you can search for brokers and investment advisors on BrokerCheck.

The CRS can also be called a relationship summary. For example, look at Vanguard’s CRS for its brokerage and investment advisory firm at tinyurl.com/ye25uj6y.

Also see Vanguard’s answers to “conversation starters” – questions built into the CRS that you can ask your finance professional. Vanguard’s answers for its brokerage services are at tinyurl.com/2p543s68and the answers for his investment advisers are at tinyurl.com/zwxdwndy (personal advisor) and tinyurl.com/yckjvuf5 (robo-advisor).

I recommend spending some time with each set. Next, check the company you are using. The goal is to compare and contrast companies.

In the latest round of SEC cases, the 12 companies, without admitting or denying the findings, agreed to be censured and to pay a civil penalty, ranging from $10,000 to $25,000, although that a company accepted a civil penalty of $97,523.

In another instance, a Georgian broker “filed its CRS form and delivered the CRS form to its existing retail investor clients on March 30, 2021. Additionally, the CRS form…failed to include certain terms and information specified in the instructions for Form CRS and required by Rule 17a-14 On or about December 13, 2021, [the firm] filed an updated CRS form with additional information and language…and delivered [it] to existing retail investor clients on December 17, 2021.” The firm agreed to pay a civil penalty of $10,000.

The reason for reading your company’s CRS is simple, citing an SEC Investor Bulletin published in August 2020 (tinyurl.com/dhf7c6up): “It’s important to make sure your financial professional is providing you with the services you expect. In order to help you, the retail investor, understand the differences between brokers and advisers – including, for example, the services they offer and the fees they charge – SEC rules require them to provide you with a [Form CRS].”

I am a strong believer in understanding how to invest wisely. The fundamental knowledge is to understand the type of business with which you are engaging to invest. If you haven’t read your company’s NCD, now is a good time to do so. In fact, I can’t think of a single good excuse to put this off.

If you’d like to share what you find, take a moment to complete this quick survey on tinyurl.com/2p9xzcjh or email me at [email protected]

Julie Jason, JD, LLM, personal fund manager (Jackson, Grant of Stamford) and author, welcomes your questions/comments ([email protected]). His awards include the 2021 Clarion Award, symbolizing excellence in clear and concise communications. Her latest book, a curated collection of Julie’s columns, is “Retire Securely: Insights on Money Management From an Award-Winning Financial Columnist.” To hear Julie speak, visit juliejason.com/events.

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