Form CRS

Form CRS sits alongside Reg BI as part of the SEC's 2019 reform package. While Reg BI sets the conduct standard for retail recommendations, Form CRS is the disclosure document that introduces the relationship to the retail investor at the outset. The two were adopted together; firms that comply with Reg BI typically file and deliver Form CRS as part of the same workflow.

Who Must Prepare and Deliver Form CRS

Every broker-dealer (BD) registered with the SEC that offers services to a retail investor must prepare, file, and deliver a Customer Relationship Summary.

The retail investor definition for CRS purposes is broader than Reg BI's "retail customer." A retail investor is any natural person (or the legal representative of a natural person) seeking services for personal, family, or household purposes, regardless of whether a recommendation has been made.

Think of it this way: Reg BI's "retail customer" trigger requires an actual recommendation. Form CRS's "retail investor" trigger requires only that the investor is a natural person seeking services. Form CRS may need to be delivered before Reg BI is even implicated, because the customer is shopping for an account and has not yet received a recommendation.

Exam Tip: Gotchas

• Form CRS uses "retail investor" (broader trigger); Reg BI uses "retail customer" (narrower trigger requiring an actual recommendation). A natural person opening an account who has not yet received any recommendation is a "retail investor" for Form CRS purposes but not yet a "retail customer" for Reg BI purposes.

Required Content

Form CRS is a plain-English summary of:

• Services: the types of accounts, securities, and investment strategies the firm offers
• Fees and costs: how the firm charges for services (commissions, account fees, transaction-based vs. asset-based)
• Conflicts of interest: material conflicts associated with the firm's business model
• Standard of conduct: a description of Reg BI as the firm's standard for retail customer recommendations
• Disciplinary history: a "yes/no" question on whether the firm or its financial professionals have legal or disciplinary history, with a link to Investor.gov for further detail
• Conversation starters: prescribed questions that retail investors are encouraged to ask the firm (e.g., "Given my financial situation, should I choose a brokerage service?")

Length Limits

Form CRS is strictly length-limited:

• 2 pages for a standalone broker-dealer
• 4 pages for a dual registrant (a firm registered as both a broker-dealer and an investment adviser)

The page limits are designed to keep the summary readable. Firms that need more detail must cross-reference longer disclosures rather than expand the CRS itself.

Exam Tip: Gotchas

• Form CRS is 2 pages for a standalone BD, 4 pages for a dual registrant. The exam tests these page limits as a memorizable number.

Delivery Triggers

Form CRS must be delivered to retail investors at specific points in the relationship:

The "earliest of" trigger means delivery must precede the very first significant interaction. A firm cannot wait until after a recommendation; CRS must be in the customer's hands first.

Think of it this way: Form CRS is the gateway document. Before any recommendation, any order, any account opening, the retail investor must receive the firm's relationship summary. The firm gets one chance to deliver it before the relationship begins.

Exam Tip: Gotchas

• Initial delivery is "before or at the earliest" of three triggers, not "30 days after." A firm that delivers Form CRS the day after the first recommendation has already violated the Form CRS rule, even though the customer received the document.
• The 30-day post-amendment delivery window for existing customers is narrower than the 60-day post-amendment window for general updates. Read the question carefully to identify whether the customer is new (initial delivery rules) or existing (amendment delivery rules).

Filing and Recordkeeping

Filing requirements:

• Form CRS must be filed electronically with the SEC via Web CRD/IARD
• Must be posted on the firm's public website if the firm has a website
• Must be made available upon retail investor request

Recordkeeping requirements:

• Records of dates of delivery to each retail investor must be retained
• Each version of Form CRS must be retained for 6 years after the record/relationship summary is created or amended
• Records must be in an easily accessible place during the first 2 years of the retention period (consistent with the books-and-records retention rule)

Exam Tip: Gotchas

• Form CRS retention is 6 years from creation, with the most recent 2 years easily accessible. This matches the customer-account record retention period and is longer than the 3-year retention for general communications.

Form CRS in the Disclosure Stack

Form CRS is one disclosure in a stack that retail investors typically receive:

• Form CRS: relationship summary
• Account agreement: detailed terms of the brokerage relationship
• Margin disclosure: risks of margin
• SIPC information: SIPC coverage details
• BrokerCheck notice: annual notice of BrokerCheck availability
• Predispute arbitration disclosure: if the account agreement contains a binding arbitration clause

Form CRS is unique in the stack because it is the firm-level relationship overview. The other disclosures are activity-specific (margin, SIPC) or jurisdiction-specific (arbitration). Form CRS introduces the firm; the others govern specific aspects of the relationship.

Exam Tip: Gotchas

• Form CRS is mandatory for retail investors regardless of whether a recommendation is made. Annual disclosures like the BrokerCheck notice and SIPC information also apply, but they are triggered by account opening, not by the broader "retail investor" status. Form CRS has the broadest delivery trigger of any disclosure document.