“Delaying the comment deadline would allow the SEC to receive fully informed comment on an issue of paramount importance to millions of working Americans and retirees,” Roper said.
To measure the proposed Form CRS’s effectiveness with investors, the group is asking the SEC to test:
• whether investors understand the differences between sales recommendations offered by brokers and the advice offered by investment advisors;
• whether investors understand what the requirement to act in the customer’s best interest means and how that differs from a fiduciary duty;
• whether they understand the implications of the fact that brokers do not typically have an ongoing duty of care;
• whether the information provided on costs and fees is meaningful;
• whether the discussion of conflicts of interests helps investors to understand how those conflicts might influence the recommendations or advice they receive; and
• when investors would need to receive the disclosures in order to incorporate them into their selection of providers.
“In short, information gained through testing will prove important to how we comment, not only upon specific aspects of the CRS, but upon the fundamental adequacy of Regulation BI. And until we know whether an effective disclosure document can be developed, any comment on the overall proposed regulatory approach will necessarily be merely speculative,” the group said.
The new request and testing itself is likely to prove challenging for the agency -- not least of which because the SEC is giving broker-dealers creative license to create their own Form CRS disclosures, instead of requiring a standardized form.