Both the institute and Morningstar are pressing the SEC to consider mandating that firms provide a point-of-sale fee and service estimate to enlighten investors about what they’re paying.

“I would just point out, having read a few hundred of these CRS forms, it would have been nice to see more companies getting this right in round one,” said Aron Szapiro, a policy research expert at Morningstar, at a press conference held by the institute last week. “The firms we see are by and large fully compliant and check the box, but do not go that extra mile to empower investors and help them understand if services and products meet their needs.”

Rostad said that representatives of the institute have had four meetings with SEC commissioners and staff in July and August to press the need to improve the client relationship summary and fee disclosure. “In each and every case, there was interest in taking another look at CRS and additional data,” he added.

Firms also fell down on the job explaining what a fiduciary standard is, the institute found.

In fact, only one firm, Equitable Advisors, explained in detail what a fiduciary standard of care means and that it is better or higher than the broker-dealer standard, the study said. “When we serve as your investment advisor, we owe you a fiduciary duty, which likewise requires us to act in your best interest, but in a manner that is generally broader in duration and scope than the broker-dealer standard,” the firm’s client relationship summary states.

“I spoke to several executives of these firms, and to a person they were not aware of the fact their own CRS did not use the word ‘fiduciary,’” Rostad said. “They intend to make the changes forthwith.”

“If I were to test these forms on an ordinary investor, I’m not sure that they could tell me what fiduciary means,” said Deborah Bosley, a principal of the Plain Language Group who also spoke at the press conference yesterday.

“I think the issue of consequences for firms is critical,” Bosley said. “Do these forms meet or not meet the standard of plain language which is part of what the regulation requires? What are the consequences to the firm? Even if they meet the content standard, they are not meeting the requirement of plain language.”

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