The Fiduciary Institute wants the U.S. Securities and Exchange Commission to use its proposed best-interest disclosure to require brokers to tell customers, “We represent issuers or underwriters. ... We do not represent you.”

That declaration is found in the one-page, sample customer relationship summary the Fiduciary Institute released Tuesday as part of its lobbying campaign to convince the SEC to address consumer confusion surrounding the SEC’s proposed best-interest rule and its customer relationship summary (CRS) form.

The CRS is supposed to explain to investors the differences between working with a broker and advisor, but a growing number of professional and consumer groups, as well as the SEC itself, have found that a significant number of investors either do not understand or draw false assurances from the proposed disclosure.

“Even highly educated investors with careers in the financial, legal and writing professions say the language in Form CRS is poorly written, ambiguous and [unclear],” Fiduciary Institute President Knut Rostad said during a press conference to release the group’s sample CRS and latest findings about investor confusion.

Seven of 17 investors who spoke at a recent SEC investor roundtable in Washington, D.C., expressed confusion about the CRS form.

“There is a lot of jargon and information that is not telling the whole story or implies that things will be better in a broker situation than in a fiduciary situation, which of course is not true, so in our rewrite we tried to be very clear about differences between brokers and advisors,” said Deborah S. Bosley, principal of The Plain Language Group, which was retained by the Fiduciary Institute to do a qualitative review of the SEC’s sample CRS form and create a more workable disclosure.

Bosley said the readability analysis she ran on the SEC’s CRS scored at a 14th grade level, while the average American reads at an 8th grade. “Even those who read at a high school level are investors. We’re missing six grade levels in terms of readability,” Bosely said.

She said to create a more effective CRS, she took the SEC’s four-page document down to one-page and moved costs and fees up to the top of the document.

“Costs and fees don’t appear until the second page of the SEC’s sample. In general, that is the first thing people want to know about,” said Bosely, who underscored the importance of the SEC creating a sample disclosure that is useful to consumers since many firms will adopt whatever the regulator puts out.

The draft summary she created for the Financial Institute, which compares and contrasts brokers with advisors in a side-by-side fashion, is likely to stir controversy in the brokerage industry as a result of its direct nature. “By law, if you open a brokerage account, we only give you incidental advice related to the products you buy through us,” the draft CRS stated next to the heading, “What kind of advice do we (brokers) give.”

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