“We think that the SEC doesn’t want Form CRS to be a marketing piece, but wants firms to stick closely to its proscribed best interest language, but it is our view that saying you’re a fiduciary is a factual statement,” added Bernstein, who encouraged RIAs to have discussions with clients about what being a fiduciary means and to find a way to use the term in the form’s “conversation starter” section.
Some RIAs themselves are taking the bull by the horns and demanding their compliance consultants add the word fiduciary to the next iteration of their Form CRS:
Daniel Wiener, Chairman of $7 billion Adviser Investments is one of them. “Originally we did not use the word fiduciary in Form CRS because compliance people told us adding the word would be going against what the SEC requires,” Wiener said. “We’re having a compliance call with our whole team and when we file our new CRS we will add the word. Without it, there’s not a person who gets our CRS who will know we are fiduciaries,
“I told compliance, ‘let’s be explicit about who we are and what we do,” Wiener added.
Institute for the Fiduciary Standard President and Co-Founder Knut Rostad said he has met with SEC officials four times in the past two months to press the point. “I want the SEC to clarify to investment advisors that it is permissible to cite and describe fiduciary duty in form CRS,” Rostad said.
Rostad called it shocking that “the term fiduciary, the single biggest differentiator between types of firms, has been eliminated from forms that are supposed to highlight material facts. Instead, we see form CRS highlight similarities and product fee schedules.”
Rostad said he believes the disclosure could become useful if firms disclose material information and show investors the differences between their standards and their core businesses.