In the SEC’s recently approved Reg BI, the SEC requires a client relationship summary, the Form CRS. This document must be presented to clients and is meant to explain the differences between broker-dealers, investment advisers and dual registrants.
In the 524-page Reg BI, it states; “For example, we are substantially revising our approach to disclosing standard of conduct and conflicts of interest to make this information clearer to retail investors, including (among other changes) eliminating the word ‘fiduciary’ and requiring firms — whether broker-dealers, investment advisers, or dual registrants — to use the term ‘best interest’ to describe their applicable standard of conduct.” This confused many advisers who were concerned that they could no longer refer to themselves as fiduciaries. However, today the SEC clarified their position by stating: “Investment advisers are fiduciaries, recognized and regulated as such by the commission. Recent commission action does not prohibit investment advisers from calling themselves fiduciaries.” The SEC prohibition on the word “fiduciary” only applies to the standard-of-conduct description in the Form CRS. Investment advisers can continue to describe themselves as fiduciaries and to market that standard of care to clients in every other way.
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Red Oak Compliance Solutions is a leading provider of intelligent compliance software, offering a range of AI-powered solutions designed to help firms of all sizes successfully navigate the increasingly complex regulatory landscape. Our suite of 17(a)-4/WORM compliant features offer risk minimization, cost reduction, and process optimization capabilities with features that are designed to evolve with our client’s needs. Our flagship advertising review software enables firms to deliver compliant content to the market with confidence, faster. Our Disclosure Management and Intelligence solution simplifies the management of disclosures, while our Registration Management solution automates and streamlines the licensing and registration process, further enhancing your internal processes.