Advisor RulebookYour financial advisor's public record, straight from the SEC's own filings.

17 CFR 275.204-5

Form CRS: the two-page disclosure you are owed before you pay anyone

A federal rule requires every SEC-registered investment adviser and every registered broker-dealer that serves retail investors to hand you a relationship summary called Form CRS: a document capped at two pages (four for firms that are both adviser and broker), written under instructions that demand short sentences and everyday words, covering services, fees, conflicts, the standard of conduct, and disciplinary history. An adviser must deliver it before or at the time you sign an advisory contract, and a broker before or at the time of the first recommendation. Almost nobody reads it, which is a waste, because it is the one document where the firm must answer the awkward questions in writing.

Where the requirement comes from

In June 2019 the SEC adopted Form CRS alongside Regulation Best Interest. For investment advisers the delivery duty lives in rule 204-5 under the Investment Advisers Act (17 CFR 275.204-5), and the form itself is Part 3 of Form ADV; for broker-dealers the parallel duty is Exchange Act rule 17a-14. Firms had to file their first relationship summaries by June 30, 2020, so every firm you would realistically talk to has one on file today.

The instructions are unusually prescriptive: a firm may not pad the document with marketing, must present the required items in the required order, must use prescribed question headings, and must keep it to the page limit. The SEC also requires firms to post the summary prominently on their public website and to provide a copy free within 30 days of anyone asking.

The five required sections

The instructions to Form CRS enumerate five items every relationship summary must contain, in this order:

  1. Introduction. The firm's name, whether it is registered as an investment adviser, a broker-dealer, or both, and a statement that fees differ between the two and that free tools for researching firms exist at Investor.gov/CRS.
  2. Relationships and services. Under the required heading "What investment services and advice can you provide me?": what the firm offers, whether it monitors your account and how often, whether it takes discretionary authority (trading without asking first), any limits on what it will recommend (proprietary products only, for example), and account minimums.
  3. Fees, costs, conflicts, and standard of conduct. The principal fees and costs you will incur and the conflicts the firm's compensation creates, plus the required sentence pattern acknowledging that the firm must act in your interest but that its interests can conflict with yours. This is where fee-based versus commission compensation shows up in writing; the fees page defines each model.
  4. Disciplinary history. Under the required heading "Do you or your financial professionals have legal or disciplinary history?": a yes or no, with a pointer to the free search tools. The instructions do not allow the firm to soften a yes with explanatory marketing. The firm pages on this site show the parallel flag from Form ADV Item 11.
  5. Additional information. Where to find more detail (the Form ADV brochure, for advisers) and a phone number for requesting up-to-date information and a copy of the relationship summary.

The form also requires "conversation starters" sprinkled through the document: questions the SEC wrote for you to ask, such as "How much would I pay per year for an advisory account?" and "As a financial professional, do you have any disciplinary history? For what type of conduct?" A firm that gets visibly uncomfortable answering its own required conversation starters is telling you something.

You can read it before paying anything

The delivery rule for advisers is explicit: the relationship summary must reach you before or at the time the firm enters into an advisory contract with you, even an oral one. You never have to pay first. In practice you do not even have to ask: every filed relationship summary is public. Search the firm on this site, follow the link to its adviserinfo.sec.gov page, and the Relationship Summary is a labeled link on the firm's summary page.

Here is a live example to calibrate against: the relationship summary filed by Fisher Investments (CRD #107342), pulled straight from the SEC's public reports server. Notice how short it is, and notice the required headings; every firm's summary must answer the same questions in the same order, which is the point: the form was built for side-by-side comparison, the same way the Loan Estimate works in mortgages.

How to actually use it

  • Collect the Form CRS from two or three firms before committing to any of them, and read the fee sections side by side. They are short by law.
  • Check the disciplinary answer against the firm's record here and on IAPD and BrokerCheck.
  • If the firm is dual-registered (adviser and broker), ask which hat the person across the table is wearing for each account they propose. The fiduciary page explains why the answer changes what they owe you.
  • Ask the conversation-starter questions out loud. They are in the document because the SEC concluded investors were not asking them.

Sources

Advisor Rulebook is an independent educational site and is not an investment adviser, a broker, or a law firm. Nothing here is legal, financial, or investment advice, and nothing here recommends any firm.