The key to simpler Reg BI compliance.

The SEC Regulation Best Interest (Reg BI) went into effect on June 30th, 2020.

Essentially, Reg BI requires broker-dealers and associated financial advisors to only make investment and transaction recommendations that are in retail investors’ “best interest.”

One of the most tangible impacts of Reg BI has been the introduction of new disclosure requirements, including Form CRS.

What is Form CRS?

Form CRS is a relationship summary disclosure form that broker-dealers and financial advisors are required to share with their customers (aka retail investors) in conjunction with certain events, such as opening a new account or recommending an investment product.

Form CRS must include, among other things…

  • Firm registration information
  • A description of all services offered by the firm
  • A summary of the firm and advisor’s disciplinary history
  • “Conversation starters” for customers to ask their advisor or point of contact

View complete Form CRS instructions from the SEC

While the contents of Form CRS are strictly regulated, broker-dealers and advisors do have some flexibility in how they choose to deliver it — electronically or on paper.

In order to minimize any potential negative impacts associated with Reg BI and Form CRS, wealth management firms should explore electronic delivery and storage options. Paperless Form CRS workflows can address multiple challenges created by Reg BI and make compliance simpler.

In this article, we’ll discuss the benefits of electronic Form CRS delivery and storage and show you an example of what that workflow could look like.

But first, let’s explore some of the challenges of Form CRS.


SEC Form CRS challenges

Reg BI has introduced many new requirements for broker-dealers and financial advisors that affect the ways they do business and communicate with customers. The long-term impact of these requirements remains to be seen.

In the short term, the complexity and frequency of these disclosure events has created compliance problems as well as business interruptions for wealth management firms who were unable to roll out compliant Form CRS policies prior to the June 30th, 2020 deadline.

IRA and tax specialist Ed Slott says that some firms mistakenly believe they’ve done enough to reach compliance, when in reality they’re falling behind. Additionally, a Wall Street Journal analysis found that a minimum of 1,300 brokerage and financial advisory firms have failed to accurately disclose their disciplinary history — one of the requirements of Form CRS.

These firms face potential fees and other disciplinary action from the SEC, not to mention frustration and headaches.



Delivery of Form CRS to new and potential customers

The SEC requires broker-dealers and associated financial advisors to deliver Form CRS to customers “before or at the earliest of”…

  • The first recommendation of investment products (including account types, securities transactions, or strategies involving securities)
  • The first order placed for the customer
  • The first brokerage account being opened for the customer

In an age when many firms process transactions and new account opening via rapid paperless workflows, the introduction of a paper disclosure form threatens to destroy the benefits of said workflows, slowing them down and negatively impacting the investor experience.

In addition, the requirement to deliver Form CRS prior to recommending investment products means sales prospecting may be disrupted as well. Form CRS may need to be delivered with a prospectus or other forms of communication with non-customers.


Delivery of Form CRS to existing customers

Reg BI applies retroactively to all customer relationships, not just new ones. That means broker-dealers are on the hook for sending versions of Form CRS to existing customers.

Firms were required to deliver Form CRS to their existing customers within 30 days of the June 30th, 2020 compliance date. Additionally, on an ongoing basis, firms must continue to deliver the latest appropriate Form CRS to existing customers…

  • When the customer opens a different account
  • When the firm or advisor recommends a change to the client’s accounts (such as a retirement rollover) or a new service or investment
  • When Form CRS is updated
  • When the customer requests it

The wide variety of ongoing events that trigger a Form CRS delivery requirement make it necessary for firms to have a simple, fast, streamlined delivery process in place. Otherwise, each of these events will represent an opportunity for a compliance issue, and business will slow as advisors and customers wait for their Form CRS delivery.


Form CRS and advisor transitions

Based on the current SEC rules, it’s unclear exactly when advisors transitioning from one broker-dealer to another will need to send an updated Form CRS to the customers they take with them.

However, the conservative approach would be to include this disclosure in the account repapering process, and possibly even earlier (e.g. at the first suggestion of switching firms).

This introduces yet another required instance of Form CRS delivery and storage for broker-dealers.

Related: Learn more about paperless advisor transitions


Updating and storing Form CRS

The SEC requires firms to update Form CRS within 30 days of any change which renders the existing versions “materially inaccurate.”

After updating Form CRS, firms must highlight the changes that have been made and re-deliver the form to all existing customers.

The SEC also mandates storage of Form CRS paperwork and delivery information. Firms are required to “maintain and preserve in an easily accessible place”..

  • A copy of each relationship summary
  • Delivery records, including the dates that each Form CRS relationship summary was provided to the customer

These requirements necessitate secure, accessible document management and version control processes for Form CRS. Both paper and electronic storage of these forms must conform to existing SEC and FINRA rules.

Paper vs. electronic Form CRS processes

Thankfully, the SEC has given broker-dealers a choice for how they would like to deliver and store Form CRS — on paper or electronically.


Paper-based delivery and storage of Form CRS

Most of the issues with a paper-based approach to Form CRS are the same issues associated with all paper-based workflows: added costs associated with printing and mailing, gaps in security, greater opportunities for mistakes, extended timeframes, etc.

However, due to the specific requirements of Form CRS, these effects could be amplified.


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Reg BI details so many different events that require Form CRS delivery that the sheer number of documents a firm can expect to deliver in a given year is staggering.

In addition, records of each one of these disclosures must be stored in a compliant format for at least six years, and must be easily accessible when auditors come knocking. These records must include mailing and delivery confirmations, and keeping manual logs of these deliveries will be painstaking and costly.

Costs aside, a paper-based approach to Form CRS also threatens the experience of investors and advisors. In an age when broker-dealers are competing directly with sleek, fast self-service and technology-based options, inundating customers with repetitive paperwork or having to delay an action due to disclosure requirements is the opposite of progress.


Electronic delivery and storage of Form CRS

Electronic generation, delivery, and storage options eliminate many of the challenges of paper-based Form CRS compliance. In fact, paperless workflows may even present an opportunity for broker-dealers to turn Reg BI into a competitive advantage.


Electronic processes make compliance simpler.

First and foremost, an electronic approach to Form CRS will eliminate a large portion of the tedious, expensive administrative work associated with a paper-based solution.

In addition to saving firms from added printing, mailing, faxing, and filing, an electronic Form CRS workflow can minimize opportunities for non-compliance.

Firms can use a multi-step paperless workflow (aka wizard) to automatically generate different versions of Form CRS and other disclosures based on different parameters, like the license type of the advisor, and ensure the content in each disclosure is always up to date.

The summary can then be delivered electronically to the investor. Though not explicitly required, firms can even add an acknowledgement integration to confirm receipt of the disclosure. This can all happen instantly, allowing business to continue unimpeded.

The relationship summary can then be stored electronically in a 17a3- and 17a4-compliant manner. These documents can then be easily made available upon request to demonstrate compliance.

Depending on the solution used, a paperless Form CRS workflow can potentially be integrated into existing paperless workflows, for example by making it a required step during new account opening. Automatic triggers can also be created to ease compliance with Reg BI, for example by automatically sending updated forms to existing clients following an update.


Electronic processes offer greater communication capabilities.

In complying with Reg BI, it’s important not to lose sight of the SEC’s overall goal. As stated in the initial Reg BI press release, their aim is to “enhance the quality and transparency of retail investors’ relationships with investment advisers and broker-dealers.”

Following the letter of the law and nothing further in complying with Reg BI will work for now, but firms that wish to build a long-term solution that pleases both regulators and investors should consider electronic workflows for their superior ability to communicate the important concepts of the relationship summary.

In their Form CRS instructions, the SEC explicitly encourages the use of creative media elements to enhance customer understanding of the relationship summary. They offer as examples:

  • Charts, graphs, tables, and other graphics or text features
  • Online tools that populate information in comparison boxes based on investor selections
  • A means of facilitating access to video or audio messages
  • Mouse-over windows
  • Pop-up boxes
  • Chat functionality
  • Fee calculators

In other words, firms can align their Form CRS experience with the SEC’s goals by making it as straightforward, easy to understand, and attractive as possible.

Using a branded digital workflow rather than a stack of paperwork doesn’t just allow a firm to include elements that enhance understanding, it can make the investor feel like their firm is doing them a service by disclosing this information, rather than simply checking boxes on compliance.


Rules for electronic delivery and storage of Form CRS

The rules for delivering Form CRS electronically are the same as other SEC disclosure requirements under Use of Electronic Media by Broker-Dealers, Transfer Agents, and Investment Advisers for Delivery of Information. They can be found here.

Choosing an electronic Form CRS solution

Of course, purchasing or creating an electronic Form CRS solution comes at a price. Realizing the benefits and cost-savings described above requires up-front investment of time, money, and labor.


Off-the-shelf vs. bespoke solutions

Some firms opted to go with a paper-based solution to reach compliance by the initial Reg BI deadline, but now want to transition to an electronic solution.

In this case, it’s beneficial to choose a solution that can go to market as quickly as possible in order to start reaping the benefits of paperless workflows. It makes sense for most broker-dealers to choose an off-the-shelf solution that can be customized to fit their specific needs, rather than creating a solution from scratch in-house.


Form CRS solution requirements

At the very least, any solution for electronic delivery and storage of Form CRS must be able to satisfy the following requirements:

  • Comply with SEC rules for electronic delivery of information
  • Create a workflow that can automatically generate different versions of disclosures if needed
  • Facilitate delivery of Form CRS to investors
  • Facilitate storage of records in a compliant format
  • Create an easily accessible audit trail of documents and delivery records

In addition, firms looking to use Reg BI and Form CRS as an opportunity to improve their investor relationships and enhance the experience of their investors and advisors should consider finding a solution that can do the following:

  • Integrate interactive elements like charts, calculators, and links to helpful content
  • Provide a positive experience on desktop and mobile devices
  • Integrate with esignature tools to enable investors to confirm receipt and understanding
  • Convert the form experience into a multi-step wizard rather than a .pdf

Docupace, the leading digital operations software provider for broker-dealers, is the best choice for firms that want an off-the-shelf solution which can meet all of the above criteria. They have nearly two decades of experience building compliant, integrated digital workflow solutions for the wealth management industry.

The Docupace Form CRS solution

Docupace’s Form CRS solution is unmatched, both in helping firms maintain compliance and in enabling them to improve user experiences, from the investor to the advisor to the back office.


Built on the same foundations as the rest of the Docupace Platform, the Form CRS solution includes built-in SEC- and FINRA-compliant electronic delivery and document management. Unlike other providers, Docupace works exclusively with wealth management firms; compliance is built into the core of their products.


Digital experience

The Docupace Form CRS solution is built on Docupace Start, a branded, customizable digital experience builder. It enables firms to transform Form CRS from a few sheets of paper into a true digital workflow, and supports many of the enhanced elements recommended by the SEC.


Through deep integrations with DocuSign and Signix, the Docupace Form CRS solution enables firms to add esignatures to their Form CRS workflows. This way, customers can confirm that they’ve read and understand their relationship summaries, and firms can go above and beyond SEC compliance.



Docupace enables its clients to store records in a hyper-secure 17a3-compliant digital cloud vault. Each copy of the form can be stored along with data about its delivery, in accordance with SEC guidelines. Docupace even enables advanced role and permission set up and user behavior monitoring to increase security.



Docupace has built a Form CRS solution that can be used off-the-shelf, but that doesn’t mean firms have to sacrifice customization. With their team of talented developers, Docupace can customize a Form CRS workflow to meet an individual firm’s goals.

Docupace even supports hybrid paper/electronic solutions. For example, firms can use Docupace document management to store copies and delivery information of paper forms.


Reg BI has injected a little chaos into the day-to-day operations of the wealth management industry. However, by choosing to meet its challenges with paperless solutions, firms can ensure compliance, reduce headaches, and most importantly save money in the long run.

In addition, choosing a paperless compliance solution now won’t just help firms comply with Reg BI — it will increase readiness for the next major regulatory change, whether it comes from the SEC, DoL, FINRA, or somewhere else entirely.