An SEC-registered investment adviser (“adviser”) that has “retail investors” must file a Form CRS relationship summary (“relationship summary”) with the SEC by no later than June 30, 2020.1
A retail investor is defined as “a natural person, or the legal representative of such natural person, who seeks to receive or receives services primarily for personal, family or household purposes.” An adviser is not required to deliver a relationship summary to retail investors in pooled investment vehicles, such as hedge funds, private equity funds and venture capital funds, unless the adviser has a separate basis for delivering a relationship summary to these investors, such as separately managed account arrangements.2 Therefore, an adviser that only advises these types of pooled investment vehicles is not required to prepare, file or deliver a relationship summary even if those vehicles include retail investors.
The relationship summary is a two-page document intended to inform retail investors about the types of client relationships and services the adviser offers; the fees, costs, conflicts of interest, and required standard of conduct associated with those relationships and services; whether the adviser and its financial professionals currently have reportable legal or disciplinary history; and how to obtain additional information about the adviser.
Seward & Kissel has created a “Guide to Form CRS for Investment Advisers” to assist advisers with preparing a relationship summary. The Guide also contains Seward & Kissel’s “Template Form CRS Relationship Summary for Investment Advisers.” The Template contains sample disclosures for each requirement, which an adviser can use to tailor to its current advisory business and practices. The Guide and other compliance tools, resources, webinars and publications are available on our SKRC Online Compliance Subscription Service, which is free to our active investment adviser clients. Please click here to request free client access.