As part of the SEC’s ongoing efforts to help address investor confusion about the nature of their relationships with investment advisers and broker-dealers, the SEC’s Office of the Investor Advocate released a report on investor testing to the public on November 7th. This report was conducted by the RAND Corporation and was based on investor testing feedback on a sample Relationship Summary issued in April 2018 as part of a package of proposed rulemakings and interpretations that were designed to enhance the quality and transparency of investors’ relationships with investment industry entities.
In general, the report states that investors found the Relationship Summary useful in understanding and comparing investment relationships. The results of this report support the SEC’s goals of providing retail investors with clear and concise summaries to help them make important decisions about choosing to work with an investment professional.
The RAND Corporation’s investor testing of the Relationship Summary consisted of:
- A nationwide online survey of over 1800 individuals that were fielded through RAND’s nationally representative American Life Panel
- Qualitative in-depth interviews performed in Denver and Pittsburgh that were conducted using independent market research firms
The staff at the SEC is reviewing the report carefully, as well as other information related to the proposed Relationship Summary that is relevant to the final rule. This report is also of interest and may be informative to outside parties evaluating the proposed Summary, and the Office of Investor Advocate has made it publicly available to permit said parties to consider and comment on its supplemental information. Comments should be submitted to the comment File Nos. S7-08-18, S7-09-18, and S7-07-18. The SEC is encouraging interested parties to submit their comments by December 7th, 2018.
Sources:
Investor Testing of the Proposed Relationship Summary for Investment Advisers and Broker-Dealers (www.sec.gov)
Investor Testing of Form CRS Relationship Summary (www.sec.gov)
