SEC Adopts New Rules for Brokers & Investment Advisers & Require Form CRS

While My Solo 401k Financial does not sell investments, offer investment advise or custody funds for our self-directed solo 401k clients, many of our solo 401k clients hire brokers and investment advisers for their solo 401k plans.  As such, solo 401k participants should familiarize themselves with the new SEC rules applicable to brokers and investment advisers  as well as the new Form CRS Relationship Summary (the SEC created a list of questions for investors to ask their advisers-see list of questions below).

On June 5, 2019 The Securities and Exchange Commission voted to adopt new rules governing the conduct of broker-dealers and investment advisers. Specifically, these actions include new Regulation Best Interest (known as Reg BI), the new Form CRS Relationship Summary, and two separate interpretations under the Investment Advisers Act of 1940.Effective dates: The rules and form are effective September 10, 2019.

What is an Investment adviser?

  • Investment advisers don’t charge a commission. Instead, they  charge a fee; provide ongoing oversight, or continuous “monitoring,” of your investments.

What is a broker-dealer adviser?

  • Brokers generally work for a broker-dealer and receive a  commission if you buy what they recommend and don’t usually monitor your investments.

Here Are Some of the New Requirements

To require registered investment advisers and registered broker-dealers  (together, “firms”) to provide a brief relationship summary to retail investors.

The relationship summary is intended to inform retail investors about: the types of client and customer
relationships and services the firm offers; the fees, costs, conflicts of interest, and required standard of conduct associated with those relationships and services.

Whether the firm and its financial professionals currently have reportable legal or disciplinary history; and how to obtain additional information about the firm.

The relationship summary will also reference, a page on the Commission’s investor education website,, which offers educational information to investors about investment advisers, broker-dealers, and individual financial professionals and other materials.

Retail investors will receive a relationship summary at the beginning of a relationship with a firm, communications of updated information following a material change to the relationship summary, and an updated relationship summary upon certain events. The relationship summary is subject to Commission filing and record keeping requirements.

List of SEC Questions Required to be Included in Form CRS Relationship Summary

If you hire an investment adviser or broker for your solo 401k or IRA investments, you need to get answers to the following questions which will need to be provided by investment advisers starting June 30, 2020.

Given my financial situation, should I choose a brokerage service? Why or why not?

 Given my financial situation, should I choose an investment advisory service?

Why or why not?

Given my financial situation, should I choose an investment advisory service? Should I choose a brokerage service? Should I choose both types of services? Why or why not?

What is your relevant experience, including your licenses, education and other qualifications? What do these qualifications mean?

Help me understand how these fees and costs might affect my investments. If I give you $10,000 to invest, how much will go to fees and costs, and how much will be invested for me?

How might your conflicts of interest affect me, and how will you address them?

As a financial professional, do you have any disciplinary history? For what type of conduct?

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>


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