What is Form ADV?
Form ADV is the uniform form used by investment advisers to register with both the Securities and Exchange Commission (SEC) and state securities authorities. It serves as the primary disclosure document that provides clients and prospective clients with essential information about an advisory firm.
Parts of Form ADV
Part 1: Contains information about the adviser's business, ownership, clients, employees, business practices, affiliations, and any disciplinary events. This part is primarily for regulatory use.
Part 2A (Brochure): A narrative document written in plain English that must be delivered to clients, covering:
- Services offered and fees charged
- Investment strategies and methods of analysis
- Risk disclosures
- Disciplinary information
- Conflicts of interest
- Code of ethics
Part 2B (Brochure Supplement): Provides information about specific individuals who provide investment advice to clients.
Part 3 (Form CRS): A brief relationship summary for retail investors.
Filing Requirements
- Must be filed electronically through the Investment Adviser Registration Depository (IARD)
- Annual amendments required within 90 days of fiscal year end
- Must be updated promptly for material changes
- Part 2A must be offered to clients annually
Importance for Clients
Form ADV helps clients:
- Understand how the advisor is compensated
- Identify potential conflicts of interest
- Research the advisor's background and disciplinary history
- Compare different advisory firms
Financial advisors should use their ADV as a tool for transparency and building client trust.
