Key Takeaways
- Form ADV registers and discloses investment adviser info.
- Required for SEC- and state-registered investment advisers.
- Includes firm and individual adviser disclosures.
- Parts 1 and 2 are publicly available online.
What is Form ADV?
Form ADV is the uniform disclosure document that registered investment advisers (RIAs) and exempt reporting advisers (ERAs) must file with the SEC and state securities regulators to register, report operations, and provide transparency on their business practices, fees, conflicts, and disciplinary history. This form is essential for regulatory compliance and investor protection.
The document is publicly accessible through the SEC’s Investment Adviser Public Disclosure system, helping clients and prospects evaluate advisory firms before engaging their services.
Key Characteristics
Form ADV contains detailed information about an adviser's business, broken down into specific parts for regulatory and client use:
- Part 1A: Business details such as legal name, assets under management, ownership, and disciplinary events, filed electronically for regulatory review.
- Part 1B: State-specific questions relevant only to advisers registered at the state level.
- Part 2A (Firm Brochure): Narrative description of services, fees, conflicts, and investment strategies, required to be delivered to clients.
- Part 2B (Brochure Supplement): Individual adviser disclosures including education, experience, and disciplinary history.
- Part 3 (Relationship Summary): A concise summary designed for retail investors outlining services, fees, and conduct standards.
How It Works
Advisers must file Form ADV electronically via the Investment Adviser Registration Depository (IARD) before commencing operations, ensuring compliance with SEC or state registration requirements. Annual updates are mandatory within 90 days of the fiscal year-end, with amendments needed for material changes.
Firms with assets under management above certain thresholds register with the SEC, while smaller advisers register with state regulators. Exempt Reporting Advisers, such as some venture capital firms, file partial forms to maintain transparency without full registration. This process ensures ongoing disclosure and public access to adviser information.
Examples and Use Cases
Form ADV is critical across various advisory firms and industries, illustrating its broad application:
- Venture Capital Firms: An exempt reporting adviser managing $200 million in private funds must file required sections of Form ADV without full RIA registration.
- Public Companies: Advisers working with publicly traded companies like Delta or American Airlines must maintain up-to-date filings reflecting their business and disciplinary records.
- Investment Strategies: Disclosure of advisory strategies often overlaps with selecting low-cost options, such as those highlighted in our guide to best low-cost index funds.
Important Considerations
Filing Form ADV accurately and timely is crucial for regulatory compliance and maintaining investor trust. Advisers should ensure all disciplinary events and conflicts of interest are fully disclosed to avoid penalties.
Clients can use the information provided to compare firms and understand potential risks. Staying informed about registration thresholds and delivery requirements helps advisers meet evolving standards while protecting investor interests, especially in complex advisory roles like those involving C-suite decision-makers or advanced data analytics in portfolio management.
Final Words
Form ADV provides essential transparency into an adviser’s business, fees, and conflicts, making it a critical tool for evaluating investment professionals. Review the publicly available Parts 1 and 2 on the SEC’s website to compare advisers before making your choice.
Frequently Asked Questions
Form ADV is a uniform disclosure document that registered investment advisers and exempt reporting advisers must file with the SEC and state regulators. It provides transparency about their business practices, fees, conflicts of interest, and disciplinary history.
Investment advisers who meet SEC or state registration thresholds must file Form ADV. This includes advisers with $110 million or more in assets under management for SEC registration, state-registered advisers below that threshold, and exempt reporting advisers such as certain venture capital or private fund advisers.
Form ADV is divided into five parts. Part 1A covers business information, Part 1B includes state-specific details, Part 2A is the firm brochure with narrative disclosures, Part 2B is the brochure supplement with individual adviser info, and Part 3 is a concise relationship summary for retail investors.
Filing is required before an adviser begins selling securities and must be updated annually within 90 days of the fiscal year-end. Additional amendments, called "other-than-annual," must be filed within 30 days for significant changes like disciplinary events or changes in ownership.
Parts 1 and 2 of Form ADV are publicly accessible via the SEC’s Investment Adviser Public Disclosure (IAPD) website. These parts include business details, services offered, fees, conflicts, and disciplinary history, allowing investors to research advisers.
Advisers must deliver Part 2A, the firm brochure, to all clients and prospective clients annually and upon request. Part 2B, the brochure supplement with individual adviser details, must be provided to clients who have direct contact with those advisers.
An Exempt Reporting Adviser is typically a venture capital or private fund adviser exempt from full SEC registration but still required to file a limited or partial Form ADV. They submit only certain sections rather than the full form.
Form ADV offers investors transparency into an adviser's business, fees, conflicts of interest, and disciplinary history, helping them make informed decisions. It also ensures advisers meet regulatory requirements and maintain accountability.
