What Is SEC Form ADV?
I'm here to explain SEC Form ADV directly to you as an investor or someone interested in financial regulations. The Securities and Exchange Commission requires all professional investment advisers to file this form, which outlines their investment style, assets under management, and key officers. You need to know that it gets updated annually and becomes public record for firms handling more than $25 million.
Form ADV has multiple parts. The first part covers basic identifying information, including any past disciplinary actions against the adviser. The second part dives into assets under management, investment strategies, fee setups, and services offered.
Key Aspects of SEC Form ADV
Form ADV, officially the Uniform Application for Investment Adviser Registration and Report by Exempt Reporting Adviser, is your go-to registration document submitted to the SEC and state authorities. The North American Securities Administrators Association reviews changes, with support from the Financial Industry Regulatory Authority.
As a client, you should always check the filed Form ADV. It gives you clear evidence of the firm's asset mix and the professional backgrounds of its key people. Advisers usually provide the current form to potential clients early on, and if they don't offer it freely when you ask, that's a red flag you can't ignore.
Filing SEC Form ADV: A Comprehensive Guide
Let me walk you through the key parts of the form. Part 1 is a fill-in-the-blank section that's straightforward for advisers to complete. It includes details on the business, ownership, affiliations, practices, clients, employees, and any disciplinary events involving the firm or its staff. The SEC uses this to handle registrations and oversight.
Part 2 is a narrative section written in plain English by the adviser. It covers the types of services, fee schedules, disciplinary info, and conflicts of interest, like outside business interests of directors that might affect judgments. It also includes backgrounds on management and key personnel. This is the main disclosure document for clients, and brochures are public once filed. There's a supplement in Part 2 detailing employees who give direct advice.
Maintaining Compliance: Annual Updates to SEC Form ADV
You have to submit annual updates as an adviser, covering all significant changes or activities in the firm. This keeps everything current and compliant.
Introduction to SEC Form CRS: The Relationship Summary
Form ADV used to have a Part 3, the relationship summary, but in June 2019, the SEC split it off into a new form called SEC Form CRS. This is designed to give retail investors a brief summary of the firm's info. Every firm offering retail services must file it with the SEC and provide it to clients.
Form CRS summarizes Form ADV details like identifying info, services, relationships, fees, conflicts, conduct standards, disciplinary actions, and more. It has to be concise and in plain English for easy understanding.
Accessing SEC Form ADV: Tips for Investors
To get a copy, contact your nearest SEC branch. As a potential or current client, always review the filed Form ADV for transparency on asset mix and personnel backgrounds. You can download it from official sources, and firms must make their submissions public via the SEC's Investment Adviser Public Disclosure page. Request it directly from the firm if needed—all are required to provide it to clients.
Brokers and dealers file Form ADV too if they provide investment services. It's for firms or individual advisers registering with the SEC and state authorities.
The Bottom Line
SEC Form ADV is a vital regulatory tool for investment advisers to register and disclose investment style, assets under management, and fees. Submit accurate info annually, or face fines or prosecution. As a client, review it to understand the firm's setup and history. Advisers, keep your submissions clear and simple for all investors.
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