What is SEC Form ADV?
SEC Form ADV is mandated by the Securities and Exchange Commission (SEC) for all professional investment advisers. The submission outlines the investment style, assets under management (AUM), and key officers of an advisory firm. Annual updates are required for public records, especially for firms managing funds exceeding $25 million.
SEC Form ADV comprises several parts. The first section includes identifying information. If past disciplinary actions were taken against the adviser, these must also be noted in this section. The second part covers AUM, investment strategy, fee arrangements, and service offerings of the firm.
Key Takeaways
- Professional investment advisers must submit SEC Form ADV to the SEC.
- The form serves as a registration document with the SEC and state securities authorities.
- Form ADV includes details about assets under management, investment fee structures, advisors’ business practices, and key personnel’s background.
- Clients are advised to review SEC Form ADV to get transparent information about the firm’s operations.
- SEC Form CRS was spun off from Part 3 of SEC Form ADV to offer a Relationship Summary.
Who Can File SEC Form ADV?
Officially known as the Uniform Application for Investment Adviser Registration and Report by Exempt Reporting Adviser, the SEC Form ADV registers advisers with the SEC and state securities authorities. The North American Securities Administrators Association (NASAA) approves changes, and the Financial Industry Regulatory Authority (FINRA) supports it.
Potential and current clients should always review the SEC Form ADV to understand the asset mix within the firm and the qualifications of key personnel.
How to File SEC Form ADV
Part 1
The first part is a fill-in-the-blank format and includes details about:
- The adviser’s business
- Ownership structure
- Affiliations
- Business practices
- Clients
- Key and other employees
- Disciplinary events
The SEC uses this information to process registrations and conduct regulatory examinations.
Part 2
The second part is a detailed narrative in plain English covering:
- Advisory services offered
- Fee schedule
- Disciplinary information
- Conflicts of interest
It also includes management background, education, and experiences—critical for clients to refer to while making decisions. This part should be updated annually with any material changes.
SEC Form CRS
Initially part of Form ADV as Part 3, SEC Form CRS (Customer or Client Relationship Summary) now exists independently. It provides a summary of identifying information, services, client relationships, fees, conflicts of interest, standards of conduct, and disciplinary action in plain English.
How to Access SEC Form ADV
To obtain a copy, contact your nearest SEC branch or access it through the SEC’s Investment Advisor Public Disclosure page. Firms are obliged to provide these forms to new and existing clients.
Download SEC Form ADV
A downloadable version of SEC Form ADV can be found here.
Additional Insights
Do Brokers/Dealers File SEC Form ADV?
Yes, anyone providing investment services must file SEC Form ADV, including brokers and dealers. It acts as a registration document with the SEC and must also be filed with state authorities.
Understanding Part 1 and Part 2 of SEC Form ADV
- Part 1 includes firm identification, services, ownership, client details, affiliations, and disciplinary history.
- Part 2 (A and B) provides key business practices, fees, conflicts of interest, and a supplement with information on employees offering direct advisory services.
What Is SEC Form ADV Part 3?
Now known as SEC Form CRS, this part summarizes the entire form, listing factors like service offerings, client relationships, conflicts of interest, and more in a consumer-friendly manner.
The Bottom Line
SEC Form ADV is crucial for maintaining regulatory compliance and providing transparency. Investment advisers must submit accurate and clearly written information to avoid penalties. Investors should use this form for informed decision-making regarding their investment advisors.
Related Terms: Form ADV Part 1, Form ADV Part 2, Form CRS, Investment Adviser Registration, NASAA.
References
- U.S. Securities and Exchange Commission. “Form ADV and IARD Frequently Asked Questions”.
- U.S. Securities and Exchange Commission. “Investor Bulletin: Form ADV – Investment Adviser Brochure and Brochure Supplement”.
- North American Securities Administrators Association. “Investment Advisor Guide”.
- U.S. Securities and Exchange Commission. “FORM ADV (Paper Version)”.
- Investor.gov. “Form ADV”.
- U.S. Securities and Exchange Commission. “Form CRS Relationship Summary; Amendments to Form ADV”.
