The SEC is looking for some good reading material from America’s 38,000-plus Registered Investment Advisors.
And the story has to be told in “plain English,” a standard that was irrelevant when RIAs could meet their brochure requirements with a simple “check the boxes” protocol.
Now, after 21 years of checking those boxes, investment advisers registered with the SEC will be required by Form ADV-2 to provide new and prospective clients with a brochure explaining the adviser’s qualifications, investment strategies, and business practices.
Deadlines closing in
Newly registered advisers will be required to submit the new Form ADV Part 2 after January 1. Current advisers are required to submit the new form ADV Part 2 with their first fiscal year-end update after December 31. Because many investment advisers’ fiscal years end December 31, that means most — but not all — will be required to file the new form by March 31.
Here are some of the highlights:
- New rules Under the new rules, advisers will have to provide new and prospective clients with narrative brochures that are organized in a consistent, uniform manner
- Disclosures The piece must include disclosures of the adviser’s business practices, fees, conflicts of interest, and disciplinary information
- More information Advisory firms also must provide “brochure supplements” to clients containing information about the employees who will provide the advisory services to that client
Investment News reporter Lisa Shidler noted recently that “New Form ADV-2 Adding Costs, Confusion” to the RIA world’s sense of well being. One of those areas for confusion is how to find and deploy the plain English resources necessary to respond to the online questionnaire in a way that is comprehensive and consistent with a firm’s other messaging strategies.