Inside Form ADV; What You Need To Know Now
Articles by: Richey May, Jan 25, 2024
Form ADV, the Uniform Application for Investment Adviser Registration and Report by Exempt Reporting Adviser, is like a detailed financial autobiography for investment firms in the US. It plays two crucial roles: registration and transparency. In this short video, Justin Schleifer, Co-Founder & President of Aspect Advisors, breaks down the key aspects of Form ADV. Keep reading below the video for everything you need to know.
Registration: While there are some exceptions, in general, investment advisors with $100 million or greater in regulatory assets under management (AUM) must register with the SEC as Registered Investment Adviser (RIA). Some of the common exceptions which allow an investment advisor with less than $100 million in AUM to register with the SEC instead of the relevant state(s) include:
- An investment advisor with its principal office and place of business in New York or Wyoming will generally register with the SEC if it has $25 million or greater AUM.
- Advisors to investment companies registered under the Investment Company Act of 1940 must register with the SEC regardless of AUM.
- Advisors that would be required to be registered in 15 or more states will generally register with the SEC regardless of AUM.
- Internet-only advisors may register with the SEC regardless of AUM.
When registered with the SEC, Form ADV serves as their official registration document, providing comprehensive information about their business practices, investments, fees, and personnel. Think of it as a resume for an investment firm, packed with details like investment strategies, team qualifications, fee structures, and ownership structure.
Transparency: But filing Form ADV doesn’t end with registration. It needs regular updates throughout the year to reflect any changes in the firm’s operations. This could include the addition of new team members, adjustments to fee structures, or significant shifts in assets under management. This ongoing transparency plays a vital role:
- For Investors: They get a clear and updated picture of the firm, allowing them to compare investment advisors and make informed decisions about who to trust with their money.
- For Regulators: Form ADV provides a standardized way for the SEC to monitor the industry and identify potential risks or misconduct.
Now, let’s talk about due dates:
- Registered Advisers: For firms with a December 31 fiscal year-end, updating Form ADV (Parts 1A, 1B, and 2A) is due no later than 90 days after fiscal year-end (typically by March 31st of the following year).
- Exempt Reporting Advisers: Depending on the specific exemption relied upon, filing schedules for these firms can vary. Consult with a legal or compliance professional for specific deadlines.
Remember, adhering to Form ADV’s filing and update requirements is crucial for investment advisors. It ensures compliance with regulations, fosters transparency, and ultimately builds trust with potential clients. Investment advisors are encouraged to consult with their legal counsel/advisors when submitting, updating or making changes to their registration through the Form ADV.
Our advice: Start planning now and don’t hesitate to reach out for guidance. Need to set up a call? Email Steve Vlasak, Richey May’s Business Development Partner, Alternative Investments Practice.