Form ADV
Candlefocus EditorWhen filing Form ADV, the investment adviser must reveal its identity and affairs, organization and operations, financial status, and disciplinary history. This includes basic information about the adviser, such as its name and address. Funds, portfolios, and accounts managed by the adviser should also be listed, including their size and scope. Moreover, investment advisers must disclose their methods of calculating fees, advertising practices, and measures to protect the confidentiality of the information they maintain on clients. They must, however, note that they are not providing legal advice to clients.
Part 2 of Form ADV is also known as the Brochure. In this part, each investment adviser must make available an up-to-date legal disclosure document designed to provide potential clients with information about its background, practices, and methodologies. It must include information about the adviser’s services, fees and compensation, conflicts of interest, disciplinary history, and background and experience of the personnel in their respective roles. Finally, Form ADV Part 3 is the newly implemented SEC Form CRS, which requires advisers to deliver to clients a Client Relationship Summary (CRS) tailored to the particular advisory relationship.
In short, Form ADV is an important source of information for both the SEC and clients looking to engage the services of a professional investment adviser. It impacts the safety of investors’ funds, as well as the performance of their chosen adviser. When studying Form ADV, investors should not only focus on the adviser in question, but glimpse at their competitors’ form to get insight into the different services, fees, and other investments-related information they may provide.