What Is SEC Form ADV?

The Securities and Exchange Commission (SEC)requires all professional investment advisers to submit SEC Form ADV. This form specifies the investment style, assets under management (AUM) and key officers of an advisory firm. This form must be updated annually and it must be made available as a matter of public record for companies that manage funds in excess of $25 million.

There are several parts of SEC Form ADV. The first section includes identifying information, If past disciplinary action was taken against the adviser, this must be noted in the first section of SEC Form ADV. The second section deals with the AUM, investment strategy, fee arrangements, and service offerings of the firm.

Fortis ADV Part 1&2

Who Can Submit SEC Form ADV?

The SEC Form ADV, formally known as the Uniform Application for Investment Adviser Registration and Report by Exempt Reporting Adviser, is a required registration document submitted to both the SEC and state securities authorities.

It’s  essential for potential and existing clients of an investment adviser to review the SEC Form ADV on file. The form provides clear details about the firm’s asset composition and the professional backgrounds of key personnel.

Part 1

The first section of Form ADV is a structured, fill-in-the-blank format that makes it more straightforward for advisers to complete. This section includes information about:

  • The adviser’s business structure
  • Ownership details
  • Affiliations
  • Relevant business practices
  • Client details (current and historical)
  • Key personnel and employees
  • Any disciplinary actions involving the firm or its staff

The SEC uses the data in this section to process registrations and oversee regulatory and examination programs.

The SEC uses the data in this section to process registrations and oversee regulatory and examination programs.

Part 2

The second section of the form is a detailed narrative prepared by the investment adviser. It should be written in clear, plain language and must include specific information about the advisory services provided, the fee structure, any disciplinary history, and potential conflicts of interest. This includes disclosure of whether any directors have outside business activities that could influence their decisions or access to insider information.

Additionally, this section should provide background information on management, including their education and professional experience. It should also feature bios of key advisory staff. As the main disclosure document for clients, this section is highly significant. Once filed, brochures are publicly accessible.

SEC Form ADV Part 2 also requires a supplement that outlines details about key employees who provide direct investment advice to clients.

Annual Updates to SEC Form ADV

Investment advisers must update their brochures annually. These updates should include any material changes within the firm or information and activities critical to its operations.