Form ADV is a requirement for new registered investment advisors and existing RIA firms. You’ll need to submit your initial filing and follow up with an updated filing each year. Form ADV Part 1 is where you’ll disclose vital details about your firm, including its legal name, the services you offer, and the ownership structure.
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What Does Form ADV Part 1 Cover?
Form ADV Part 1 collects several categories of information about registered investment advisors. This check-the-box, fill-in-the-blank format document asks specific questions about the business and includes several supplemental schedules. You’ll only complete the schedules that are relevant to your form.
There are two parts: Part 1A and Part 1B. Form ADV Part 1A is organized into these sections.
Item 1 – Identifying Information
Item 1 tells the SEC who you are, where you do business, and your contact details. In this section, you’ll share the following:
- Your full legal name
- The name under which you do business if different from your full legal name
- Any changes to your legal name or primary business name, if applicable
- Your SEC file number, if already registered
- Your CRD number if you have one
- The address of your principal office and place of business
- The telephone and fax number of this location
- Days of the week you conduct business at this location and your normal business hours
- The total number of offices your firm operates
- Your residential address if different from your business address (for sole proprietors only)
- A list of all websites and social media accounts you own that are associated with your firm
- The name of your chief compliance officer and their contact information
- Additional contact information for any person(s) other than the chief compliance officer who is authorized to receive information and respond to questions about your Form ADV
- Your legal entity identifier if you have one
You’ll also answer several yes/no questions about your recordkeeping practices, registration with a foreign financial regulatory authority, your status as a public reporting company, and your assets under management.
Item 2 – SEC Registration
Item 2 allows the SEC to determine if you’re eligible for registration. You’ll see 13 boxes describing various registration statuses your firm might have. You’ll choose the one that applies to you.
Section B of Item 2 is for exempt reporting advisers only. You’d check any boxes that apply here.
In Section C, you’ll check boxes for any states you’d like to receive notice of your Form ADV filing.
Item 3 – Form of Organization
In Item 3, you’ll choose your organizational structure from one of six boxes. If it’s not listed, you can check the ‘Other’ box and write in the type of organization you have in the blank space.
You’ll also tell the SEC when your fiscal year ends and which state or country’s laws you’re organized under.
Item 4 – Successions
Here, you’ll tell the SEC if you’re succeeding to the business of an existing RIA. If so, you’ll enter the date of succession. You can check ‘No’ here if you’ve already reported the succession on a previous Form ADV.
Item 5 – Information About Your Advisory Business
In this section you’ll provide details about your:
- Employees
- Clients
- Compensation arrangements
- Regulatory assets under management
- Advisory services
- Participation in wrap fee programs, if applicable
- Separately managed account clients
- Marketing activities
Some of the questions are check-the-box, while others will require you to enter numbers or write out answers.
Item 6 – Other Business Activities
In this section of Form ADV Part 1, you’ll tell the SEC about any other business activities you might engage in. For example, you’ll need to let the SEC know if you’re also a registered broker-dealer, real estate broker, or accountant.
You’ll check all the boxes that apply. You’ll also need to inform the SEC of whether you’re engaged in any other business activities not listed, apart from giving investment advice.
Item 7 – Financial Industry Affiliations and Private Fund Reporting
Item 7 is used to identify any potential conflicts of interest. You’ll need to disclose all related persons and whether you’re an advisor to a private fund. All answers in this section are check-the-box.
Item 8 – Participation or Interest in Client Transactions
In this Item, you’ll answer a series of yes or no questions about participation in client transactions. The questions apply to both you and any related persons associated with your firm.
Item 9 – Custody
This Item includes several questions about custody of client assets for you and related persons associated with your firm. You’ll answer yes or no questions, with some ‘yes’ answers requiring you to complete additional fill-in-the-blank questions.
Item 10 – Control Persons
In this Item, you’ll identify every person that, directly or indirectly, controls you. Question A is yes/no. If you answer ‘yes,’ you’ll need to complete Section 10.A of Schedule D.
Item 11 – Disclosure Information
Item 11 requires you to disclose any disciplinary actions in which you’ve been involved. The SEC uses the answers you provide here to determine whether to grant your registration.
Item 12 – Small Business
Item 12 determines whether you qualify as a small business or small organization, under the Regulatory Flexibility Act. You’ll only answer this Item if you are registering with the SEC (or are already registered) and you indicated that you have <$25 million in regulatory AUM.
Form ADV Part 1B
Part 1B of Form ADV is only required for advisors who are registering with state regulatory agencies. In Part 1B you can indicate the states in which you plan to register. If you’re completing your Form ADV online, you’ll only be directed to Part 1B if your answers in Part 1A indicate that you must complete it.
Form ADV Schedules
Form ADV Part 1 has several schedules, but you may not need to complete them all. The SEC uses them to collect additional information about your advisory firm. Briefly, here’s what each one covers:
- Schedule A – Direct owners and executive officers
- Schedule B – Indirect owners
- Schedule C – Information updates (for paper filers only)
- Schedule D – Additional information for certain items in Part 1A
- Schedule R – Additional information about relying advisors
- Disclosure Reporting Pages (DRPs) – Disciplinary events involving you or your advisory affiliates
As you work through Items 1-12 on Part 1A you’ll be directed to the schedules you need to complete.
Form ADV Part 1 Tips for Advisors
Form ADV is mandatory for registration and proper preparation can make for a smooth filing. Here are a few tips to help navigate the process.
- Review each Item and any Schedules you’re required to complete individually to understand what information you’ll need to provide.
- Complete each Item in full before moving on to the next.
- Plan to have your form in ahead of your filing deadline. RIAs must file their annual Form ADV within 90 days of the end of their fiscal year. For example, if your FY ends on December 31, your filing deadline is March 30 of the following year.
- Fund your Flex-Funding Account to cover your Form ADV submission fees. This account is set up through IARD and can be funded through transfers from your firm’s business bank account.
Once you submit your Form ADV, IARD automatically runs a completeness check. This check tells you if there are any unanswered questions or incomplete schedules you need to address.
Frequently Asked Questions (FAQs)
What’s the Difference Between Form ADV Part 1 and Part 2?
Form ADV Part 1 collects information about investment advisory firms that register or are registered with the SEC. Form ADV Part 2 covers the SEC’s disclosure requirements for RIA brochures.
Who Is Required to File Form ADV?
Investment advisors and exempt reporting advisors are required to file Form ADV with the SEC. RIAs are required to submit an initial Form ADV to register and file an updated form each year. The filing deadline is 90 days from the end of the advisory firm’s fiscal year.
How Do You File Form ADV?
Form ADV is submitted electronically through the Investment Adviser Registration Depository. Investors can use the Investment Adviser Public Disclosure website to check a registered advisor’s IARD filing status.
Bottom Line
Form ADV Part 1 is extensive but necessary to complete your registration. When filing, it’s important to ensure that you’ve answered all required questions and done so correctly and truthfully. You may consider working with a compliance consultant who specializes in Form ADV filings to complete your initial or updated paperwork.
Tips for Growing Your Advisory Business
- One section on Form ADV Part 1 centers on marketing activities and how you attract new clients to your business. If you’re struggling to reach your client acquisition goals, it could make sense to partner with an advisor marketing platform. SmartAsset AMP uses a holistic approach to help growth-focused advisors connect with leads. Schedule a demo to learn how you can leverage it to expand your book of business.
- SEC registration is required for advisors whose assets under management exceed $110 million. If your AUM is greater than $100 million but less than $110 million, you can choose to register with the SEC or state regulatory authorities. If your AUM is under $100 million, you’ll register with the appropriate agency for your state.
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