April 3, 2012

ADV Amendment Filed – What’s Next?

Here are some next steps now that you’ve filed your annual amendment. Below are questions our consultants at AdvisorAssist are frequently asked:

What am I required to provide to Clients?

There are two different routes advisors can take when it comes to delivering their ADV Part 2. First and foremost, regardless of the path you chose for your ADV Part 2, you must deliver a copy of your privacy policy annually. For the ADV Part 2:
  • Option 1: If there have been material changes to your business the material changes must be described in ADV Part 2, Item 2. Under the current rules, you could provide your clients with a summary of these material changes and an offer to deliver the entire ADV Part 2. In your offer you must include instructions on how clients can obtain a copy from you.
  • Option 2: Advisors can also opt to deliver a full copy of the entire ADV Part 2. In this instance Item 2 - Material Changes still needs to be updated.
Generally, AdvisorAssist recommends that advisors include a cover letter explaining what is being provided to clients and why. For an example letter, please contact us.

May I email this information to Clients?

You may attach the information described above as pdf files in an email to clients. Sending an email with a link to the documents does not constitute delivery. You should only email this information to clients if you generally use email as a means of communication with that client.

When must I deliver the information?

The information described above must be delivered within 120 days of your fiscal year end. Generally the 120 day mark is May 1st, however, since 2012 is a Leap Year, the 120th day is actually April 30th.

What constitutes a material change?

The best way to determine if a change is material is to consult an independent resource who can assist you in making an objective determination. Material changes to your Form ADV Part 2A may include changes to your services, fees, advisory personnel, financial industry affiliations, disciplinary events and financial challenges of the firm or principals, such as a bankruptcy.

Besides my annual amendment, what other times must I update my ADV Part 2?

Investment advisors are required to update their Form ADV Part 2A promptly when the information in the brochure is materially inaccurate. Remember to file your updated Form ADV Part 2A on the IARD system.


Post a Comment