September 8, 2014

How to Determine the Total Number of Accounts for your RIA Firm's Form ADV

Regulators expect that RIA firms to accurately report their total number of clients and accounts in Form ADV 1. Determining each of these data points can be trickier than you'd expect. In this post, we lay out the logic you can use to calculate total accounts for Form ADV 1.

In another post, we discuss how to count your firm's total clients.

What’s an Account?

Accounts are distinct (segregated) groupings at the client’s designed custodian, trust company or transfer agency or administrator (collectively the “custodians”). This makes relatively easy to determine (as opposed to total clients) since custodians maintain and report on an account-level basis, with each being specifically identified.

When determining your RIA firm’s total number of accounts:
  • You must only include accounts where you provide continuous and regular supervisory or management services.
  • You must include both discretionary and nondiscretionary accounts, as applicable,and report them separately on Form ADV 1, Item 5.F.
  • You may include accounts where you do not receive compensation for your services, as long as you provide continuous and regular supervisory or management services.
  • For pooled vehicles (hedge funds and mutual funds), the underlying investors are generally not counted. So the fund is one account.
  • You should exclude accounts with zero values or those established to allow a client self-directed investments.

During examinations, regulators will check the accuracy of these numbers in your Form ADV 1. We hope that this helps you accurately calculate and report your RIA firm's total accounts.


Post a Comment