Form ADV and registration mechanics

Form ADV — the universal IA registration form

Form ADV is the single registration document used by both federal-covered and state-registered investment advisers — one form, every adviser, filed electronically through the Investment Adviser Registration Depository (IARD), the FINRA-operated system that also handles BD registrations through Web CRD.

Four parts, and each one answers a different question:

• Part 1A and 1B — structured-data sections about the adviser's business: ownership, control affiliates, clients, AUM, disciplinary history, custodial arrangements. Filed with the regulator (SEC or state).
• Part 2A — the "Brochure" — narrative plain-English disclosure document covering services, fees, conflicts, disciplinary history, financial condition, and operational details. Delivered to clients.
• Part 2B — the "Brochure Supplement" — narrative disclosure about the specific IARs servicing the client's account: education, work history, professional designations, disciplinary events. Delivered to clients.
• Part 3 / Form CRS — the "Client Relationship Summary" — a 2-page plain-language summary for retail investors comparing the firm's services, fees, conflicts, disciplinary history, and questions to ask. Delivered at relationship start.

Filing mechanics:

• All parts are filed electronically through the IARD system
• Initial filing fee is paid to the IARD; state registration fees are paid in addition
• Amendments to Form ADV Part 1 are filed annually (within 90 days after fiscal year end) and promptly upon material changes to specified items
• Amendments to Part 2A are filed annually and promptly when information becomes materially inaccurate

Form ADV is one form with four parts. Each part has its own filing target (regulator vs client) and delivery rules.

Form ADV Parts — detail and delivery rules

Now each part in working detail — because the Series 63 tests not just what each part is, but what's inside and when it moves.

Part 1A (filed with SEC) and Part 1B (filed with state): structured-data sections requiring the adviser to report specific information about its business. Part 1A is required of all federally-registered advisers and most state-registered advisers; Part 1B contains state-specific information required only of state-registered advisers. Filed information includes:

• Identity of the adviser, principal office location, contact information
• Direct and indirect owners (5%+ ownership stakes), control affiliates, executive officers
• Clients: number, type, AUM by client category
• Advisory activities: financial planning, portfolio management, pension consulting, etc.
• Affiliated activities: broker-dealer, insurance, other financial businesses
• Custodial arrangements and physical custody of client assets
• Disciplinary history of the firm and its control persons

Part 2A — the Brochure (Delivered to Clients): a plain-English narrative document, organized in 18 standardized items, covering:

• Advisory services and fees
• Performance-based fees and side-by-side management
• Types of clients and account requirements
• Methods of analysis, investment strategies, and risk of loss
• Disciplinary information and other financial industry affiliations
• Code of ethics, participation or interest in client transactions, personal trading
• Brokerage practices, including soft-dollar arrangements
• Custody, including any practices that constitute custody under the rule

Delivery rules for Part 2A — and here's where the clocks live: must be delivered to a prospective client at or before entering an advisory contract. Existing clients must be offered — in writing, annually — a copy of the updated brochure (the "annual offer to deliver"); if there has been a material change, the updated brochure must be promptly delivered, with a summary of material changes within 120 days of the adviser's fiscal year end.

Part 2B — the Brochure Supplement: a separate disclosure for each IAR providing advice to a specific client, covering the IAR's education, work history, professional designations, disciplinary events, and any side businesses. Must be delivered before or with the start of the advisory relationship with that IAR. The firm gets a brochure; the human gets a supplement.

Registration process and effective dates

State registration (USA §201/§202): a state-registered investment adviser files Form ADV (Parts 1A, 1B, 2A, 2B, and CRS where applicable) through the IARD system, pays the state fee, and submits any state-specific addenda. Then the clock you already know from the BD arc starts running — registration becomes effective:

• Automatically on the 30th day after filing a complete application, unless the administrator denies, suspends, or stops the application during that window
• The administrator may shorten the period and grant early effectiveness, or may extend the period if additional information is needed
• A deficient or incomplete filing does not start the 30-day clock until the deficiency is cured

Federal registration: a federal covered investment adviser files Form ADV with the SEC through IARD. The SEC has up to 45 days to grant effectiveness, with the option to delay if additional information is required or if disciplinary or examination concerns warrant. Note the asymmetry: state effectiveness is automatic at day 30; SEC effectiveness is granted within 45.

Books and records retention — the 5/2 rule:

• Required books and records must be retained for 5 years total from the date of last entry
• The first 2 years must be kept in the adviser's principal office (or otherwise immediately accessible)
• The remaining 3 years may be archived but must remain available for SEC or state examination
• Records include client account documents, billing records, advertising files, performance records, code-of-ethics documentation, and personal trading reports of access persons

Ongoing maintenance obligations — the annual rhythm:

• Annual amendment of Form ADV Part 1 (within 90 days of fiscal year end) and Part 2A (within 90 days, including a summary of material changes)
• Other-than-annual amendments must be filed promptly upon material changes to specified items
• Annual offer to deliver an updated brochure to existing clients
• Continuing education requirements for IARs (NASAA model rule, covered in next chapter)
• Maintenance of registration of each IAR with the state(s) where they have a place of business