What You Need to Know
The second most common compliance deficiency for RIA firms is omissions or inaccuracies in the firm’s Form ADV. Some of these result from inconsistent upkeep of the ADV as the firm evolves. But in most cases we see, the deficiencies occur when firms use cookie cutter ADVs or borrow some/all of the content from another firm’s ADV.
On at least a yearly basis, RIAs are required to review and update their Form ADV so that it accurately describes the nature of their business to clients and prospects. (This occurs within 90 days of the firm’s fiscal year end.)
Advisors are also expected to immediately update their Form ADV to reflect any material changes that occur throughout the year. These updates include, but are not limited to:
Why You Should Care
While it may seem like a hassle to maintain an accurate Form ADV, these documents will not only make a difference from a regulator’s perspective, but also from the point of view of clients and prospects. While not always apparent, your Form ADV creates an initial (sometimes lasting) impression on prospects, clients and competitors. Ensuring the accuracy of your Form ADV can lead to to more productive and efficient relationships by removing (or at least not creating) any potential ambiguity in the early stages of your relationships.
It is not only important that the information contained in Form ADV is comprehensive and accurate, but you must also be able to evidence its timely delivery to all clients and prospects, keeping in mind that regulators must take a stance that if it’s not documented, it didn’t happen.
To ensure that your firm is keeping up with regulatory requirements and industry best practices in this area: