How NAPFA President Susan John Wrote Her New Form ADV

“The instructions for Form ADV Part 2 are 26 pages long themselves, so we had to read through them, and I also read through the SEC’s 174-page final ruling on the new Part 2 and its narrative format,” said Rachel Sanborn, a financial planner at Financial Focus who also serves as the firm’s chief compliance officer and research analyst. “But I read the health-care reform act, which is almost 3,000 pages long, so 174 pages seemed pretty easy in comparison.”

Sanborn’s advice to advisors is to write the form using the SEC’s 26-page long instructions, and going step by step through those instructions. “That simplifies the process,” she said.

In addition, Financial Focus used the ProTracker ADV Part 2 software developed by Warren Mackensen, an advisor colleague of John’s. The ProTracker provides a formatting structure while filling in headings and basic text.

“Warren put in information we didn’t need, and he repeated himself in places because he’s such a thorough guy, but it gave us a good structure,” Sanborn said. “Then what let us make it really short and sweet was going through the SEC instructions and following it point by point.”

By cutting back on repetition, John and Sanborn managed to reduce their brochure to 21 pages, compared to the 35 to 40 pages they’re hearing that many advisors have written. For example, Financial Focus’ “firm description” section originally contained information about services and fees, but the SEC’s instructions call for services and fees information elsewhere, so John and Sanborn deleted that information from the firm description.

Read about NAPFA’s consumer guide for how to find a financial advisor, which includes a weblink to the guide, at AdvisorOne.com.