Every year RIAs are required to update their Form ADVs with the Securities and Exchange Commission within 90 days of the end of their fiscal year; this year those filings will be a lot more complicated. RIAs have to complete a revised ADV Part 1A form, which requires far more disclosure about separately managed accounts (SMAs), social media, multiple offices and more.
Although this new filing requirement, took effect Oct. 1, many RIAs whose fiscal year ends with the calendar year will be filling out the new form this quarter, before March 31.
The ACA Compliance Group, a risk management and technology solutions company, and boutique law firm Kleinberg, Kaplan, Wolff and Cohen held a meeting in New York focusing on some of the major changes in the new ADV and reporting requirements. They called the educational session “Attacking the New Form ADV.”
Jamie Nash, partner at Kleinberg Kaplan, noted that the new ADV formers covers “every investment advisor under the sun,” including RIAs, financial planners, wrap fee program advisors and private fund managers such as hedge funds and private equity funds, which is something RIAs should keep in mind when trying to understand how the rules apply to them.
(Related: Big Form ADV Changes Coming Soon. Are You Ready?)
Nash and others mentioned the FAQs released by the SEC about the ADV, which can be helpful to advisors. And Maurice Collada, an associate of the firm, noted the redlined Form ADV, which shows what changes were made to the old Form ADV.
(Related: SEC Issues More Guidance on Form ADV Changes)
Here are some highlights of the presentation:
Social media. Advisors must disclose all the websites and publicly available social media platforms they use where they control the content, such as Twitter, Facebook and LinkedIn. Advisors also need to update this section promptly when changes are made, Nash said. Firms do not have to disclose the social media accounts of employees or of unregistered affiliates that are used solely for the business of the affiliate.
Client referrals. Firms need to disclose compensation for client referrals, whether paid to employees or non-employees, in cash or otherwise.
Client and asset counts. Advisors need to show the number of clients in each category, and the amount of assets under management for each category, not their percentages. Client categories include high-net-worth individuals and non-HNW individuals, banks, BDCs and more.
Number of offices. Firms should disclose the total number of offices plus data about their 25 largest, based on the number of people working there. Disclosure should include the number of employees performing advisory functions, security-related activities and a description of investment-related business.