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January 29, 2018 at 07:00 PM
It is of extreme importance that investment advisors provide accurate and complete information when responding to these new questions on Part 1 of Form ADV.
Separately Managed Accounts: When you are preparing your ADV Annual Amendment, forget your current understanding as to what an “SMA” is. For ADV purposes, the SEC defines SMAs as advisory accounts that are not pooled investment vehicles.
This means that for purposes of completing Form ADV, any client account that is not a registered investment company, Business Development Company or pooled investment vehicle must be treated as an SMA for ADV reporting purposes.
The amendments will require advisors to categorize their regulatory assets under management (RAUM) attributable to SMAs as a percentage of one of 12 asset categories found in Section 5.K.1 of the revised Form ADV Part 1 (e.g. Exchange-Traded Equity Securities, Securities Issued by a Registered Investment Company (mutual funds), Cash or Cash Equivalents, etc.).
Advisors with less than $10 billion in RAUM attributable to SMAs will be required to report year-end percentages, whereas advisors with more than $10 billion in RAUM attributable to SMAs will be required to report midyear and year-end percentages in their Form ADV filings.
Social media usage: Investment advisors must now disclose social media accounts (e.g. Facebook, LinkedIn, etc.) controlled by the advisor on Form ADV.
Social media accounts utilized by employees of the advisor or unregistered affiliates that are not subject to the advisor’s control need not be disclosed on Form ADV. However, social media accounts controlled by the advisor are required to be disclosed, even if they are not used to promote the advisor’s business.
Chief compliance officer disclosure: If an advisor’s chief compliance officer is compensated or employed by any third party, that relationship must now be disclosed on Form ADV Part 1.
