Form ADV - Important Disclosure Information
The United States Securities and Exchange Commission (SEC) requires Registered Investment Advisors (RIAs) to update and file Form ADV annually. If you did not receive a Form ADV from your advisor, it's likely that you are working with a commissioned salesperson and you should seek advice elsewhere. Here is what Arthur Levitt, former SEC Chairman had to say about the difference between an independent Registered Investment Advisor, like our firm, and a broker:
“If you have more than $50,000 to invest, you should fire your broker and find an investment advisor. Brokerage firms would like for you to think that they perform the same functions as investment advisors. Many brokers call themselves ‘financial consultants’ or ‘financial advisors.’ But they are not the same as independent investment advisors.”
The most important duty of an investment adviser is the disclosure of all information relating to the relationship between an adviser and a client. The disclosure required in Form ADV includes identifying potential conflicts of interest between the advisor and the client that should be very important considerations. The form also provides information on the ownership structure of the firm, it's size, the types of clients it works with, its fee structure and affiliations. This is the reference tool with which the client or potential client can compare advisory firms for compatibility with their needs. That is why investment advisory regulations require that Part 2A of Form ADV be given to customers in advance of entering into a contract.
Generally, a Registered Investment Advisor with more than $100M in assets under management is required to register with the SEC. Smaller advisors are state registered and are not subject to SEC oversight or examinations. The SEC provides access to Form ADV for all advisory firms at http://www.adviserinfo.sec.gov/.