Advisers get more breathing room to make Form ADV changes

RIAs can enter '0' in some new parts of the document before their annual filing next year.
AUG 17, 2017

The Securities and Exchange Commission is giving investment advisers breathing room before they have to add more client account data to their registration form. Advisers who make changes on their Form ADV after Oct. 1 won't have to provide the new information about regulatory assets under management, separately managed accounts and wrap-fee programs until they file their annual ADV amendment next year, according to recently issued SEC guidance. Most firms update their ADV in the first quarter. "Some filers have noted that, in certain cases, this information may not be available because previously it was not required to be reported on Form ADV," the guidance states. Advisers who make "other-than-annual-amendment" changes to their ADVs, such as updating their postal address, can put a "0" as a placeholder in the parts of the ADV where data is missing, and must provide an explanation in the miscellaneous section of Schedule D. The SEC's enhanced data collection was promulgated in a regulation last year designed to help the agency better monitor potential systemic market risks. "For a firm that does need to make an update before the annual update, it is a big deal," said Amy Lynch, president of FrontLine Compliance. "They don't need to go back and do the calculations of assets and the breakdown that would be required" next year. Advisers should already be preparing for the new ADV, said Steven Thomas, chief operating officer of Wealth Financial Advisory Services. "Hopefully they were starting to think about it," he said. "Now they have until the end of the year to put some hard and fast numbers to what the SEC is going to be asking for." Advisers must provide information in several areas, including regulatory assets under management attributable to various client types. They also must indicate whether they use an outsourced chief compliance officer, disclose firm social media pages and give details about their 25 largest branch offices. The rule will become applicable Oct. 1. "People need to be careful with this guidance," said G.J. King, president of the compliance consulting firm RIA in a Box. "It impacts some of the changes but not all of the changes. The rule itself has not changed. The vast majority [of firms] are going to need to have the information available shortly." The zeros that are entered between Oct. 1 and next spring will help the SEC practice data tracking through the revised Form ADV. "They'll be testing it with the zero numbers," Ms. Lynch said. "The zeros will be the dummy information to pilot the new system." The ADV revisions are the most significant since 2010, when the document was changed from a check-the-box overview of a firm to include a narrative description. Mr. King gives the SEC credit for allowing advisers more time to figure out the new form. "SEC staff continues to demonstrate that it is willing to listen to industry concerns and feedback," Mr. King said. "They're doing their best to help with this transition."

Latest News

Retirement advisors have a major small business opportunity
Retirement advisors have a major small business opportunity

State mandates and plan complexity are opening doors for financial advisors in the 401 market.

Most pre-retirees are planning without a planner - and it shows
Most pre-retirees are planning without a planner - and it shows

New LIMRA data reveal a stubborn advice gap that financial professionals are well-positioned to close.

Treasury hits BofA with $1.2B fine over money laundering violations
Treasury hits BofA with $1.2B fine over money laundering violations

“Today’s actions send a clear message that even the biggest financial institutions are not above the law,” said Treasury Secretary Scott Bessent.

The hidden cost of growing a firm without intention
The hidden cost of growing a firm without intention

To build a truly self-sustaining practice, enterprising advisors have to start with a vision of what they want to be – and accept the realities that come with building toward it.

Waverly, Apella buy $412M in RIA assets across Oregon, Northeast
Waverly, Apella buy $412M in RIA assets across Oregon, Northeast

Serial acquirers add a 35-year-old Oregon wealth manager and a New York practice focused on women navigating life transitions.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor