The Investment Adviser Registration Form, Its Three Parts, the Filing Deadlines and the Brochure Delivery Rules

Form ADV is the registration and disclosure form that every investment adviser files to register with the Securities and Exchange Commission or with a state securities regulator. It tells regulators who the adviser is and how it operates, and it tells clients what services they will receive, what they will pay and what conflicts the adviser has.

The form has three parts. Part 1 is written for regulators, Part 2 is the brochure written for clients, and Part 3 is the client relationship summary for retail investors.

This guide covers what each part contains, how and where the form is filed, when it must be updated, when the brochure must be delivered, worked examples, the exam traps and five practice questions. For background on the firms that file it, FRC’s guide to what a registered investment adviser is explains how advisers are registered and regulated.

Why Form ADV Exists

An investment adviser owes its clients a fiduciary duty, and a large part of that duty is full and fair disclosure. Clients can only judge whether to hire an adviser, and whether its advice is objective, if they know how it is paid and where its interests might conflict with theirs.

Form ADV turns that disclosure into a standard document. Every adviser answers the same questions in the same format, so regulators can review firms consistently and clients can compare one adviser with another.

The form is also public. Anyone can look up an adviser’s Form ADV online through the SEC’s Investment Adviser Public Disclosure website, which makes it one of the most useful tools an investor has for checking an adviser before hiring one.

Where This Topic Appears on the Exams

Form ADV appears in the laws and regulations section of the Series 65, alongside adviser registration, books and records and the brochure rule. Questions test which part goes to whom, when the form must be updated and when the brochure must be delivered.

FRC’s Series 65 Exam Preparation course covers adviser registration and Form ADV in detail, and the exam requires no sponsor. The SIE Examination Preparation course introduces the regulators and registration forms used across the industry.

Every FRC course can be spread across interest-free monthly payments, so cost is no reason to delay. Form ADV questions are built on a few clear deadlines and a simple split between parts, which makes them some of the most learnable marks on the exam.

Who Files Form ADV

Form ADV is filed by the advisory firm, not by the individuals who work for it. It is used both by advisers registering with the SEC and by advisers registering with the states, so the same form serves both levels of regulation.

Larger advisers, generally those with $110 million or more in regulatory assets under management, register with the SEC. Smaller advisers register with the states where they do business, unless an exemption such as the de minimis exemption applies, and FRC’s guide to what the de minimis exemption is explains when a state cannot require registration.

Individual investment adviser representatives do not file Form ADV. They register using Form U4, the same form used by registered representatives of broker-dealers.

How Form ADV Is Filed

Form ADV is filed electronically through the Investment Adviser Registration Depository, known as IARD. The system is operated by FINRA on behalf of the SEC and the state regulators, and it allows a single filing to reach every regulator that needs it.

For an adviser registering with the SEC, registration generally becomes effective within 45 days of filing unless the SEC starts proceedings to deny it. For an adviser registering with a state, the Uniform Securities Act generally makes registration effective at noon on the 30th day after a complete filing, unless the state acts sooner or later.

Once filed, the information flows into the public disclosure database. Accuracy is therefore essential from the first filing, because every answer becomes part of the adviser’s public record.

Part 1: Information for Regulators

Part 1A is a series of check-the-box and fill-in-the-blank questions. It covers the adviser’s ownership, business activities, types of clients, number of employees, regulatory assets under management, custody of client assets and affiliations with other financial firms.

It also asks detailed questions about disciplinary history. If the firm or any of its advisory affiliates has a relevant criminal, regulatory or civil history, the firm must answer yes and complete a disclosure reporting page giving the details.

Part 1B is used only by advisers registering with the states. It asks for additional information that state regulators require, such as bonding, financial requirements and details of the firm’s representatives.

Part 2A: The Firm Brochure

Part 2A is the brochure, and it is the part clients actually read. It must be written in plain English and is organised into 18 required items, covering topics such as the firm’s advisory business, fees and compensation, types of clients, methods of analysis and risk of loss.

It must also disclose disciplinary information, other financial industry activities, codes of ethics, brokerage practices, how accounts are reviewed, custody, investment discretion, voting of client securities and financial information. Many of these items exist to bring conflicts of interest into the open.

Advisers that sponsor wrap fee programs must also prepare a separate wrap fee program brochure, known as Part 2A Appendix 1. FRC’s guide to what conflicts of interest an investment adviser must disclose explains how those disclosures work in practice.

Part 2B: The Brochure Supplement

Part 2B is the brochure supplement. It gives information about the individual people who provide advice to the client, such as their education, business background, disciplinary history, other business activities and how they are supervised.

A client receives a supplement for each supervised person who will formulate advice for them or has direct contact with them while giving advice. It lets the client see who is actually responsible for their account, not just the firm’s name.

Unlike the brochure, Part 2B is not filed on IARD for SEC-registered advisers, though it must be kept in the firm’s records. State-registered advisers file it with their state regulator.

Part 3: Form CRS

Part 3 is Form CRS, the client relationship summary. It applies to advisers that offer services to retail investors and has been required since June 30, 2020.

Form CRS is a short document, no more than two pages for an adviser, or four pages for a firm that is registered as both an adviser and a broker-dealer. It summarises the services offered, fees and costs, conflicts of interest, the standard of conduct the firm owes and whether the firm or its professionals have disciplinary history.

It also includes conversation starters, questions that retail investors are encouraged to ask their financial professional. The aim is to give retail investors a quick, comparable summary before they read the longer brochure.

When Form ADV Must Be Updated

Form ADV is a living document, and keeping it current is a continuing obligation. Every adviser must file an annual updating amendment within 90 days after the end of its fiscal year.

Between annual updates, the adviser must promptly amend the form when certain information changes or becomes inaccurate. Examples include a change of name, address or contact details, a change in custody arrangements and a material change in disciplinary information.

The brochure must also be updated promptly when any of its information becomes materially inaccurate. If the change concerns disciplinary information, the adviser must deliver the amended brochure, or a statement describing the change, to its existing clients.

When the Brochure Must Be Delivered

Under the SEC’s brochure rule, an adviser must deliver its brochure to a client before or at the time it enters into an advisory contract. It must also give each client the relevant brochure supplements for the people advising them.

Many states follow the NASAA model rule, which sets a timing test. The brochure must be delivered at least 48 hours before the contract is signed, or at the time of signing if the client has five business days to cancel without penalty.

Every year, within 120 days after the end of its fiscal year, the adviser must deliver to existing clients either an updated brochure with a summary of material changes, or a summary of material changes with an offer to provide the brochure. If there have been no material changes, no annual delivery is required.

Related Forms in the ADV Family

Several other forms share the ADV name. Form ADV-W is used when an adviser withdraws its registration, for example after moving from state to SEC registration or closing down.

Form ADV-E is filed by an independent accountant after a surprise examination of an adviser that has custody of client assets. Form ADV-NR is used by non-resident advisers to appoint an agent for service of process in the United States.

Broker-dealers use a different form altogether. They register on Form BD, and candidates should not confuse the two.

Worked Example: A New Adviser Registers

A new advisory firm in Texas expects to manage $40 million for individual clients. Because it is below the SEC threshold, it registers with the Texas State Securities Board by filing Form ADV Parts 1A, 1B and 2 through IARD.

Its two advisers each file a Form U4 and pass the Series 65. Before signing up its first client, the firm delivers its brochure, the supplements for both advisers and its Form CRS.

The firm’s fiscal year ends on December 31. Its annual updating amendment is therefore due by the end of March, and any annual summary of material changes must reach clients by the end of April.

Worked Example: A Disciplinary Event

Midway through the year, one of the firm’s advisers becomes the subject of a regulatory action. This is disciplinary information that must be disclosed.

The firm must promptly amend its Form ADV and update the affected brochure supplement. Because the change involves disciplinary information, it must also deliver the update to the clients that adviser serves, rather than waiting for the annual cycle.

Waiting until the next annual amendment would leave clients relying on an inaccurate document. That delay could itself become a regulatory problem.

Worked Example: Prepaid Fees

An adviser asks clients to pay a $2,000 annual planning fee 12 months in advance. Under the SEC’s version of Form ADV, an adviser that requires prepayment of more than $1,200 per client, six or more months in advance, must include an audited balance sheet in its brochure.

The rule protects clients who have paid for services they have not yet received. If the adviser is in financial difficulty, the balance sheet gives clients warning.

State rules can be stricter, and many use a lower prepayment threshold. A state-registered adviser should check its own state’s requirement before collecting fees in advance.

How Form ADV Connects to Other Adviser Rules

Form ADV sits at the centre of a wider set of adviser rules. The books and records rule, Rule 204-2, requires advisers to keep copies of each version of their brochure and records of when it was delivered.

The custody rule, Rule 206(4)-2, links to the custody disclosures in Part 1A and the surprise examinations reported on Form ADV-E. The compliance program rule, Rule 206(4)-7, requires advisers to have policies to keep their disclosures accurate.

All of these rules are made under the Investment Advisers Act of 1940 for SEC-registered firms. State-registered advisers follow equivalent rules under the Uniform Securities Act and their own state’s regulations.

The Exam Traps

The first trap is mixing up the parts. Part 1 is for regulators, Part 2 is the brochure and supplement for clients, and Part 3 is Form CRS for retail investors.

The second trap is thinking individual representatives file Form ADV. The firm files Form ADV, while individual representatives register on Form U4.

The third trap is confusing the deadlines. The annual updating amendment is due within 90 days of fiscal year end, while the annual delivery of material changes to clients is due within 120 days. The fourth trap is forgetting that disciplinary changes require prompt amendment and delivery, not just an update at the next annual filing.

FRC’s guide to Series 65 ethics and laws questions and exam traps covers more traps in this area. For the full list, see FRC’s guide to Series 65 exam traps and common mistakes.

A Memory Aid

Remember “one for regulators, two for clients, three for retail.” That covers the three parts of Form ADV.

For the deadlines, remember “90 to file, 120 to tell.” The annual amendment goes to regulators within 90 days, and material changes go to clients within 120 days.

Practice Questions

Question one: which part of Form ADV is the firm brochure delivered to clients? Part 2A.

Question two: what form does an individual investment adviser representative use to register? Form U4.

Question three: within how many days of fiscal year end must an adviser file its annual updating amendment? 90 days.

Question four: an adviser’s founder becomes subject to a regulatory action in July. Can the firm wait until its next annual amendment to disclose it? No, disciplinary changes require a prompt amendment and delivery to clients.

Question five: what is Form ADV Part 3? Form CRS, the client relationship summary for retail investors.

Related Questions

Form ADV is the public record that clients and employers use to check an adviser. FRC’s guide to how to look up an investment advisor representative explains how to search the public databases and what the results mean.

Get Exam-Ready

Form ADV questions reward candidates who know which part does what and when each deadline falls. Once the three parts and the 90-day and 120-day deadlines are clear, these questions become some of the most dependable marks on the exam.

The FRC dictionary is more than a dictionary. It is a library of explainer videos, written explanations and on-page quizzes covering the FINRA and SEC rules you are tested on, so you can open any term and go deeper whenever a question catches you out.

Study With FRC

FRC’s programs and memberships are open to everyone. Whether you are preparing for the Series 65, the SIE or both, structured exam preparation turns topics like adviser registration into marks you can rely on.

FRC’s Professional Membership adds verified progress and a Digital Profile, so when you apply for roles, employers can see your exam progress and the knowledge you are building, not just read about it on a resume.

Your Next Step

Form ADV is the registration and disclosure form for investment advisers, with Part 1 for regulators, Part 2 for clients and Part 3, Form CRS, for retail investors. It must be updated within 90 days of each fiscal year end and promptly when key information changes, and the brochure must reach clients before or at the time they sign.

Remember “one for regulators, two for clients, three for retail,” and you will be ready for every version of this question the exam can ask.