As you prepare for your 2026 Form ADV annual filings (Due March 31, 2026, for firms with December 31 fiscal-year-end), we encourage registered investment advisers (“RIAs”) to take a comprehensive approach to providing meaningful disclosures to clients that extends beyond updating Form ADV.
For example, as you update your current Form ADV, it is critical to also consider how these updates may trigger other necessary disclosures provided for in your client investment advisory agreements. It is important to ensure they align with current Form ADV disclosure updates, regulatory requirements, and actual business practices.
Recent SEC examinations continue to identify inconsistencies between Form ADV disclosures and advisory agreements as a recurring deficiency. As a result, firms should view their advisory contracts in conjunction with their Form ADV brochures.
The standard of care for disclosures is that it should enable clients to give “informed consent” from the information provided. Not only should disclosures remain consistent across forms and agreements, but they should also be relevant, current, and reflective of how the firm operates today.
Prioritize the steps and guidelines below as you file and keep deadlines in mind. If ever in doubt, remember, in this situation – more is more.
Considerations for Gathering the Necessary Disclosures for Form ADV Parts 1 and 2
As part of the annual update process for Form ADV, RIAs should take the time to get the executive team’s buy-in and feedback on whether the disclosures provided are complete and accurate. Ensure that disclosures accurately reflect current business practices, compensation arrangements, and potential conflicts of interest.
Following an organized process of gathering information can help firms reduce inconsistencies and avoid regulatory pitfalls. Firms should carefully review their product offerings, fee billing practices, and compensation arrangements to determine whether additional disclosures are required. This includes examining how fees are calculated and billed, whether different client types receive different services or pricing, and whether any third-party compensation, revenue sharing, or referral arrangements exist that could create conflicts requiring disclosure.
Finally, the firm should conduct thorough reviews of individuals who require a brochure supplement, Form ADV Part 2B, which will be based in part upon whether the personnel is providing investment advice to clients or having direct client contact. This can help ensure that education, business experience, and disciplinary disclosures are accurate, current, and consistent with both firm records and Form ADV disclosures.
Quick Tips for Gathering Form ADV Disclosures:
- Interview managers to best understand the day-to-day operations requiring disclosures in the Brochure
- Review Form U4 filings for consistency with Form ADV disclosures
- Evaluate product lines, fee billing practices, and compensation arrangements
- Distribute questionnaires to advisory personnel
- Review personnel resumes and background checks
- Interview supervised persons who require a brochure supplement
Failure to align Form ADV disclosures and client agreements may increase examination risk and result in compliance deficiencies as this can be viewed as a breakdown in compliance oversight. Prior to filing, firms should ensure that client agreements and disclosures:
- Accurately describe the services disclosed in Form ADV
- Align with current fee structures, billing practices, and expense disclosures
- Incorporate updated regulatory or contractual language where required
- Address conflicts of interest consistently with ADV disclosures
Taking a holistic approach helps ensure regulatory compliance, consistency across documents, and readiness for SEC examinations.
For assistance with reviewing your client agreements, disclosures and Form ADV filings, please contact us at 619.298.2880 or email [email protected].
