Your Form ADV – Beyond Checking the Box

Why Filing Your Form ADV Is More Than a Check-the-Box Process

Filing your Form ADV is not a simple check-the-box process.  It requires a thorough and tailored disclosure of your firm’s business practices, services, fees, conflicts of interest, and compliance policies. Each section of the form demands customized responses that align with your firm’s unique operations and regulatory obligations.  The information must be clear, accurate, and updated regularly to reflect material changes, ensuring it meets regulatory expectations and serves as a reliable resource for clients. 

The Link Between Form CRS and Form ADV 

Reg BI requires that firms file Form CRS.  The SEC has said that to answer some parts of Form CRS, you may link to other places where the relevant information resides, and a lot of that information is already in your ADV part 2A brochure.  Even if you don’t take advantage of your new ability to link, it’s very important to make sure your CRS and your ADV Part 2A are consistent.

Your form ADV 1A and 2A are more than a matter of checking the box – you are telling the SEC who you are and what your business looks like.  They use the boxes you check in ADV 1A to evaluate your business and determine the risks you pose to the marketplace- so accuracy is critical.  Avoid some of the common mistakes in your ADV by:

• Getting input from your portfolio managers, traders, operations and sales teams to make sure that the disclosures “are true and do not omit any material facts.”
• Scheduling time to complete the task. The ADV is an easy thing to set aside for another day when other urgent matters arise, but it is also an extremely important task, and you should give it the time it deserves.
• When in doubt, include it. A summary of material changes must be sent to each client, as well as an offer to provide the full ADV2A. If you have any doubt as to whether something could be perceived material, put it in there. Even well-crafted ADVs can get picked apart by regulators and litigators, and it is expensive to go through the process to prove you were right.
• Use “will” instead of “may.” Even when “may” is the accurate term, it can lead to findings in an exam or worse.
• Make sure you can document your Assets Under Management (AUM) calculations and be sure that they are consistent between Forms ADV1 and ADV2A. “Clients” may be counted as either individual accounts or as households, but the way clients are counted must be consistent across all filings.

The Importance of Thoughtful Form ADV Preparation

Filing your Form ADV is a critical process that goes beyond simply meeting a regulatory requirement—it’s an opportunity to demonstrate your firm’s transparency, professionalism, and commitment to compliance.  Avoiding common pitfalls, engaging with key internal teams, and keeping your disclosures clear and comprehensive will set your firm up for long-term success. Ultimately, a well-prepared Form ADV reflects the integrity of your firm and its dedication to maintaining high standards in an evolving regulatory landscape.

Regulatory Compliance Success with Oyster Consulting

Oyster Consulting has the expertise, experience and licensed financial professionals you need, all under one roof to protect your firm and your clients. Oyster’s experts have the CCO, Financial Industry Regulatory Authority (FINRA), Securities and Exchange Commission (SEC) and state regulatory experience to help solve complex regulatory challenges. Oyster Consulting provides compliance support to broker-dealers and investment advisors, including risk assessments, testing, remediation, outsourced compliance roles and automated compliance solutions.