Glossary of Form ADV terms

The form investment advisers file with the SEC and state securities regulators. Part 1 is structured information about the firm: its size, clients, fees, custodians, and disciplinary history. Part 2A is the firm's brochure and Part 2B its brochure supplements, and Form CRS is Part 3. Exempt reporting advisers file only parts of Part 1A.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Annual updating amendment, Brochure (Form ADV Part 2A), IAPD (Investment Adviser Public Disclosure).

The update every adviser must file within 90 days after its fiscal year ends, reaffirming that it is eligible for its registration and updating any answer that is no longer accurate. Firms also amend Form ADV during the year when certain answers change, so a firm's figures can be more than a year old, typically up to about 15 months.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Data period.

The written disclosure statement an adviser must give clients and prospective clients, in plain English: its services, fees, conflicts of interest, and disciplinary information. Its fee schedule and account minimum are the firm's own statements.

Source: SEC, Form ADV Part 2. See also Brochure supplement (Form ADV Part 2B), Form CRS (relationship summary).

A written statement about certain of the firm's supervised persons, such as the people who give clients advice: their education, business background, disciplinary information, and who supervises them.

Source: SEC, Form ADV Part 2. See also Supervised person.

A short summary that SEC-registered advisers and broker-dealers must give retail investors: services, fees and costs, conflicts of interest, standard of conduct, and disciplinary history. It may not exceed two pages, or four for a firm that is both an adviser and a broker in one summary.

Source: SEC, Form CRS instructions. See also Dual registrant, Brochure (Form ADV Part 2A).

The SEC's public website for investment advisers (adviserinfo.sec.gov), operated for the SEC by FINRA: each firm's current Form ADV, its brochures, and the detail of any disclosure. Every AdvisorCensus firm page links to the firm's IAPD record.

Source: SEC, Investment Adviser Public Disclosure. See also Disclosure Reporting Page (DRP), BrokerCheck.

FINRA's free tool (brokercheck.finra.org) for researching brokers, brokerage firms, and investment adviser representatives. Both BrokerCheck and IAPD show an individual's customer complaints and regulatory events; for people who have been registered brokers, BrokerCheck adds their brokerage registrations and history.

Source: FINRA BrokerCheck. See also IAPD (Investment Adviser Public Disclosure), Investment adviser representative.

The number FINRA's registration systems assign to each firm and individual. Advisers file Form ADV through the Investment Adviser Registration Depository (IARD), which FINRA operates for the SEC and the states. Every AdvisorCensus firm page shows the firm's CRD number, and the page's web address ends in it.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also IAPD (Investment Adviser Public Disclosure).

A firm registered with the SEC or a state securities regulator to give investment advice for pay. Registration is not an endorsement: it means the firm files Form ADV, keeps required records, owes its clients a fiduciary duty, and can be examined.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also SEC-registered adviser, State-registered adviser, Fiduciary duty.

An adviser registered with the SEC. Generally, a firm with $100 million or more in regulatory assets under management registers with the SEC and a smaller firm with its home state; some firms, such as advisers to registered funds, register with the SEC at any size. SEC-registered firms may still notice-file in states.

Source: SEC, Form ADV instructions for Part 1A. See also Notice filing, Regulatory assets under management (RAUM).

An adviser registered with one or more state securities regulators instead of the SEC, usually a firm with less than $100 million in regulatory assets under management. It also files Form ADV Part 1B and is examined by state securities regulators.

Source: SEC, Form ADV instructions for Part 1A. See also Home state, SEC-registered adviser.

An adviser exempt from SEC registration because it advises only venture capital funds, or only private funds with less than $150 million in assets under management in the United States. It files parts of Form ADV Part 1A and no brochure, and its clients are funds rather than individual investors. States have their own exemptions too.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Private fund.

For a state-registered firm, the state where it keeps its principal office and place of business.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Principal office and place of business.

A copy of an SEC-registered adviser's filing that it gives a state securities regulator. Firm pages show the states where a firm is registered or notice-filed together, as the filing lists them.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also SEC-registered adviser.

The firm's executive office, from which its officers, partners, or managers direct, control, and coordinate its activities. AdvisorCensus lists a firm under this office's city and never shows a street address.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Metro area.

A supervised person who regularly solicits, meets with, or communicates with the firm's clients, when more than five of their clients, and more than ten percent, are individuals other than high net worth individuals (people who give only impersonal advice are excluded). Representatives of SEC-registered firms may have to register in the states where they have a place of business; state-registered firms follow their state's definition.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Supervised person, BrokerCheck.

A firm registered both as an investment adviser and as a broker-dealer. It may act as a fiduciary adviser on some accounts and as a broker on others, so the role can differ by account.

Source: SEC, Form CRS instructions. See also Form CRS (relationship summary), Fiduciary duty.

The duty an investment adviser owes its clients under federal law, made up of a duty of care and a duty of loyalty: it must act in the client's best interest and not put its own interests ahead of the client's, and must eliminate its conflicts of interest or disclose them fully and fairly.

Source: SEC, Commission Interpretation Regarding Standard of Conduct for Investment Advisers (2019). See also Registered investment adviser (RIA).

The value of the securities portfolios a firm provides continuous and regular supervisory or management services for, as of the filing, with no debts subtracted (Item 5.F). An account counts if at least half its value is securities, and cash may count as securities. It measures scale, not skill or returns, and can differ from the assets figure on a firm's website.

Source: SEC, Form ADV instructions for Part 1A. See also Discretionary authority, Annual updating amendment.

The authority to decide which securities to buy and sell for a client, or which other investment advisers to hire for the client. Assets managed without it are non-discretionary: the firm makes recommendations and the client decides.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Regulatory assets under management (RAUM).

An account a firm manages for a client other than a registered investment company, a business development company, or another pooled investment vehicle such as a private fund. Schedule D, Section 5.K(3), names each custodian holding 10 percent or more of these accounts' assets.

Source: SEC, Form ADV Part 1A. See also Custodian, Private fund.

A fund that would be an investment company but for sections 3(c)(1) or 3(c)(7) of the Investment Company Act of 1940: generally one with no more than 100 investors, or one sold only to qualified purchasers. Most hedge funds and private equity funds are private funds.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Exempt reporting adviser.

How a firm is paid for advice, as checked on Item 5.E: a percentage of assets under its management, hourly charges, subscription fees (for a newsletter or periodical), fixed fees, commissions, performance-based fees, or other. A firm checks every one that applies.

Source: SEC, Form ADV Part 1A. See also Fee-only (as AdvisorCensus uses it), Performance-based fee.

A fee based on a share of the capital gains or capital appreciation of a client's assets. A fee figured as a percentage of assets managed is not one. Registered advisers can generally charge one only to qualified clients, who meet the wealth thresholds of SEC rule 205-3.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Compensation arrangements (Item 5.E).

A program that charges one fee, not based directly on transactions, for investment advice and the execution of trades. Firm pages show whether a firm reports participating in one (Item 5.I).

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Compensation arrangements (Item 5.E).

Not a term on Form ADV. On AdvisorCensus, a firm is fee-only when Item 5.E shows only client fees (a percentage of assets, hourly, subscription, or fixed fees) and the filing shows no sales-related compensation ties. Counted by firm, not by person: most people who give investment advice work at large firms with such ties. Fee-based usually means fees plus commissions.

Source: AdvisorCensus methodology. See also Compensation arrangements (Item 5.E), Sales-related compensation ties (as AdvisorCensus uses it).

Not a term on Form ADV. A filing shows them when the firm checks commissions on Item 5.E, has an employee registered with a broker-dealer or licensed as an insurance agent (Item 5.B), has a brokerage, futures, real estate, insurance, or other product sales business (Item 6.A), has a related broker-dealer, futures commission merchant, insurance company or agency, or real estate broker or dealer (Item 7.A), has another sales interest (Item 8.B(3)), or receives compensation from others for client referrals (Item 8.I).

Source: AdvisorCensus methodology. See also Fee-only (as AdvisorCensus uses it), Compensation arrangements (Item 5.E).

The bank, broker-dealer, or other financial institution that holds a client's money and securities and sends account statements. The advisory firm manages or advises on the account; the custodian keeps it. An adviser with custody of client assets generally must keep them with a qualified custodian.

Source: SEC rule 206(4)-2, the custody rule. See also Custody, Separately managed account, Related person.

Holding client funds or securities, directly or indirectly, or having any authority to obtain them, such as a power to withdraw money from a client's account. An adviser with custody must follow the SEC's custody rule, which adds safeguards such as account statements sent to the client by the custodian.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Custodian.

Any advisory affiliate of the firm, and any company under common control with it. A custodian that is a related person is shown on firm pages as affiliated with the firm.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Advisory affiliate, Control.

Any of the firm's officers, partners, directors, or employees, or anyone else who gives investment advice on the firm's behalf and is subject to its supervision or control.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Advisory affiliate, Investment adviser representative.

The firm's officers, partners, and directors; everyone who controls the firm or is controlled by it; and its current employees other than those in clerical, administrative, or support roles. Every Item 11 disclosure question covers the firm and its advisory affiliates.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Control, Disclosure Reporting Page (DRP).

The power to direct a firm's management or policies, through ownership, contract, or otherwise. Officers, partners, and directors with executive responsibility are presumed to control a firm, as is anyone who can vote, or direct the sale of, 25 percent or more of a class of its voting securities (for a partnership or LLC, 25 percent of its capital). AdvisorCensus summarizes ownership changes and never names owners.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Advisory affiliate.

The page a firm completes for each event behind a yes answer to Item 11: who it involved, the court or regulator, the dates, the allegations, and how it was resolved. There are criminal, regulatory, and civil judicial DRPs, and they are on the firm's IAPD record.

Source: SEC, Form ADV Part 1A. See also IAPD (Investment Adviser Public Disclosure), Advisory affiliate.

On Form ADV, a regulator or court found something when there was an adverse final action, including a consent decree in which the respondent neither admitted nor denied the findings. Deficiency letters, examination reports, letters of caution, and similar informal resolutions do not count.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Order.

A written directive issued under statutory authority and procedures, such as an order of denial, exemption, suspension, or revocation. Stipulations, undertakings, or agreements count only when they are part of an order.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Found (a finding).

Accused of a crime in a formal complaint, information, or indictment, or an equivalent formal charge.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Proceeding.

Subject to an injunction: a mandatory, prohibitory, or preliminary injunction, or a temporary restraining order.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Proceeding.

A formal administrative or civil action brought by a government agency, a self-regulatory organization, or a foreign financial regulator, or a formal criminal charge. Other civil lawsuits, investigations, and arrests without a formal charge are not proceedings.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Charged, Self-regulatory organization (SRO).

A national securities or commodities exchange, registered securities association, or registered clearing agency, such as FINRA, the New York Stock Exchange, or the Chicago Board of Trade.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Minor rule violation.

A violation of a self-regulatory organization's rule designated as minor under a plan the SEC approved, generally when the fine is $2,500 or less and is not contested. Item 11.E(2) leaves these out.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Self-regulatory organization (SRO).

Having to do with securities, commodities, banking, insurance, or real estate, including acting as or being associated with an adviser, broker-dealer, bank, or similar business.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Involved.

Engaging in an act or omission, or aiding, abetting, counseling, commanding, inducing, or conspiring with someone else in it, or failing reasonably to supervise someone who did it.

Source: SEC, Form ADV General Instructions and Glossary of Terms. See also Investment-related.

A metropolitan statistical area defined by the U.S. Office of Management and Budget: a core urban area of 50,000 or more people and the surrounding counties tied to it by commuting. AdvisorCensus places each firm in the metro area of its principal office's ZIP code; the methodology has the details.

Source: U.S. Census Bureau, metropolitan and micropolitan statistical areas. See also Principal office and place of business.

The month of the SEC's adviser data a page is built from, printed on every page. A firm's figures come from its latest Form ADV filing on record that month, whose date is shown with them, and can be older because firms update most answers once a year.

Source: AdvisorCensus methodology. See also Annual updating amendment.