How to read a Form ADV
Form ADV is the form registered investment advisers, and exempt reporting advisers, file with regulators. Part 1 is structured data about the firm (size, clients, fees, disclosures). Part 2A is the plain-English brochure. Part 2B covers the individual advisers, and Form CRS, which SEC-registered firms give retail investors, is a summary of two to four pages. Together they answer most of what a new client wants to know.
Form ADV has a reputation for being dense, and parts of it are. But you don't need to read all of it. A handful of sections answer almost every question a new client has, and once you know where they are, a firm's filing takes about fifteen minutes to get through.
The four parts, in plain terms
- Part 1 is structured data: who owns the firm, how big it is, whom it serves, how it's paid, and whether it has any disciplinary history. It's mostly checkboxes and numbers, which is why AdvisorCensus can lay it out for every firm.
- Part 2A, the brochure, is the firm explaining itself in prose: services, fees, conflicts of interest, and how it invests. This is where the nuance lives.
- Part 2B, the brochure supplement, covers the individual advisers you'd work with: education, experience, other business activities, and disciplinary history.
- Form CRS, the relationship summary, is a short overview (two pages, or up to four for a firm that is also a broker-dealer) that SEC-registered firms must give retail investors; state-registered firms generally don't have one. When a firm has one, it's the easiest place to start.
A fifteen-minute reading plan
- Form CRS (3 minutes). If the firm has one, read it end to end. Note how the firm describes its fees and conflicts.
- Part 1, Item 5 (3 minutes). Clients by type (5.D), how the firm is compensated (5.E), assets under management (5.F), and services (5.G). This is the firm's size and shape.
- Part 1, Item 11 (1 minute). Any yes answers? If so, open the detail. See reading disclosures.
- Part 2A, Items 5 and 7 (3 minutes). The actual fee schedule and how fees are billed (Item 5), and any account minimum (Item 7).
- Part 2A, Items 10 to 14 (4 minutes). Affiliations, conflicts, and any compensation from third parties. This is where you learn what the firm's incentives are beyond your fee.
- Part 2B (1 minute per adviser). Background of the person you'd actually be working with.
If what you hear in a meeting doesn't match what's in the filing, ask about it. Firms update Form ADV at least once a year, and things change, but the answer should be easy to give.
How current is it?
Firms must update Form ADV at least annually, within 90 days of their fiscal year end, and promptly when certain information changes. The filing date is shown on the record. AdvisorCensus rebuilds from the SEC's monthly data, so each firm page shows the filing period it reflects.
Where to find it
Search the firm by name or CRD number on the SEC's IAPD site. The record shows Part 1 and links to the Part 2 brochures and Form CRS. Every AdvisorCensus firm page links directly to it, and lays out the Part 1 answers in plain language so you can see the shape of a firm before you open the full filing.
Common questions
Where can I get a firm's Form ADV?
Search the firm on adviserinfo.sec.gov. The record shows Part 1 and links the Part 2 brochures. Every AdvisorCensus firm page links to it.
Which part should I read first?
Start with Form CRS for the short overview if the firm has one (SEC-registered firms serving retail investors do), then the Part 2A brochure sections on fees (Item 5), conflicts (Items 10 to 14), and disciplinary information (Item 9).
Is everything on Form ADV verified?
The firm fills it in and signs it, and filing false information is a violation. Regulators review filings and examine firms, but the form is the firm's own account.
Sources
- SEC, Form ADV Part 1A (the form itself)
- SEC, Form ADV general instructions
- SEC, Investment Adviser Public Disclosure (IAPD)
Written from the public record and the regulators' own instructions. AdvisorCensus is a directory built from Form ADV filings; nothing here is investment advice. Spot something wrong? Tell us.