Form ADV Part 2: Identifying and Disclosing Conflicts

Course Description:

Five years ago the SEC approved a new Form ADV Part 2, a “plain English” narrative approach to client disclosure, which was put into effect in 2011. The adopted rule changes require investment advisers to file their brochures electronically and the public has access to these brochures via the IAPD. This course will examine the form’s 19 specific potential disclosure topics, including advisory business, fees and compensation, disciplinary events and brokerage practices. In addition, the panel will delve into the mechanics of the “brochure supplement” requirement, which is a résumé-like disclosure for each individual providing advice to a client.

Both SEC commissioners and staff continue to emphasize the importance of meaningful, clear and useful disclosure, as well as the need for advisers to avoid legalese and boilerplate disclosures. Lessons learned from the past year’s filings of Form ADV Part 2 will be reviewed to gain further clarity into how to complete the narrative in ways that will withstand current SEC scrutiny. Disclosure on the adviser’s actual practices and conflicts, as well as on practices and conflicts reasonably likely to exist will be reviewed to highlight material facts concerning conflicts and address the requirement of how the adviser deals with them.

The session will also address:

  • How to identify conflicts of interest within the framework of Part 2
  • Guidance for disclosing conflicts of interest, compensation arrangements, fee structures and soft dollars arrangements, among other conflicts
  • The growing implications of public access to the firm’s brochure on the Investment Adviser Public Disclosure (IAPD) website

Learning Objectives:

After attending this course, attendees should be able to:

  • Identify the 19 specific disclosure topics of Form ADV Part 2
  • Further identify conflicts of interest within your firm to raise awareness and provide proper disclosure
  • Apply “plain English” drafting techniques to the firm’s Form ADV Part 2 to fulfill disclosure requirements

For Whom: Designed to increase the professional competence of investment adviser professionals with legal, compliance and management responsibilities.

Suggested Skill Level: Basic

Instructional Method: Group Internet-Based and Group Live

Pre-requisites for participation: No prerequisites are required. However, attendees can benefit by reviewing the Investment Advisers Act of 1940 and Form ADV to become familiar with structure and terms, and the SEC adopting release IA-3060 – Amendments to Form ADV (July 28, 2010).

Advance Preparation: None

Continuing Education Credits:

NRS Continuing Education Guide
Maximum Recommended CPE Credit: 2 in the Regulatory Ethics field of study
Maximum Recommended IACCP® CE Credit: 2
Maximum Recommended CA MCLE Credit: 2
Maximum Recommended CFP Credit: Credit: Pending