FIN Family of Companies

Advisors: Preparing for Form ADV 1A changes


By Cory Roberson, Principal at RIA Review and RIA Consults



As of October 1, 2017, firms that make an ADV amendment would notice additional reporting requirements on the Part 1A form (electronic format)

We recommend that firms review the summary of changes and prepare ahead time to comply with additional burdens.  ADV 1A Changes include:
Client Reporting Chart:


Item 5.D.1 - Breakdown of clients 


Type of Client
Number of clients
Fewer than 5 clients
AUM ($)
Individuals



High Net Worth Individuals



Banking or thrift institutions



Investment companies



Business development companies



Pooled investment vehicles (other than investment companies and business development companies)



Pension and profit sharing plans (but not the plan participants or government pension plans)



Charitable organizations



State or municipal government entities (including government pension plans)



Other investment advisers



Insurance companies



Sovereign wealth funds and foreign official institutions



Corporations or other businesses not listed above



Other:  




Additional reporting questions include:

Item 1.F.(5) – What is the total number of offices?
Item 5.C.(1) – What is the total number of clients?
Item 5.I.(1) – Does the firm participate in a wrap fee program?
Item 5.J.(2) - Does the firm report client assets that are computed using a different method?
Item 5(K) – Does the firm have assets under management for separately managed accounts?
Item 8.B(2) – Does the firm recommend the purchase of securities to advisory clients?
Item 8.H(1) – Does the firm compensate any non-employee for client referrals?
Item 8.H(2) – Does the firm compensate any employee for client referrals?
Item 8.I – Does the firm compensate any person for client referrals?

Firms (with separately managed accounts in Item 5.D.1):

Must file:

Schedule. D (Section 5.K (1)(a) - firms reporting over $10 billion 
Schedule. D (Section 5.K (1)(b) - firms reporting under $10 billion 

(1)(B) example shown below

Asset Type
End of year (%)
Exchange-Traded Equity Securities

Non-Exchange-Traded Equity Securities

U.S. Government/Agency Bonds

U.S. State and Local Bonds

Sovereign Bonds

Investment Grade Corporate Bonds

Non-Investment Grade Corporate Bonds

Derivatives

Securities Issued by Registered Investment Companies or Business Development Companies

Securities Issued by Pooled Investment Vehicles (other than Registered Investment Companies or Business Development Companies)

Cash and Cash Equivalents

Other


SEC-Umbrella filling firms with Relying Advisors

Must file:  Schedule R. 

Firms who report Private Funds:

Must include a: Public Company Accounting Oversight Board (PCAOB) number for their auditor.  Link to auditor search: https://pcaobus.org/Pages/AuditorSearch.aspx


Regulatory (Grace) period
Some advisors may experience additional headaches in compiling reporting data, but there is some relief---a regulatory grace period through the next ADV amendment cycle.
The SEC will not recommend enforcement actions for firms that fail to report assets of separately managed accounts (Schedule D, Section 5.K.(2)) prior to next annual amendment cycle (e.g. “other than annual amendment filing’s).

Excerpt from IM Guidance:  “if a filer does not have enough data to provide a complete response to a new or amended question in Item 5 or the Schedule D sections related to Item 5 during the period ranging from October 1, 2017 to the filer’s next annual amendment to the form, the staff would not recommend enforcement action to the Commission under section 207 of the Investment Advisers Act of 1940 if the filer responds “0” as a placeholder in order to submit its Form ADV, with a corresponding note in the Miscellaneous section of Schedule D to identify that a placeholder value of “0” was entered”.
https://www.sec.gov/divisions/investment/imannouncements/im-info-2017-06.pdf







Contact us at: 650-305-2688 or http://RIAreview.com if you would like to learn more about ADV changes.


Investment Advisor/Compliance/Broker Dealer

Cory Roberson is Principal of RIA Review, a compliance and document management portal (www.riareview.com) - 130+ users and growing.  

He is also Principal of RIA Consults -Roberson Consults Group), a consulting firm providing compliance, operations, and business development services for registered investment advisors and next-gen fintech entrepreneurs (www.riaconsults.com).  To date, RIA Consults worked with more than 160 SEC & State advisors clients across the US (including a few in Europe).  Our integration division, RegConsults helps to mitigate compliance issues for other Fintech businesses.  


RegTech Products, a compliance tech notifications portal featuring RIA and other regulatory Products (SaaS/IaaS -beta) – http://regtechproducts.com

FinTech/RegTech/Crypto/Impact

Fin Community is a member rewards and business listing network featuring providers in the FinTech, RegTech, Crypto and Blockchain communities (website coming soon).  https://FINcommunity.io

As a social entrepreneur, through his mission-driven arm SoCap Missions (http://SoCapmissions.com), he provides business support group sessions and has volunteered for more than fifteen youth programs in locations such as like S. Korea, China, S. Africa, Thailand, and India.


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