Timely Updating the Brochure

Posted on by admin

Part 2A of the Form ADV requires advisers to create narrative brochures containing information about the advisory firm. Both federal and state registered advisers must prepare and deliver a brochure to their clients. They both also have requirements set by the SEC and NASAA for timely updating their brochure

Similarities for Federal Covered Advisers and State Registered Advisers

The brochure must be updated:

  • Each year at the time of filing the annual updating amendment; and
  • Promptly, whenever any information in the brochure becomes materially inaccurate.

It is not required to update the brochure between annual amendments solely because the amount of client assets under management has changed or because the fee schedule has changed. However, if the brochure is being updated for a separate reason in between annual amendment (a disciplinary action, some other material change, and so forth), and the amount of client assets under management and/or the fee schedule listed in the brochure has become materially inaccurate, the investment adviser should update that item(s) as part of the interim amendment.

If, when preparing the annual updating amendment, there are no material changes to the previous brochure, and there have been no interim amendment making material changes to the brochure that was filed with the previous year’s annual updating amendment, a summary of material changes does not have to be prepared (because there is nothing to say). Read what the SEC has to say about that: “If you do not have to prepare a summary of material changes, you do not have to deliver a summary of material changes or a brochure to your clients that year. If you are a state registered adviser, you should contact the appropriate states securities authorities to determine whether you must make an annual offer of the brochure.” That means that a new brochure doesn’t even have to be offered (in the case of federal covered advisers) if there has been no material change.

Difference for Federal Covered Advisers and State Registered Advisers

For the most part, the requirements for timely updating the brochure are the same for both federal covered advisers and state registered advisers. The differences are:

  • Federal covered advisers are required to file amendments to their brochure electronically through IARD. However, they are not required to file amendments to the brochure supplements with the SEC but must maintain a copy of them in their files.
  • State registered advisers are required to file amendments to their brochure and amendments their brochure supplement with the appropriate state securities authorities through IARD.

If the investment adviser has no clients to whom the delivery of a brochure is required, they do not have to prepare one.

For more specifics regarding timely updating the brochure and Form ADV, check out the SEC’s General Instructions for Part 2 of Form ADV.

For more information on Form ADV, check out our other blogs on the topic:

For help updating and filing your firm brochure, please contact us. MasterCompliance provides expert consulting, outsourcing, and implementation tools in planning and budgeting your firm’s compliance responsibilities.