Proposed New Form ADV Part 2 – Table of Contents and Index Required

September 12, 2008

According to the proposed new Form ADV Part 2 rule, registered investment advisors will be required to insert a table of contents at the beginning of their brochures and an index at the end of their brochures.

In the proposing rule releaseoffered earlier this year for consideration by the U.S. Securities and Exchange Commission (“SEC”), the SEC stated that registered investment advisors need to provide a table of contents detailed enough to provide clients and prospective clients the ability to locate topics easily. However, the SEC has not settled on whether or not it will require a specific format for the table of contents. In the proposed rule, the SEC appears to be leaning towards allowing investment advisors the ability to develop their own format and method for the table of contents. The reason to allow registered investment advisors the ability to adopt their own table of contents format is that there is a wide variety of registered investment advisors and it may be impractical to develop a uniform method. On the other hand, there are those within the industry that believe a uniform method would allow clients and potential clients to more easily compare multiple investment advisors. A uniform method is used for the current Form ADV Part II and Schedule F.

In addition to a table of contents, brochures filed with regulators through the Investment Adviser Registration Depository (IARD) will be required to include an index of the items required by the new Form ADV Part 2 instructions. The index must indicate where in the brochure the registered investment advisor addresses each item. The index is intended to help facilitate reviews by regulators to ensure requirements of the new Part 2A are met. Registered investment advisors will not be required to insert the index into brochures that are provided to clients and prospective clients.

As with every other item in the proposing rule release, the requirement to include a table of contents and index is open to further discussion. Therefore, registered investment advisors will not know for sure if they must include a table of contents and/or index until the final rule is released. Stay tuned to RIA Compliance Consultants for more information and further updates regarding the new Form ADV Part 2.

If you are interested in engaging RIA Compliance Consultants for its Form ADV Part 2 drafting services, please call us today for a proposal and quote.

Posted by Bryan Hill
Labels: ADV Part 2, Form ADV