Proposed New Form ADV Part 2A Will Require a “Material Changes” Page

September 12, 2008

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According to the proposed new Form ADV Part 2 rule offered earlier this year for consideration by the U.S. Securities and Exchange Commission (“SEC”), registered investment advisors will be required to insert a Material Changes page at the beginning of their brochures. Material changes could be summarized on the Cover Page of the brochure or could be included on a separate Material Changes page which would appear immediately after the Cover Page and before the Table of Contents. A third alternative will be to include a separate communication that would accompany the brochure.

Because the purpose of this requirement is to highlight changes made to prior brochures, registered investment advisors will not need to include a summary of material changes in the first versions of their brochures.

The SEC’s intention with a Material Changes page is for registered investment advisors to provide clients and prospective clients with a summary of any and all material changes to the registered investment advisor’s brochure since the last annual update. The SEC believes that this requirement will help clients identify information that has changed since the prior year’s brochure, especially changes that may be important to clients.

As with all items in the proposing rule release, the requirement to include a summary of material changes has not been finalized and is still under consideration. Therefore, registered investment advisors will not know for sure if they must include a summary of material changes 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