Updating Your Investment Adviser’s Compliance Manual for the New Form ADV Part 3

May 26, 2020

Compliance with the new Form CRS/Form ADV Part 3 is fast approaching for investment advisers registered with the U.S. Securities and Exchange Commission (“SEC”) and certain state securities regulators. An SEC registered investment adviser’s initial Form CRS/Form ADV Part 3 must be filed via IARD by June 30, 2020 and delivered to existing clients no later than July 30, 2020. Click here to read our recent blog on the SEC’s decision to maintain the original June 30, 2020 filing deadline.

State registered investment advisers that are registered with the Oklahoma Department of Securities are also now required to prepare and file the Form ADV Part 3; please click here to read more about Oklahoma’s specific requirements.

Adopting Policies and Procedures & IAR Training Requirements

In addition to drafting, filing, delivering the new Form ADV Part 3, investment adviser firms required to file the Form CRS/Form ADV Part 3 should now adopt policies and procedures to help ensure compliance with the new rule. In its recent Risk Alert regarding the Form ADV Part 3, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) noted that OCIE will be examining an investment adviser’s policies and procedures related to the filing, delivery, and update of the Form CRS/Form ADV Part 3, in conjunction with reviewing the investment adviser’s actual practices related to the rule. Click here to read OCIE’s Risk Alert for Form CRS Compliance.

A robust compliance manual will include policies and procedures that address filing, delivery, update, and supervised person training for the Form CRS/Form ADV Part 3. The policies and procedures should designate one or more individuals to be responsible for each aspect of compliance with the rule, and should ensure that the investment adviser regularly reviews the Form CRS/Form ADV Part 3 for consistency with the firm’s other materials relevant to retail investors, such as disclosure brochures, advisory contracts, and advertisements.

Due to novelty of the Form CRS/ Form ADV Part 3, it will be especially important to require compliance training for the investment adviser’s supervised persons and IARs. Supervised person and IAR training on the Form CRS/Form ADV Part 3 should cover the basics of filing, delivery and updating the Form CRS/Form ADV Part 3, but should also include specific training on how to respond to the SEC’s required “Conversation Starters” and how to discuss the Form CRS/Form ADV Part 3 with retail investors.

Form ADV Part 3 Drafting Tips

Washington DC, USA – US United States Securities and Exchange Commission SEC

Other Resources

For help determining whether your investment adviser firm is required to deliver a Form ADV Part 3/Form CRS or for more information on the Form ADV Part 3/Client Relationship Summary, you can review the SEC’s Form ADV Part 3 instructions here or visit our Form ADV Part 3 FAQs website page here. You can also watch RCC’s recent complimentary compliance training webinar detailing the Form ADV Part 3/Form CRS by clicking here. The complimentary webinar slides are available here.

To read our three part blog on Drafting Tips for the Form CRS/Form ADV Part 3, click here for Part 1 – “Preparing to Draft Your Form ADV Part 3”. To read Part 2 – “Drafting the Content of Your Form ADV Part 3”, click here. To read Part 3 – “Style and Technical Considerations”, click here.

Contact Us

If your investment adviser firm is an existing client of RIA Compliance Consultants and would like assistance developing customized policies and procedures and/or IAR training regarding Form CRS/Form ADV Part 3, we encourage you to speak with your compliance consultant. Or, if you are not an existing client of RIA Compliance Consultants, click here to set up an introductory call with our Business Development Team.

If your investment adviser firm is an Annual Compliance Program client (Bronze, Silver, Gold or Platinum) of RIA Compliance Consultants, Inc., please check your online subscription account for our sample compliance manual section for Form ADV Part 3 compliance. To purchase on a la carte basis our Sample WSP/COE Section for Form ADV Part 3, click here.

Posted by Grant Parr
Labels: ADV Part 3, Oklahoma Investment Advisor, SEC