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When must Appendix 1 be provided to clients?

November 02, 2018

Timing requirements for delivering Appendix 1 are identical to the delivery requirements for Part 2A of Form ADV. The Appendix 1 must be provided to clients prior to or at the time of entering into a written or oral agreement to participate in the program.

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Who must provide the Appendix 1 to clients?

November 02, 2018

Because there may be several entities or intermediaries involved in a wrap-fee program, the responsibility to provide the brochure can be confusing. Ultimately, the sponsor must ensure all clients with an account in its program have received a copy of the brochure. However, the sponsor does not have to deliver the brochure. The sponsor registered […]

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Who must prepare the Appendix 1?

November 02, 2018

The registered investment adviser responsible for sponsoring and administering the program must prepare Appendix 1. Usually the sponsor of a wrap-fee program will also be registered as a broker/dealer or affiliated with a registered broker/dealer. However, independent registered investment advisors also sponsor wrap-fee programs through unaffiliated broker/dealers such as discount broker/dealers.

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What information must be included in Appendix 1?

November 02, 2018

While considered separate documents, Part 2A of Form ADV and Appendix 1 will contain similar language and details. Appendix 1 must contain specific information about the wrap-fee program. It does not need to contain information regarding other programs offered by the registered investment adviser, such as information which must be contained in Part 2A of […]

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What is Appendix 1 of Form ADV Part 2A?

November 02, 2018

Appendix 1 is the disclosure brochure for wrap-fee programs. Under Rule 204-3(f)(1), a registered investment adviser that is compensated under a wrap-fee program for sponsoring, organizing, or administering a wrap-fee program, or for providing advice to clients under the wrap-fee program, must provide clients Appendix 1 of Form ADV Part 2A. Appendix 1 must be […]

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What is the definition of a wrap-fee program?

November 02, 2018

Rule 204-3(g)(4) defines wrap fee program to be a “program under which any client is charged a specified fee or fees not based directly on transactions in a client’s account for investment advisory services (which may include portfolio management or advice concerning the selection of other advisers) and execution of client transactions.” (Italics have been added for emphasis.) […]

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