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Should there be a specific disclosure within the Form ADV if a registered investment adviser pays a referral fee to a third-party solicitor?

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Yes, if a registered investment adviser firm pays a third-party solicitor for referrals, there are several disclosures that need to be made in the Form ADV. The number of third-party solicitors used by the registered investment adviser needs to be indicated in response to Item 5.B(6) of the Form ADV Part 1. In Form ADV Part 2A, Item 14.B Client Referrals and Other Compensation, “If you or a related person directly or indirectly compensates any person who is not your supervised person for client referrals, describe the arrangement and the compensation.”

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