ADV Part 1 Changes

Included in the final rule regarding the amendments due to Dodd-Frank are many changes to ADV Part 1.  These changes to ADV Part 1 will apply to you whether you are a small, mid, or large sized advisor. 

Tee new ADV Part 1 will be available on the IARD in November 2011; however the specifics are available as part of Release No. IA-3221 ( 

You will want to review this document early as there are details about your firm that have not been required before.  For example, and this doesn’t sound too difficult at first, but wait until you get to item (iii) and (iv),  Item 5C and 5D requires an advisor to report the number and types of clients the advisor serves.  Specifically, the amendments require each registered advisor to: (i) provide an approximate number of clients it has if over 100; (ii) report the aproximate percentage of its clients that are not US persons; (iii) specify the types of clients that it advises (adding categories for business development companies, other investments advisers, and insurance companies) and the percentage that each client type comprises of its total number of clients; and (iv) report in a  new item the approximate percentage (in broad ranges) of assets under management attributable to each client type. 

This is just one of the changes.  The new ADV Part 1 (including Schedules) has gone from a document 26 pages long to 37 pages long. 

So waiting until mid-March to begin your Annual Updating Amendment will probably create a some stress around the firm.  In addition, if you are a mid-sized advisor that will need to switch from SEC to state registration, you will want to begin the process sooner (like November/December 2011) rather than later. 

 If you are an investment advisor and have questions regarding this or any other compliance related issue, please give me a call at 619-795-5986 or email

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