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Tuesday, February 23 2016

Common Mistakes When Completing Annual ADV Update

Advisers should beware of the following common mistakes made when filing their annual amendment.

  • Overstating or understating your assets under management (Remember you must keep proof of the calculations every year)
  • Stating that you are doing business in states where you do not do business
  • Stating that you have offices in states that you do not
  • The fees listed and other parameters must match in the ADV, the advisory agreement and any advertising.
  • Failing to disclose all conflicts of interest
  • Failing to properly identify how fees are charged or charging fees differently than described in ADV
  • Inconsistencies between services provided and services described
  • Misrepresentations in description of the business
  • ADV Part I and Part 2 do not match
    • The types of clients listed on Item 5.D of Part I do not match Item 7 of Part 2.A.
    • The type of compensation listed on Item 5.E of Part I does not match Item 5 of Part 2.A.
    • Services marked in Item 5.G of Part I do not match the services described in Item 4 of Part 2.A.
    • Discretionary authority marked in Item 8.C of Part I does not match the discretionary authority described in Item 16 of Part 2.A.
  • Fee schedule and frequency of fees listed in Item 5 of Part 2.A does not match the fee schedule and frequency listed in the investment advisory agreement.