2017 Form ADV Changes & Annual Compliance Reminders:
Key Actions You Need to Take Before the End of the Year
As the industrywide push for transparency continues, the steps for Form ADV filings have also become more rigorous in 2017. With the year winding down, advisors will want to take the necessary steps to ensure they are compliant before year-end. Here are some of the biggest updates and items that may require your attention:
Annual Compliance Review & Renewal Payments
Conducting a comprehensive annual compliance review of your firm is one of the top things an SEC auditor will look for, so be sure you and your team set aside time to do so at the end of your fiscal year.
All renewal payments will also be due to FINRA on December 18. As you review your book of business, you will want to make sure you are properly filed in all the states that you are conducting business. Then, you will want to verify that you have the appropriate amount of funds in your flex funding account prior to December 18.
If you’re an SEC-registered RIA, filing is typically straightforward, but the process can become more arduous if you’re a state-registered advisor. You will have to file directly with the state(s). As you do so, make sure those filings are up-to-date prior to you paying the renewal fee. At Beacon, one of the biggest and easily correctible mistakes we see advisors make is going into an autopilot mode when filing, missing filings with states that have gone over the de minimis limits during 2017 that did not require a filing in 2016.
In 2017, the SEC has adopted several revisions to Form ADV that take a deeper dive on advisor data. Those revisions went into effect on October 1 of this year, but advisors are not required to provide the additional information until the next annual amendment filing, which for most advisors, will be by March 31 2018 (for those firms whose fiscal year ends December 31). As you begin preparing your filing, here are some of the most important revisions you will need to know about:
* Client Types In the past, advisors were able to report client types as a percentage of their total clients. Not any longer. Under the new revisions, you will have to report the specific number of clients by each client type. Those client types are: Individuals, HNW individuals, Banking or Thrift Institutions, Investment Companies, Business Development Companies, Pooled Investment Companies, Pension and Profit Sharing Plans, Charitable Organizations, State or Municipal Government Entities, and Other Investment Advisors, Insurance Companies, Sovereign Wealth Funds and Foreign Official Institutions, Corporations and Other.
* RAUM Client Types Starting this year, you will also be required to breakdown the amount of your regulatory assets under management by client type. Before, this was done as a percentage, allowing you to ballpark your figures, but under these new amendments, the SEC is requiring more specific data.
* Separately Managed Accounts This is a new section in Form ADV and it refers to any advisory accounts that are not Pooled Investment Accounts. Again, it’s breaking down the data and developing a more detailed account of client information.
* Custodians for SMAs Under the new revisions, you will be required to identify any custodian who holds 10 percent or more of your RAUM.
* Social Media Now, your social media such as Facebook, LinkedIn, Twitter, and others, will face more scrutiny as you will need to provide the addresses to those corporate accounts.
Beacon is here to help.
Even with these recent changes, at Beacon we make it easy for our advisors to access and export this detailed data through your secure advisor portal. For assistance with how to find the data you need, contact your personal Beacon operations specialist for support.