1. Brad Reifler Explains the SEC Brochure Rule
All registered investment advisers must file an ADV form with the Security Exchange Commission (SEC).
The second part of the ADV form requires investment advisers to deliver to their clients a written
brochure, says Brad Reifler. This brochure should be written in “plain English” and details the advisers
“practice, strategies, fees and any conflict of interest.” This is important, as this brochure must be filed
with the SEC -- as the Commission is responsible for the regulation of many investment advisers and
ensures the adviser is delivering pertinent information and relevant disclosures to their clients in a
timely manner.
The brochure must be presented to clients before or after entering into an investment advisory contract
with a client. After the first brochure is sent to clients, the brochure must be presented annually and
include any changes that are material to the day to day operations of the investment adviser, explains
Brad Reifler.
In addition to detailing out an investment adviser’s practices, fees and more, the SEC requires that a
brochure supplement contains information about any employee who is also deemed an investment
adviser and/or works on or also dispenses investment advice. This must include the employee’s
background including business experience, activities, education as well as any disciplinary history – and
all this must be presented before or at the time the investment adviser begins to dispense advice.
In 2011, the SEC started requiring registered advisers with at least “$150 million in private fund assets
under management to submit regular reports on new Form PF. “Advisers must file Form PF
electronically on a confidential basis,” according to the SEC.
There are a few exceptions to the brochure rule – for example, investment advisers do not have to file
an annual brochure with clients that pay them less than $500, says Brad Reifler.