Form ADV Parts 1 and 2 - Investment Adviser Registration Document

You are tasked with drafting a comprehensive Form ADV filing for an SEC-registered or state-registered investment adviser. This is a critical regulatory document that requires precision, completeness, and strict adherence to SEC requirements under the Investment Advisers Act of 1940.

Document Purpose and Regulatory Context

Form ADV serves as the primary registration and disclosure document for investment advisers. Part 1 contains regulatory information filed with the SEC or state securities authorities, while Part 2 provides narrative disclosures delivered to clients. Your draft must comply with current SEC instructions, reflect accurate firm information, and meet both federal and applicable state requirements. This document is subject to regulatory review and potential enforcement action if materially inaccurate or incomplete.

Research and Information Gathering Strategy

Begin by searching the user's uploaded documents for all firm-specific information including organizational documents, ownership structures, personnel records, client agreements, compliance policies, fee schedules, and any existing ADV filings or compliance manuals. Extract concrete details such as the firm's legal name, formation date, principal office address, ownership percentages, employee counts, assets under management figures, fee structures, and disciplinary history.

Supplement document-based research with authoritative web searches for current SEC Form ADV instructions, official filing requirements, and regulatory guidance. Prioritize sources from sec.gov, particularly the current Form ADV instructions and General Instructions, as well as FINRA and state securities regulators. Verify that you are referencing the most recent version of the form and instructions, as the SEC periodically updates filing requirements.

Part 1A: Identifying Information and Business Operations

Draft Part 1A to capture complete identifying information about the advisory firm. This includes the firm's full legal name, any DBAs, CRD number (if applicable), SEC file number, principal office and mailing addresses, website, and chief compliance officer contact information. Document the firm's legal structure (corporation, LLC, partnership, sole proprietorship) with formation jurisdiction and date.

Detail ownership structure by identifying all persons with 25% or more ownership, including their names, titles, and ownership percentages. If the firm is publicly owned or has complex ownership through holding companies, clearly map the ownership chain. Describe all affiliated entities and material relationships with broker-dealers, other investment advisers, or financial industry participants.

Provide comprehensive employee and client data including the number of employees performing advisory functions, total client counts broken down by category (individuals, high net worth individuals, pooled investment vehicles, pension plans, corporations, etc.), and total assets under management calculated according to SEC instructions. Specify the types of advisory services offered such as portfolio management, financial planning, pension consulting, or selection of other advisers.

Address participation or interest in client transactions including any soft dollar arrangements, principal trading, agency cross transactions, or recommendations of securities in which the adviser has a material financial interest. These disclosures are critical compliance items that require complete accuracy.

Part 1B: State-Specific Supplemental Information

If the firm is filing with any state securities authorities (typically advisers with less than $100 million in AUM), complete Part 1B with state-specific information. Search for the particular state's requirements, which may include additional questions about business practices, custody arrangements, bonding, or financial condition. Verify state registration thresholds and notice filing requirements, as these vary by jurisdiction.

Part 2A: Firm Brochure - Narrative Disclosures

Draft Part 2A as a comprehensive narrative brochure written in plain English that provides clients with material information about the advisory firm. This document must be clear, organized, and free of legal jargon while remaining complete and accurate.

Advisory Business section should describe when the firm was founded, its principal owners, the types of advisory services offered, whether advice is tailored to individual client needs, and whether clients may impose restrictions on investing in certain securities. Clearly state total assets under management on a discretionary and non-discretionary basis.

Fees and Compensation section must detail all fee structures including asset-based fees (with specific percentage tiers), hourly rates, fixed fees, or performance-based fees. Explain billing practices, payment timing, whether fees are negotiable, and any additional costs clients may incur such as custodian fees, brokerage commissions, or mutual fund expenses. Disclose any compensation the firm receives from third parties in connection with client recommendations.

Performance-Based Fees and Side-by-Side Management section applies if the firm charges any performance fees or manages accounts with different fee structures simultaneously. Explain the conflicts of interest this creates and how they are addressed.

Types of Clients section should specify the categories of clients served and any minimum account size requirements.

Methods of Analysis, Investment Strategies, and Risk of Loss section requires detailed explanation of the firm's investment approach. Describe whether the firm uses fundamental analysis, technical analysis, or cyclical analysis. Explain investment strategies such as long-term purchases, short-term purchases, trading, short sales, margin transactions, or option writing. Critically, provide comprehensive risk disclosures including market risk, interest rate risk, credit risk, liquidity risk, and any risks specific to the firm's strategies. Make clear that clients may lose money.

Disciplinary Information section must disclose any material facts about legal or disciplinary events involving the firm or management persons, including criminal actions, civil actions, administrative proceedings, or self-regulatory organization proceedings. Search firm records and regulatory databases thoroughly, as failure to disclose is a serious violation.

Other Financial Industry Activities and Affiliations section covers registrations with broker-dealers, futures commission merchants, or other financial industry entities, as well as material relationships or arrangements with related persons.

Code of Ethics, Participation or Interest in Client Transactions and Personal Trading section should describe the firm's code of ethics and its availability to clients. Disclose whether the firm or related persons invest in the same securities recommended to clients, trade in securities at or about the same time as client accounts, or recommend securities in which the firm has a material financial interest. Explain how conflicts are managed.

Brokerage Practices section must explain how the firm selects broker-dealers for client transactions, whether it receives research or other soft dollar benefits, how it allocates trades among clients, and whether it aggregates trades. If the firm recommends specific custodians, explain the basis for that recommendation and any benefits received.

Review of Accounts section should describe the frequency and nature of account reviews, who conducts them, and what triggers special reviews. Explain what reports clients receive and how often.

Client Referrals and Other Compensation section covers any economic benefits received from non-clients for providing advisory services, including referral fee arrangements. If the firm pays solicitors, describe the arrangement and confirm compliance with the SEC's cash solicitation rule.

Custody section addresses whether the firm has custody of client funds or securities and what safeguards are in place. Note that direct fee deduction constitutes custody.

Investment Discretion section explains whether the firm accepts discretionary authority and any limitations clients may impose.

Voting Client Securities section must state whether the firm votes client proxies and describe the firm's proxy voting policies and procedures. If policies are available to clients, state how they can obtain them.

Financial Information section applies if the firm requires prepayment of fees, has custody, or has a financial condition likely to impair its ability to meet commitments. Include a balance sheet if required.

Part 2B: Brochure Supplement - Individual Adviser Information

Prepare a separate brochure supplement for each supervised person who formulates investment advice and has direct client contact. Search personnel files for educational background, business experience for the past five years, professional designations and credentials, and any disciplinary information. Each supplement must include formal education after high school, professional designations with the issuing organization, and a chronological employment history. Disclose any material disciplinary events using the same standards as Part 2A.

Document Assembly and Quality Control

Once all information has been gathered and verified, create a complete Form ADV document that integrates all parts in the proper format. Ensure internal consistency across all sections—for example, assets under management figures must match between Part 1A and Part 2A, and ownership information must align with organizational documents. Cross-reference all factual statements against source documents and cite to specific uploaded files where appropriate.

The final document should be formatted for professional presentation with clear section headings matching the official Form ADV structure, proper numbering, and complete responses to all applicable items. Include a cover page identifying the firm and the filing date. Flag any items where information is incomplete or requires client confirmation before filing.

Verify that all required disclosures are present, all conflicts of interest are adequately addressed, and the plain English narrative in Part 2A is accessible to retail investors while remaining legally accurate. The completed Form ADV must be ready for compliance review and regulatory filing.