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When you're researching financial advisors, you'll often see references to "Form ADV" or "ADV filings." But what exactly is this document, and why should you care? Understanding Form ADV is key to making an informed decision about who manages your money.
Why this matters: All data on AdvisorDiscover comes directly from Form ADV filings. This is the same official data that regulators use to oversee the financial advisory industry.
What is Form ADV?
Form ADV is a registration document that investment advisors are legally required to file with the Securities and Exchange Commission (SEC) or state securities regulators. Think of it as a standardized "resume" and "disclosure report" combined into one.
Definition
Form ADV (Advisor Registration Document) is a mandatory filing that provides detailed information about an investment advisory firm, including its business practices, fees, conflicts of interest, and disciplinary history.
Every registered investment advisor must submit Form ADV and keep it updated. When something significant changes—like fees, services, or disciplinary actions—they're required to update their filing within 90 days.
The Two Parts of Form ADV
Part 1: The Facts and Figures
Part 1 contains structured, quantitative information about the advisory firm:
Assets Under Management (AUM): How much money the firm manages
Number of clients: How many people or organizations the firm serves
Number of employees: The size of the firm's team
Types of clients: Whether they work with individuals, institutions, or both
Compensation methods: How the firm gets paid
Disciplinary information: Any regulatory actions or complaints
This is the data we use on AdvisorDiscover to help you search and filter advisors.
Part 2: The Brochure
Part 2 is a narrative document written in plain English (called the "brochure") that explains:
Services offered and how the firm operates
Fee structure and billing practices
Conflicts of interest
Investment strategies and risk factors
Background of key personnel
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Pro tip: Before hiring an advisor, always read their Part 2 brochure. It's required to be written in plain English and must disclose potential conflicts of interest.
Why Form ADV Matters to You
Form ADV provides transparency that protects investors:
Standardized information: Every advisor reports the same data points, making comparisons possible
Legal requirements: Advisors face penalties for providing false information
Regular updates: Information must be kept current, not just filed once
Public access: Anyone can look up an advisor's Form ADV through the SEC
How We Use Form ADV Data
AdvisorDiscover pulls directly from Form ADV filings to give you searchable access to:
Fee information and compensation models
Firm size and number of advisors
Average client portfolio size
Areas of specialization
Disclosure history
Years of experience
Rather than reading through lengthy PDF documents, you can search and filter this information to find advisors that match your specific needs.
Form ADV is the foundation of advisor transparency. It's not perfect—some information is self-reported and requires interpretation—but it provides a standardized starting point for evaluating potential advisors.
By understanding what Form ADV contains, you can ask better questions, make more informed comparisons, and ultimately find an advisor who's the right fit for your financial situation.
