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Investment Adviser Workshop: the New Form ADV Part 2, New Rules, and the IA Switch

Investment Adviser Workshop: the New Form ADV Part 2, New Rules, and the IA Switch. Rewriting the ADV in Plain English Richard Jaramillo Examiner. Rewriting in Plain English. ADV Guidelines. Effective Communication Level of Financial Sophistication Use Short Sentences

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Investment Adviser Workshop: the New Form ADV Part 2, New Rules, and the IA Switch

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  1. Investment Adviser Workshop:the New Form ADV Part 2, New Rules, and the IA Switch

  2. Rewriting the ADV in Plain English Richard Jaramillo Examiner

  3. Rewriting in Plain English ADV Guidelines • Effective Communication • Level of Financial Sophistication • Use Short Sentences • Definite, concrete, everyday words • Active Voice • Tables or Bullet Lists for Complex Material • Avoid Legal Jargon or Highly Technical Terms • Avoid Multiple Negatives

  4. Rewriting in Plain English SEC Guidelines • A Plain English Handbook • Plain English ≠ deleting complex information • Analyze and Organize before drafting • Use words economically • Know your audience • Multiple Brochures, if needed

  5. Rewriting in Plain English SEC Guidelines • WORKING FROM OLD ADV • Read & Outline the old document (Schedule F) • Question whether clients will understand • Meet to resolve questions if outsourcing • Cannot outsource understanding • Identify any defined terms or references • Use sparingly but consistently

  6. Rewriting in Plain English SEC Guidelines • COMMON PROBLEMS • Long Sentences • Passive Voice • Weak Verbs • Superfluous Words • Legal and Financial Jargon • Abstract Words • Unneccessary Details • Unreadable Design and Layout

  7. Rewriting in Plain English Division Guidelines • WRITING THE NEW DOCUMENT • The instructions give the broad organization • and headings to be used • May still need subheadings and organization • within a given Item on Form ADV Part 2 • Item 4 – Advisory Business • Item 5 – Fees and Compensation • Item 8 – Methods of Analysis, Investment Strategies, and Risk of Loss • Item 10 – Other Financial Industry Activities and Affiliations • Item 12 – Brokerage Practices

  8. Rewriting in Plain English Division Guidelines • WRITING THE NEW DOCUMENT • Make the paragraph the unit of composition • Length should determine whether to divide • into separate topics / paragraphs • Use definite, specific, concrete language • Consistent tense of verbs • Simple tense • Past, Present, Future tense

  9. Rewriting in Plain English Division Guidelines • MOST CONCERNING DISCLOSURES • Item 4 – Advisory Business • Clearly describing what the Adviser does • Touting and puffery • Item 5 – Fees and Compensation • Complicated compensation formulas • Understanding “reasonable” advisory fees

  10. Rewriting in Plain English Division Guidelines • MOST CONCERNING DISCLOSURES • Item 8 – Methods of Analysis, Investment • Strategies, and Risk of Loss • Don’t be afraid to disclose risk • Item 10 – Other Financial Industry Activities • and Affiliations • Other, Outside, or Affiliated businesses • Describe the relationships or arrangements • Conflicts need to be disclosed

  11. For more information, please call (801) 530-6600

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