While it’s still early in the year, it’s easy to continue to push the Form ADV annual amendment to the side. However, with these new changes, a firm that doesn’t prepare now is setting itself up for potential penalties or worse down the road.
When the Securities and Exchange Commission (“SEC”) updated the information required for all Form ADV filings back in October of 2017, there were a great deal of questions from Registered Investment Advisers. In many cases, these questions were followed by pushing Form ADV preparation to the backburner, as end-of-the-year activities became the primary concern for many firms.
Though it seems that, just about every year, investment advisors are told not to procrastinate on their Form ADV filing, inevitably, many firms will wait until the last minute to actually prepare their Form ADV amendment. This year, it’s critical that firms put in the time and effort necessary to accurately and fully complete their ADV filing.
Nobody wants to experience enforcement — at best it’s a hassle, and at worst it can spell the end for a firm.
As we have now entered the month of February, many firms that are behind on their filing preparatory work may in fact stay behind, especially when you take into account the changes to the form. If you’ve found that your firm has fallen behind and needs help getting back on track, consider getting help from a consulting group like Core Compliance℠ to assist with the filing process.
You should begin this process by creating a preparation schedule, that delineates which documents and data you need to gather, and from whom, and who will do the gathering.
Though Core Compliance℠ has written a number of articles on how to get started with your form ADV filing, the purpose of this particular article is to discuss the cadence a firm should follow when preparing and filing the Form ADV annual amendment.
Remember: for advisers registered with the SEC, they must amend their Form ADV each year within 90 days after the end of their fiscal year. For most advisers, their fiscal year ended December 31, 2017, and as a result, their filing deadline is March 31, 2018. This is why early year timing on Form ADV preparation is so important.
Form ADV Schedule for 2018:
Gather Your Documents in January
January has come and gone, and that was what you could call your “breather” month — January is when you should have begun gathering your documents in preparation for the drafting phase.
Draft Your Form ADV in February
If January is the time of the year when a firm needs to gather specific data and documents, February should be tightly focused on drafting. As stated earlier, you have until March 31 for your annual filing amendments for Forms ADV 1 & 2 (if your fiscal year ended in 12/31/17, as is the case for the majority of firms).
Drafting can be a long and complicated process, and, more often than not, many snags are hit during the process itself. These snags tend to occur when it becomes clear that more documentation will be required to complete the filing, or that the data that has been collected may not be correct or inadeqate. Even though you might be tempted to submit very early, reread that draft and put multiple eyes on it — give yourself the space needed to review, edit, and triple-check before submission. Use the services of a third party compliance consultant, such as Core Compliance℠, to review your information for completeness.
Submit Your Form ADV in March
If February is for drafting, March should be dedicated to revisions, clarifications, editing, review, approval, and submission. That’s a lot to do in one month even if you’ve met with the necessary team members and gathered all of your data. Waiting until the last minute to gather data is a recipe for mistakes and improper disclosures.
The ultimate goal of this project is a timely and accurate Form ADV annual amendment for the benefit of your clients, prospects, and your firm. While regulatory sanction and enforcement should be avoided at all costs, even a deficiency letter can be a headache for your firm. In the modern climate of “transparency through disclosure,” it may be unwise to test the SEC’s enforcement attitude over what might appear (to you) to be a “small” oversight.
There’s Still a Significant Amount of Time Left — Use It Wisely
Take the time necessary to gather what you need to gather (if you haven’t already done so), begin drafting as soon as you can, follow these instructions if you’re just not sure where to begin. If you do need professional help, don’t hesitate to contact us today — we’re here to help!