How to Read an ADV Form

What is Form ADV?

Form ADV is the primary registration document that all SEC-registered Registered Investment Advisors are required to file with the U.S. Securities and Exchange Commission. It is the foundational document that AdvisorForInvestors uses to calculate AFI Scores, and it is publicly available to any investor through the SEC's Investment Adviser Public Disclosure database at adviserinfo.sec.gov.

Form ADV has two primary parts. Part 1 contains structured data about the firm including its ownership, employees, services, assets under management, and any disciplinary history. Part 2, known as the brochure, is a plain-language narrative document that describes the firm's services, fees, investment strategies, and conflicts of interest in detail.

What to Look for in Part 1

In Form ADV Part 1, the most critical section for investors is Schedule D, which discloses any regulatory actions, civil proceedings, criminal charges, or customer complaints that have been filed against the firm or its principals. A clean Schedule D is a meaningful signal of a firm's regulatory integrity. Any disclosures in this section should be read carefully, and investors should seek independent legal or financial counsel if any items are concerning.

Part 1 also discloses the firm's assets under management and approximate number of clients, which allows investors to calculate an average account size and assess whether the firm typically serves clients with similar financial profiles to their own.

What to Look for in Part 2

Form ADV Part 2 is the firm's client-facing brochure and is the most important document for investors to review before engaging an advisor. Key sections to examine include the description of services and whether they match what you are looking for, the fee schedule including all charges and how they are calculated, any conflicts of interest the firm is required to disclose, and the educational and professional background of the firm's investment personnel.

How AdvisorForInvestors Uses ADV Data

AdvisorForInvestors accesses Form ADV data through the SEC's publicly available database and processes it monthly to calculate AFI Scores. We evaluate fee structure from the compensation disclosures in Part 2, disciplinary history from Schedule D in Part 1, and transparency from the completeness and specificity of the Part 2 narrative. You can view any firm's current ADV directly from their profile on AdvisorForInvestors by clicking the SEC filing link.