Form ADV: How to Check Your Investment Adviser Before You Write a Check

The SEC's Investment Adviser Public Disclosure (IAPD) database lets you search any registered investment adviser's full Form ADV in seconds, for free. As of 2024, 15,870 SEC-registered RIAs manage $146 trillion in combined regulatory assets under management. Most retail and accredited investors never look at the form. That is a mistake I've seen cost people real money. Not because advisers are universally dishonest, but because Form ADV is a legally required disclosure document that tells you exactly what you need to know before you hand anyone a check: how they get paid, who they answer to, what conflicts they carry, and whether they've ever been sanctioned.

What Form ADV Actually Contains

Form ADV has four parts. Part 1A is the operational data layer: the firm's legal structure, ownership, number of employees, client types, and regulatory AUM. Part 2A is where the substance lives. Known as the Brochure, it contains 18 mandatory plain-English disclosure items covering everything from fee structures to disciplinary history. Advisers must file their annual update within 90 days of their fiscal year end. Part 2B is the Brochure Supplement covering the specific individual adviser who will manage your money. Part 3 is Form CRS, the Client Relationship Summary, added in June 2019 as part of Regulation Best Interest. At two pages maximum, it lets you compare services, fees, and conflicts across different firms. According to the SEC's Investor Bulletin on Form ADV, all parts are publicly searchable on IAPD.

How to Pull the File in 5 Steps

1. Go to adviserinfo.sec.gov. No account needed.
2. Enter the firm name. If you get multiple results, match the CRD number to what the adviser has given you.
3. Click the firm name to open its profile page. You'll see registration status and any disclosure flags.
4. Download the Part 2A Brochure from the Brochure/Supplements section. This is the document you read.
5. Check the Disclosures tab. Any disciplinary events appear here. Zero should be your baseline expectation.

If the adviser is also a registered broker-dealer representative, cross-check their individual record at FINRA BrokerCheck. BrokerCheck pulls from a different registry and sometimes surfaces events that don't appear in IAPD, particularly older brokerage-side complaints.

The 8 Items in Part 2A You Actually Need to Read

Item 2 — Material Changes. Check the date. If the brochure hasn't been updated in over a year and the adviser's business has clearly evolved, that's a process failure.

Item 5 — Fees and Compensation. Discloses how the adviser is paid: AUM fees, hourly rates, commissions, performance-based fees, and any third-party compensation including 12b-1 fees from mutual funds. If an adviser is receiving payments from product providers, those payments create incentives you need to understand before you see a single portfolio recommendation.

Item 9, Disciplinary Information. Any reported disciplinary event must be disclosed here. One event does not automatically disqualify an adviser, but it demands an explanation and independent verification against IAPD's Disclosures tab.

Item 10, Other Financial Industry Activities and Affiliations. Lists the adviser's affiliated entities. Conflicts flow from affiliations. If your adviser's parent company also sells the products your adviser recommends, that relationship must appear here.

Item 11, Code of Ethics and Personal Trading. You want to see a written code of ethics, required pre-clearance for personal trading by access persons, and review of employee holdings. Weak personal trading controls are the structural precondition for front-running.

Item 14, Client Referrals and Other Compensation. Referral fee arrangements must be disclosed here. If a third party is paid to send clients to this adviser, you are paying a finder's fee through your management fees. You have a right to know that before you agree to the relationship.

Item 18, Financial Information. If the adviser requires prepayment of fees more than six months in advance exceeding $500, or has financial conditions that could impair its ability to meet contractual commitments, those facts belong in Item 18.

Also read Item 8 (investment strategies and risk) to confirm the described strategy matches what they're pitching you in person.

Two Cases Where an IAPD Search Would Have Changed the Outcome

Salus LP (IA-5302, 2019). From December 2017 through June 2019, this Colorado-based adviser filed Form ADVs claiming up to $178 million in AUM and 20 high-net-worth individual clients. The SEC found that Salus never had any assets under management and never had any clients. Owners Brandon Copeland and Gregory Prusa each received $25,000 civil penalties and permanent industry bars. The SEC enforcement release IA-5302 details every allegation. An IAPD search would have shown a brand-new registration with AUM claims that had no operational history behind them, a mismatch that should stop any due diligence process cold.

Pinnacle Investments (Admin. Proc. 3-21405, 2023). The SEC found that Pinnacle made false and misleading statements in its Part 2A Brochure about how frequently it reviewed client accounts. It also failed to disclose conflicts related to an investment adviser representative's outside business activities and failed to deliver required Part 2B supplements to clients. Pinnacle consented to cease-and-desist, censure, and approximately $476,000 in combined disgorgement and civil penalties. A Fair Fund returned fees to harmed clients. The SEC distribution page remains active. The lesson: even an adviser with a real business can make material misrepresentations in its brochure.

Registered RIA vs. Exempt Reporting Adviser

Not every adviser on IAPD is a fully registered RIA. Exempt Reporting Advisers file only a truncated Part 1A and are not required to file a Part 2A Brochure. ERAs typically manage venture capital or private equity funds under Rule 203(m)-1 or the venture capital fund adviser exemption. Many fund managers in the AIN audience operate in this space. When you search an ERA on IAPD, you will see Part 1A data and any reported disciplinary events, but no client brochure. Your due diligence for an ERA requires direct document requests: the private placement memorandum, the limited partnership agreement, and audited financials. Knowing whether you're looking at an ERA or a full RIA takes thirty seconds on IAPD and changes your entire due diligence checklist.

Red Flags Before You Invest

AUM on marketing materials doesn't match what they've certified in their most recent Form ADV Part 1A. Disciplinary events in any item that the adviser hasn't proactively explained. Missing or stale Part 2A, over 14 months old. State registration inconsistencies: advisers with under $100 million in regulatory AUM are generally required to register with state regulators rather than the SEC. An adviser claiming SEC registration without the AUM to support it may be registered improperly.

Pull the form before your first serious meeting. Download it, date-stamp it, keep it with your investment files. If the adviser's story changes between the pitch and the paperwork, you have a document that proves it. That five-minute search is the cheapest due diligence tool available to any investor.

Author Disclosure: Jeff Barnes, MBA has no personal position in any company, fund, or platform named in this article. Angel Investors Network has no current commercial relationship with any party mentioned. AIN provides marketing and education services, not investment advice. Past performance does not guarantee future results. All investments involve risk, including loss of principal.