Client Disclosures

Client Disclosures

Regulatory status current as of June 2026 — verify effective dates, dollar thresholds, and pending rulemakings against current SEC/FINRA/FinCEN sources before advising.

Core Concepts

Form ADV Part 1

Filed electronically via IARD (Investment Adviser Registration Depository). Contains:

• Registration information (SEC, states)
• Form of organization, control persons, and ownership
• Disciplinary history (criminal, regulatory, civil)
• Other business activities and financial industry affiliations
• Custody of client assets
• Participation in client transactions
• AUM and number of clients

Part 1 is publicly available through the SEC's Investment Adviser Public Disclosure (IAPD) website. It is not delivered to clients but is a regulatory filing that must be kept current (annual updating amendment within 90 days of fiscal year end, interim amendments for material changes).

Form ADV Part 2A (Firm Brochure)

The primary disclosure document for RIAs. Must contain 18 items:

1. Cover page
2. Material changes summary (annual update)
3. Table of contents
4. Advisory business description
5. Fees and compensation (see fee-disclosure skill)
6. Performance-based fees (if applicable)
7. Types of clients
8. Methods of analysis, investment strategies, and risk of loss
9. Disciplinary information
10. Other financial industry activities and affiliations
11. Code of ethics, participation in client transactions, personal trading
12. Brokerage practices (best execution, soft dollars, directed brokerage)
13. Review of accounts (frequency, triggers, reviewer qualifications)
14. Client referrals and other compensation
15. Custody
16. Investment discretion
17. Voting client securities (proxy voting)
18. Financial information (balance sheet if prepaid fees or custody)

Delivery requirements: Initial delivery to prospective clients before or at the time of entering the advisory contract. Annual offer to deliver updated brochure (or delivery of a summary of material changes with an offer to provide the full brochure) within 120 days of fiscal year end. Interim delivery required for material changes that clients should know about.

Form ADV Part 2B (Brochure Supplement)

Provides information about specific supervised persons who provide investment advice:

• Educational background and business experience
• Disciplinary information
• Other business activities
• Additional compensation (from non-clients)
• Supervision structure

Delivered to clients before or at the time the supervised person begins providing advice. Updated for material changes.

Form CRS (Client Relationship Summary)

Required for both RIAs and BDs. Maximum 2 pages (4 for dual registrants). Must follow SEC-prescribed format with specific headings and conversation starters:

Required sections:

1. Introduction — firm name, registration status (IA, BD, or both), statement that brokerage and advisory services differ
2. Relationships and Services — description of principal services, monitoring, investment authority, limited product offerings, account minimums
3. Fees, Costs, Conflicts, and Standard of Conduct — principal fees, other costs, conflicts, applicable standard of conduct (Reg BI for BDs, fiduciary for IAs)
4. Disciplinary History — yes/no question with link to Investor.gov
5. Additional Information — how to find more information, who to contact

Delivery timing:

• Before or at the earliest of: (a) entering an advisory or brokerage agreement, (b) opening an account, or (c) making a recommendation of account type, security, or investment strategy
• When opening a new account that is different from existing accounts
• When recommending a rollover from a retirement account
• Upon request
• File with SEC via IARD/CRD

Prospectus and SAI Delivery

Mutual funds: Summary prospectus must be delivered at or before the time of sale (point of sale delivery). The summary prospectus must provide access to the full statutory prospectus and SAI (online or upon request).

ETFs: No point-of-sale prospectus delivery is required for exchange-traded transactions (SEC Rule 498). However, the prospectus must be available online, and a paper copy must be delivered upon request within 3 business days.

New issues (IPOs): Prospectus must be delivered before or with the confirmation of sale.

Statement of Additional Information (SAI): Not routinely delivered but must be available upon request. Contains additional detail on investment policies, portfolio turnover, taxation, financial statements, and fund governance.

Regulation S-P (Privacy Notices and Breach Notification)

Regulation S-P (17 CFR Part 248) requires financial institutions to protect customer nonpublic personal information (NPI):

• Initial privacy notice — delivered at account opening; describes information collected, information shared, opt-out rights, and security practices
• Annual privacy notice — historically required annually; the FAST Act (2015) created an exception: firms with unchanged privacy practices that do not share NPI (other than with permitted exceptions) may post privacy notices online instead of mailing them annually
• Opt-out notice — if the firm shares NPI with nonaffiliated third parties (beyond permitted exceptions), customers must be given a reasonable opportunity to opt out before sharing
• Safeguards rule — requires written policies and procedures to protect customer information, including administrative, technical, and physical safeguards
• Breach notification (2024 amendments) — the May 2024 Reg S-P amendments added a required written incident response program and a customer breach-notification obligation: affected individuals must be notified as soon as practicable, and no later than 30 days after the firm becomes aware that sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization (compliance dates: December 3, 2025 for larger entities; June 3, 2026 for smaller entities). Breach notices are now part of the firm's required client-disclosure inventory — see the privacy-data-security skill for program design

Trade Confirmations

SEC Rule 10b-10 requires broker-dealers to send trade confirmations to customers at or before completion of each transaction:

Required content:

• Date of transaction
• Identity, price, and number of shares or units
• Whether the firm acted as principal or agent
• If agent: commission and source of commission
• If principal: markup/markdown (for certain transactions)
• Market where the transaction was effected
• Accrued interest (for fixed income)
• Settlement date

Timing: At or before the completion of the transaction. For most equity transactions, this means at or before T+1 settlement.

Account Statements

FINRA Rule 2231 governs customer account statements:

• Frequency: At least quarterly for accounts with activity or positions; at least annually for accounts with positions but no activity in the quarter
• Content: Account positions, market values, account activity during the period, balances
• Valuations: Securities must be valued at current market prices or, if unavailable, at estimated fair value with appropriate disclaimers
• Direct mailing: Must be sent directly to the customer address of record (or electronic delivery address); may not be routed through the registered representative

Proxy Voting Disclosure

SEC Rule 206(4)-6 requires registered investment advisers that exercise proxy voting authority to:

• Adopt written proxy voting policies and procedures
• Disclose to clients how they can obtain information about proxy voting policies and how votes were cast
• Maintain records of proxy voting (at least 5 years from the end of the fiscal year in which the record was created)

Electronic Delivery

SEC guidance permits electronic delivery of disclosure documents if:

• Consent: The customer affirmatively consents to electronic delivery (for certain documents) or the firm ensures actual receipt (e.g., via email with access confirmation)
• Access equals delivery: For prospectuses and certain other documents, making the document available on a website with notice to the customer may satisfy delivery requirements
• Format: Documents must be delivered in a format the customer can access, read, and retain
• Paper backup: Customers must retain the right to request paper delivery at any time

Firms must maintain records of electronic delivery consent and have systems to track document access.

Delivery Timing Summary