NASAA Series 63Communication with Customers and ProspectsHard
An investment adviser representative (IAR) is preparing a client brochure (Form ADV Part 2A and 2B). Which of the following pieces of information is NOT typically required to be included in this brochure?
- AThe types of services offered and fees charged.
- BThe advisory firm's investment strategies and methods of analysis.
- CThe disciplinary history of the IAR and the firm.
- DThe IAR's personal net worth and credit score.
Show answer & explanationAnswer & explanation
Correct answer: D. The IAR's personal net worth and credit score.
Form ADV Part 2 (the 'brochure') requires extensive disclosure about the advisory firm and its personnel, including disciplinary history, services, fees, and investment strategies. However, an IAR's personal financial details like net worth or credit score are private and not required to be disclosed in the client brochure.
Why the other options are wrong
- A. Services and fees are core information clients need to understand the relationship.
- B. Investment strategies and methods of analysis are crucial for clients to understand the firm's approach.
- C. Disciplinary history is a mandatory disclosure for transparency.
Form ADV Part 2 Disclosure
The client brochure (Form ADV Part 2) provides detailed information about an investment adviser's business practices, fees, conflicts of interest, and personnel, enabling clients to make informed decisions.
- Includes Part 2A (firm brochure) and Part 2B (brochure supplement).
- Mandatory initial and annual delivery to clients.
- Covers fees, services, disciplinary history, investment strategies.
Memory trick: ADV Part 2: Disclose firm's fees, staff, strategies, and any past woes, but keep personal finances close.