Staying compliant with SEC and state regulations is critical for investment advisors serving retail clients. One of the most important annual obligations is the annual disclosure offer, a requirement under Form ADV regulations. Failure to meet these obligations can lead to regulatory scrutiny, fines, and reputational damage.
In this blog, we break down the key steps to ensure you're meeting the annual disclosure requirements set forth by the Securities and Exchange Commission (SEC) and applicable state regulators.
What Is the Annual Disclosure Offer?
Under SEC Rule 204-3 (the “brochure rule”) of the Investment Advisers Act of 1940, registered investment advisors (RIAs) must deliver or offer in writing a summary of material changes and a copy of their updated Form ADV Part 2A and 2B to each client on an annual basis.
This requirement ensures clients stay informed about any significant changes in your business, services, or fees that could affect their relationship with your firm.
Step-by-Step Guide to Comply with Annual Disclosure Offer Requirements
1. Determine Your Filing Timeline
SEC-registered investment advisors must submit an updated Form ADV annually within 90 days of the end of your fiscal year—typically March 31 if your fiscal year ends December 31. Some state regulators have similar or slightly different deadlines, so be sure to confirm applicable rules in your jurisdiction.
🔍 SEO Tip: Keywords like “SEC Form ADV filing deadline” and “annual ADV update requirements” can boost your visibility.
2. Review and Update Form ADV Parts 1, 2A, and 2B
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Part 1 is filed electronically via the Investment Adviser Registration Depository (IARD).
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Part 2A (the Brochure) and Part 2B (Brochure Supplements) must be written in plain English and disclose key information, including:
3. Prepare a Summary of Material Changes
You must include a "Summary of Material Changes" section at the beginning of your updated ADV Part 2A. This summary should clearly explain any changes to:
4. Deliver or Offer the Updated ADV to Clients
You have two delivery options:
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Actual Delivery: Send the full ADV Part 2A and 2B to each client. Include: Privacy Policy, Code of ethics, or BCP offer.
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Offer Letter: Send a written offer to deliver the updated brochures upon request, along with instructions on how to request or access them (e.g., via your website or client portal).
The delivery or offer must be made within 120 days after the end of your fiscal year (e.g. April 30th)
📩 Pro Tip: Electronic delivery is allowed if the client has consented to it in advance.
5. Maintain Proof of Delivery or Offer
Document your compliance by maintaining:
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A copy of the delivery or offer letter
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A list of recipients and delivery method (email, portal, mail)
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Dates of delivery
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A record of any client requests and the brochures sent in response
This documentation should be kept for at least five years in accordance with SEC Rule 204-2 or similar state rules (the “books and records rule”).
6. Monitor for State-Specific Requirements
If you’re also registered with one or more states, confirm if they require:
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Delivery rather than offer (some states do not allow an offer-only approach)
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ADV delivery timelines different from the SEC’s
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Additional disclosure elements unique to their jurisdiction
Final Thoughts: Stay Ahead of Compliance
Staying compliant with SEC and state annual disclosure requirements is more than a regulatory checkbox—it’s an essential step in building trust with your retail clients.
By following these six steps, investment advisors can confidently meet their disclosure obligations while demonstrating transparency and professionalism.
Need help managing your compliance calendar or delivering your annual disclosures? Contact us to learn how our compliance support services can keep your firm in line with SEC and state regulations.