Brochure Rule

Table of Contents What Is the Brochure Rule? How the Brochure Rule Works What Is Included in the Brochure Who Should Receive a Brochure Special Considerations The U.S Securities and Exchange Commission specifies two ways in which an advisor can satisfy the brochure rule: 1) The advisor can provide such disclosure by giving the client Form ADV Part 2A (brochure) and Part 2B (brochure supplement). 2) The advisor can provide an actual brochure containing the same information found in Form ADV Part 2A and 2B. The document must include the following information: Background information of the advisor Services available and the fees for those services, including available discounts Disclosure of any compensation received from third parties (such as commissions or referral fees) Whether the advisor exercises discretion over client funds Types of clients for whom advisory services are provided, including any minimum dollar amount of assets to be managed Disclosure of any affiliation with a broker-dealer Any material legal or disciplinary action that has occurred within the past 10 years Any financial condition of the advisor (such as bankruptcy) that might impair its ability to meet client commitments must also be disclosed if the advisor: Has discretion over client accounts Has custody of client money or securities Requires prepayment of more than $500 in fees, more than six months in advance SEC-registered advisors are not required to deliver a brochure to either (i) clients that are SEC-registered investment companies or business development companies; or (ii) clients who receive only impersonal investment advice from the advisor and who will pay the advisor less than $500 per year. An SEC-registered advisor is not required to deliver a brochure supplement to a client (i) to whom it is not required to deliver a brochure, (ii) who receives only impersonal investment advice, or to (iii) certain officers and employees of the advisor itself. The brochure rule is a requirement under the Investment Advisers Act of 1940 that requires investment advisors to provide a written disclosure statement to their clients.