Form ADV Part 2A is an investment adviser firm's brochure: a plain-English document, in a set order of 18 items, that explains the firm's services, fees, conflicts of interest and disciplinary history.
The items include Advisory Business (Item 4), Fees and Compensation (Item 5), Types of Clients (Item 7), Disciplinary Information (Item 9), Other Financial Industry Activities and Affiliations (Item 10) and Client Referrals and Other Compensation (Item 14). The headings must appear in the same order in every brochure, so you can find the same section at any firm.
A firm must give you its brochure before or when you sign an advisory agreement. Each year, within 120 days of the end of its fiscal year, it must give clients either an updated brochure or a summary of material changes with an offer of the full brochure.
Three items answer most questions about how a firm is paid. Item 5 holds the fee schedule, including breakpoints and whether fees are billed in advance or taken from your account. Item 10 discloses ties to broker-dealers, insurance companies and other financial businesses. Item 14 says whether anyone other than clients pays the firm, and whether the firm pays anyone for referrals.
How to check
Search the firm on the SEC's Investment Adviser Public Disclosure site and open its Part 2 brochures. SEC-registered and state-registered firms both file the brochure, so it should be there for any registered adviser.
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