Most people who hire a financial advisor sign the agreement without reading the advisor's Form ADV. The document is freely available, regulator-mandated, and packed with the kind of operational and conflict-of-interest information that almost everyone wants but few think to look up. This is a guide to what is in the Form ADV, where to find it, and what to clarify with the advisor before you sign.
Nothing in this article is investment, tax, legal, or financial planning advice. It is an educational walkthrough of a public disclosure document and the kinds of questions reading it tends to prompt. Real decisions about advisors and any advice they provide belong in conversations with the advisor themselves and with the professionals (tax, legal, accounting) you may already work with.
What Form ADV is
Form ADV is the registration document that investment advisers file with the Securities and Exchange Commission (SEC) and with state regulators. Every investment adviser registered as an RIA (Registered Investment Adviser) has a current Form ADV on file. The form has several parts; each part discloses a different category of information.
The most accessible parts for non-specialist readers are Part 1, Part 2A (the firm brochure), and Part 2B (the brochure supplement for the individual advisor working with you). All three are publicly searchable through the SEC's Investment Adviser Public Disclosure (IAPD) database, which is the single most useful tool for advisor research most prospective clients do not know about.
Most advisors will hand you the brochure (Part 2A) during the engagement conversation. Many will not volunteer the supplement (Part 2B) for the specific advisor you would work with unless asked. Reading both is the baseline.
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Part 1: The factual disclosures
Form ADV Part 1 contains structured, fill-in-the-blank disclosures about the firm. Reading it gives you a quick scan of the operational profile. The sections most worth reviewing:
Business activities and types of clients. What does the firm actually do? Is it primarily an investment adviser, or does it also broker-deal, sell insurance, prepare taxes, or run other businesses? A firm that does many things has more potential conflicts of interest than a firm that does only investment advisory work. The disclosure does not say whether those conflicts are managed well; it says the conflicts exist.
Assets under management and number of clients. A firm with $50 million across 30 clients and a firm with $5 billion across 5,000 clients are very different operational realities. Neither is inherently better. The disclosure helps you understand the scale of the firm you are evaluating.
Disciplinary information. Part 1 includes any disciplinary disclosures: regulatory actions, civil judgments, criminal proceedings, customer complaints with arbitration or settlement, and similar items. A single old disclosure may be benign; a pattern is a topic for conversation. The Financial Industry Regulatory Authority also maintains BrokerCheck, a separate but related public database covering broker-dealer activity, and reading both can fill out the picture.
Other business activities of advisory personnel. Sometimes advisors also work as insurance agents, broker-dealer representatives, accountants, or attorneys. Each role can create a conflict of interest that should be disclosed and discussed. A common question to clarify: when the same person can sell you insurance and also advise you on asset allocation, how is that conflict managed inside the engagement?
Custody. Does the firm have custody of client assets, or does it use a third-party custodian? Most legitimate RIAs use a third-party custodian (such as a major brokerage); direct custody is more common in private fund management and carries different operational risk profiles. The disclosure tells you the structure; the conversation tells you the implications.
Part 2A: The firm brochure (the document you should read most carefully)
Part 2A is the narrative brochure the firm files. It is written in plain English (mostly) and is the most useful single document for understanding how the firm operates. The sections to read carefully:
Item 4: Advisory business. A description of what the firm does and the types of services it offers. Useful for confirming the firm actually does the kind of work you need (for example, comprehensive financial planning vs investment management only).
Item 5: Fees and compensation. How does the firm get paid? Common structures include asset-based fees (a percentage of assets under management), flat fees, hourly fees, performance-based fees, commissions, or some combination. The brochure also discloses any other compensation the firm receives, such as referral payments, 12b-1 fees, or revenue sharing. Read this section carefully; it is where the economics of the relationship live.
Item 6: Performance-based fees and side-by-side management. If applicable. Performance-based fees create different incentives than asset-based fees; both have their use cases and tradeoffs.
Item 7: Types of clients. The firm's typical client profile. A firm primarily serving institutional clients may have different processes and minimums than one serving individuals.
Item 8: Methods of analysis, investment strategies, and risk of loss. The firm's investment process and the risks involved. This is a regulatory section, so it tends toward boilerplate, but the specifics about analytical approach are worth reading.
Item 9: Disciplinary information. Same category as Part 1, but narrative form. Read both.
Item 10: Other financial industry activities and affiliations. Affiliations with broker-dealers, insurance companies, banks, or other regulated entities. Each affiliation can create incentives that influence advice. Worth understanding.
Item 11: Code of ethics, participation or interest in client transactions, and personal trading. How the firm manages situations where personnel might have personal financial interests that intersect with client portfolios.
Item 12: Brokerage practices. How the firm selects broker-dealers, whether it accepts soft-dollar arrangements (research and services in exchange for trading commissions), and how client commissions are negotiated.
Item 13: Review of accounts. How often, by whom, and with what process the firm reviews client accounts. Useful for understanding what ongoing service looks like.
Item 14: Client referrals and other compensation. Whether the firm pays for referrals, whether it receives compensation from non-client sources, and similar disclosures.
Item 15: Custody. Same category as Part 1, narrative form.
Item 17: Voting client securities. Whether the firm votes proxies for client positions.
Item 18: Financial information. Material financial conditions affecting the firm, if any.
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Part 2B: The brochure supplement
Part 2B is the supplement covering the specific individual advisors who would work with you. It includes their educational background, business experience, disciplinary information (if any), other business activities, and supervision structure.
Read the Part 2B for the actual person who would be your advisor, not just the founders or principals listed on the firm's website. The supplement tells you:
- The advisor's professional history, including past firms and roles.
- Any disciplinary actions specific to that individual.
- Any other business activities they conduct outside their advisory role.
- Who supervises them inside the firm and how.
For practical evaluation, this is often the most actionable single page in the whole Form ADV. The firm brochure tells you what the firm does; the supplement tells you who would actually be on your account.
Topics to clarify with the advisor after reading
Reading the Form ADV will surface specific questions worth raising with the advisor before signing:
- Any disciplinary disclosures: what happened, how was it resolved, what changed afterward?
- Compensation structure: how does the advisor get paid in this engagement specifically, including any non-fee compensation?
- Conflicts of interest: which ones from the disclosure apply to this client relationship, and how are they managed?
- Custody arrangements: who holds the assets, who has authority to move them, and what protections are in place?
- Service model: what does ongoing service look like, how often are reviews, who is the primary contact?
- Succession: what happens to the client relationship if the individual advisor leaves the firm or retires?
These are educational topics, not advice. They are the kind of conversation you would have once, before signing, to understand what you are committing to.
Where the supporting reading lives
For background on the regulatory framework and what each disclosure category means:
- The SEC's investor.gov is the consumer-facing portal with explainers on adviser registration and disclosure.
- The SEC's Investment Adviser Public Disclosure (IAPD) database lets you search for any registered adviser's current Form ADV.
- The FINRA BrokerCheck tool covers broker-dealer disclosure, which is parallel to but separate from RIA disclosure.
- Industry associations like the National Association of Personal Financial Advisors and the American Institute of Certified Public Accountants publish member directories with credential information that can complement Form ADV review.
Each of these resources is free and publicly accessible. None of them replace the conversation with the advisor; they inform it.
What this article does not do
This guide is intentionally limited in scope. It does not:
- Recommend any specific advisor or firm.
- Compare fee structures to suggest which is "better."
- Tell you whether any particular disclosure should be a dealbreaker.
- Provide investment, tax, legal, or financial planning advice.
Those decisions are personal, context-dependent, and properly made in conversation with the advisor candidate and with professionals you already work with. The article exists to help you read the public disclosure document well so you arrive at those conversations better prepared.
A short pre-meeting checklist
Before a discovery call or initial meeting with a prospective advisor:
- Look up the advisor on IAPD and download the current Form ADV.
- Read Part 1 to scan factual disclosures and any disciplinary history.
- Read Part 2A end to end, paying particular attention to fees (Item 5), conflicts (Items 10-11), brokerage (Item 12), and custody (Item 15).
- Read Part 2B for the specific individual who would be your advisor.
- Write down questions raised by the reading.
- Ask those questions in the meeting.
For the advisor-search side of this process, Capivise's advisor-matching service is one place to start. The companion educational pieces on what to clarify before engaging an advisor live in the questions to ask an advisor library, and the advisor verification page covers credential and regulatory verification specifically.
The bottom line
Form ADV is the most underused tool in advisor due diligence. It is public, free, machine-searchable, and dense with the kind of operational information that prospective clients almost always want but rarely seek out. Reading it before signing is an hour of work that turns the engagement conversation from a sales conversation into an informed conversation.
Nothing in the form will tell you whether the advisor is right for you. That is the conversation you have with them, with input from any other professionals you work with, and against the backdrop of your own situation. The form will help that conversation be specific and grounded, which is usually a better starting point than the smoothest pitch.
