Is your Form ADV Part 2 still compliant with the fiduciary duty?

Today’s registered investment advisor (RIA) operates under a constantly intensifying spotlight. At the heart of this scrutiny is the fiduciary duty, which mandates that you act solely in your client’s best interest and meet both your duty of care and duty of loyalty. While this principle seems clear, demonstrating continuous adherence to SEC guidance is far more complex than a simple annual filing.

The regulatory challenge isn’t just about disclosure—it’s about the verifiable management of potential conflicts. For the SEC, the quickest path to regulatory scrutiny often runs directly through two areas: Form ADV Part 2 disclosures and conflict-of-interest management.

Why Form ADV Part 2 Is An SEC Target

Your Form ADV Part 2 is the central public promise your firm makes regarding its operations, compensation, and relationship with clients. When the SEC reviews this document, it is looking for transparency regarding all potential conflicts, including those related to:

• Economic Incentives: any compensation structures, fee arrangements, or sales contests that could incentivize staff to choose a less suitable option for the client.
• Outside Business Activities (OBAs) & Affiliated Transactions: disclosures covering income or interests from sources outside the direct client relationship.
• Mitigation Documentation: the internal processes, systems, and controls that you use to evidence that you’re actively mitigating every conflict you’ve disclosed.

Simply updating the disclosure language is no longer enough. The regulatory expectation has shifted: you must have a demonstrable, continuous process that proves adherence to the fiduciary standard, day after day.

AdvisorLaw understands that managing compliance requires deep legal and regulatory insight. Our compliance services are built to address the continuous nature of the fiduciary challenge.

We help your firm quickly audit and refine the most vulnerable aspects of your practice so that your compliance is more than defensible—it’s strategically sound.

1. Conflict Inventory Audit: We help you to assess all of your firm’s economic incentives and identify all potential conflicts, even those hidden within complex structures.
2. ADV Part 2 Refinement: We meticulously review and refine the language in your Form ADV Part 2 to maintain clarity, compliance, and consistency with current SEC expectations.
3. Documentation & Mitigation: We help you establish the internal processes and documentation required to demonstrate the continuous mitigation of all identified conflicts.

Is your current conflict management framework up to the SEC’s evolving expectations? 

Schedule a 15-minute call with our team to benchmark your current conflict management framework against SEC expectations.