Dan Shaw at Financial Planning reported on the Investment Adviser Association's finding that the data points an adviser must submit in the annual Form ADV filing have nearly doubled over 15 years to more than 1,000. The IAA is hoping a shifting SEC agenda will trim it. Dan asked me what the burden looks like from inside a small firm.
The trouble with heavy reporting requirements is that they detract from time with clients. One of my clients recently asked why his quarterly meeting had seemed rushed. The honest answer was that I had spent two mornings that week on regulatory filings that had nothing to do with his portfolio. That is the real cost: not the compliance staff or the software, but the hours that come out of the work clients are actually paying for.
I also said it is sometimes hard to discern why the SEC wants certain types of information. If the goal is to protect investors, it is not always apparent how all of the questions on Form ADV further it. Some clearly do. Fee disclosure, conflicts, disciplinary history: clients should see those. Much of the rest reads like data collection for its own sake.
I am not arguing for less oversight. I am arguing for oversight that asks for what it will use. Every question that does not protect a client is an hour that could have.
Read the full article at Financial Planning →
