Should there be a specific disclosure within the Form ADV if a registered investment adviser pays a referral fee to a third-party solicitor?
Yes, if a registered investment adviser firm pays a third-party solicitor for referrals, there are several disclosures that need to be made in the Form ADV. The number of third-party solicitors used by the registered investment adviser needs to be indicated in response to Item 5.B(3) of the Form ADV Part. In response to Item 1.D of the Form ADV Part II, a disclosure outlining the solicitor program will need to be included in the Schedule F by the registered investment adviser utilizing third-party solicitors. Finally, Item 13.B of the Form ADV Part II will need to be marked affirmatively by the registered investment adviser receiving referrals, and correspondingly, there must be a disclosure about the solicitor compensation within the Schedule F. If your investment advisor would like more information or assistance in developing appropriate disclosures and supervisory procedures for your solicitor arrangements, please contact RIA Compliance Consultants at 877-345-4034.
Related Questions
- Is a solicitor required to provide a client with a separate written solicitor disclosure when the registered investment adviser firm gives impersonal advisory services?
- What are the basic regulatory requirements for a solicitor referral arrangement between an SEC registered investment adviser and a third-party (non-employee)?
- Can the third-party solicitor’s referral fee be paid from the investment advisory fee charged by the registered investment adviser?
