What is 174 pages, calls for two sub-parts, one part calling for 18 different disclosures, and will take firms 15 to 60 hours to complete with cost estimates ranging from $3,000 to $10,000?

Clarity vs. confusion with Form ADV-2

It’s nothing less than the Securities and Exchange Commission’s Form ADV Part 2.

Emerging from the confusion surrounding the new rule, two things are certain:

• Both state-registered and SEC registered advisors will have to fill out the new ADV form Part 2
• The form is no longer a check-the-box exercise and requires strict adherence to a plain English standard

Tripping over the details

Yes, Part 2A requires narrative brochures about an advisory firm and Part 2B requires brochure supplements containing information about certain supervised persons. How is all of this supposed to be written in plain English under such a short deadline?

Though challenging, there are several sources available for guidance. Readers of RIABiz can access recent articles by Brooke Southall and Les Abromovitz, which provide practical suggestions on how one should handle various aspects of the New Form ADV Part Two.

Investment News reporter Lisa Shidler addressed RIA concerns in her article “New Form ADV-2 adding costs, confusion” detailing important sources of advisor frustrations.

Looking for answers

Advisors have a chance to listen to an overview of the new Form ADV Part 2 sponsored by Huntington Asset Services on December 1, 2010.  The webinar will include a discussion of plain English, as well as practical drafting tips, and delivery, filing and updating requirements. The webinar is available at no cost.

Although fraught with challenge, a well-written brochure can also become an effective and compliant marketing tool to serve as the foundation for a firm’s future marketing initiatives. That is why advisors should learn as much as they can about the ADV Part 2 requirements and seek out trusted experts for assistance. Financial writers like John Drachman and others have extensive experience in crafting plain English narratives for an RIA’s products and services.

Also, to facilitate and guide the discussions about the new rule, DBJ Associates recently launched RIA Forum on SEC Form ADV Part 2. Interested readers are invited to join the group and weigh in.

Confronted with the shock of the new, it’s only natural for large organizations to trust that yesterday’s strategies will continue to work a little longer.

Social media raises awareness cost-effectively

However, after FINRA-1006 was released last spring, the regulatory guidelines that govern social networking policy for the investment industry leveled the playing field for everyone. As a number of the nation’s leading firms adopt a slow, but steady approach to social media strategies, the time may right for other firms to take the initiative.

For example, recent data from marketing firm LederMark Communications underscores the growing popularity of these tools among financial services professionals:

• 85% of those under 50 use social media
• 50% of those over 50 use these cost-effective tools
• Up to 40% of all users say that social media strategies are helping them build new business

Research from Spectrem Consulting Group last spring delivered similar findings:

• 63% of Twitter users read tweets that offer financial advice
• 46% of YouTube users and 41% of Facebook users seek information from social networking investment forums

A number of investment service providers and publications have been tackling the implications of the social media question. Recently, Spectrem Group and Financial Advisor Magazine sponsored a conference that identified a wide range of issues affecting advisors and investors in the shifting wealth management landscape.

Unified Fund Services, Inc., a subsidiary of Huntington Bank, which is based in Columbus, OH, announced its sponsorship of a webinar for financial advisors and fund marketers on August 3, called “Using Social Media.”

In addition to offering some practical guidance on how to use social media, the webinar also intends to feature insights on regulatory trends and archiving solutions.

“Using Social Media” is designed to alert up-and-coming money managers and financial advisors to the advantages of implementing low-cost social media marketing programs.

Interested investment industry professionals are invited to participate in Unified’s “Using Social Media” webinar by registering here.

Unified will continue to expand its social media marketing focus during its annual client meeting to be held September 12-13.

Personally, I think firms providing timely and accurate portfolio information, articles of interest and thought leadership pieces versus market commentary will distinguish themselves from the rest.