Hi, My Name Is…

The Frank Dodd financial reform recently passed into law has a lot of Wall Street rushing to make an important deadline– publishing their new ‘Welcome Brochure’ aka SEC ADV form part 2B. It seems some on the street are miffed, too, because under the new rules the welcome kit must also include any disciplinary actions.

From Registered Rep:

The SEC last year decided to recast its Form ADV by adding a Part 2B, a disclosure supplement to the document that advisors currently provide to clients which includes information on services and fees. Among other things, Part 2B must explain, in plain English, the advisor’s educational background and business history, other business activities, supervision, and any material disciplinary history (certain state-registered advisors also must disclose awards in certain arbitration or civil cases, and bankruptcy filings.)

For some, that’s a problem. It will probably spell the end for other Advisors too.

Part 2B is not sitting well with some advisors. A Morgan Stanley Smith Barney advisor told Registered Rep. this week that the company let him know on Tuesday it was including advisor disciplinary history in “welcome packets” to clients with managed accounts. “All of us have written complaints that never go anywhere,” he said. He called it an “invasion of privacy” and predicted it would erode client confidence in an advisor. He didn’t understand why the firm didn’t just refer clients to their CRD filings, which can be found at the SEC’s website.

Like with anything new, some good people are going to get hurt as a result, but overall this is a big win for the individual investor. If your Advisor is really an Adviser, you should be getting your welcome brochure soon– even as an existing client. Ask for it, if you don’t.


Source: New SEC Disclosure Rules Dismay Some Advisors; Advisor Disciplinary Histories in Welcome PacketsRegistered Rep

Related:  Advisor or Adviser?

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