Record Retention & Brochure Delivery

🔑 Numbers & deadlines

Scope of this chapter

• Most of this chapter covers post-registration obligations for state-registered advisers. The rules are virtually identical for federal-covered advisers.
• ⚠️ There’s one exception: brochure delivery requirements (see the SEC sidenote below).

Once an investment adviser achieves effective registration, the adviser is legally permitted to operate. To keep that registration in good standing, the adviser must meet several ongoing obligations:

• Record retention
• Brochure delivery
• Brochure updates
• Custody rules
• Registration withdrawal

Record retention

The Uniform Securities Act (USA) imposes a recordkeeping requirement on investment advisers similar to broker-dealers.

“Every registered broker-dealer and investment adviser shall make and keep such accounts, correspondence, memoranda, papers, books, and other records as the [Administrator] prescribes by rule or order”

🔑 Retention comparison

Brochure delivery

Form ADV Part 2 consists of the brochure (Part 2A) and the brochure supplement (Part 2B).

The general NASAA requirement

“Unless otherwise provided in this rule, an investment adviser… shall… furnish each advisory client and prospective advisory client with a written disclosure statement which may be a copy of Part II of its Form ADV or written documents containing at least the information then so required by Part II of Form ADV, or such other information as the [Administrator] may require.

In other words, the adviser must deliver the brochure and brochure supplement to:

• Every client, and
• Every prospective client (someone the adviser is trying to bring on as a client)

🔑 Timing of delivery (state)

An investment adviser… shall deliver the [brochure]… to an advisory client or prospective advisory client:

• Not less than 48 hours prior to entering into any investment advisory contract with such client or prospective client; or
• At the time of entering into any such contract, if the advisory client has a right to terminate the contract without penalty within five business days after entering into the contract.

Textbook example: A prospective client comes to your office on a Friday to ask about your firm’s advisory services. After discussing your services, you give the prospective client the brochure. The prospective client wants time to think and doesn’t sign right away. On Monday, the client returns and signs the advisory contract.

• The brochure was delivered on Friday.
• The contract was signed on Monday.
• That’s at least 48 hours before the contract, so the adviser has met the first delivery option.

Change one fact: the client wants to sign the contract on Friday. If the client can’t have the brochure for at least 48 hours before signing, the adviser can still comply by using the second option:

• Deliver the brochure at the time of signing, and
• Give the client a five-business-day “free look” period to terminate the contract without penalty

Sidenote — Brochure delivery for SEC advisers

• Federal-covered advisers are required by the Investment Advisers Act of 1940 to deliver the brochure at or prior to contract signing.
• ⚠️ There’s no 48-hour preview requirement and no five-business-day “free look” requirement for SEC advisers.

Method of delivery

• The brochure and brochure supplement may be delivered physically or electronically.
• Electronic delivery requires client consent and verification that the client can access the document.
• The brochure is also publicly available through the Investment Adviser Public Disclosure (IAPD) website.

🔑 Two exceptions to brochure delivery

The delivery of the [brochure and brochure supplement] need not be made in connection with entering into:

• An investment company contract; or
• A contract for impersonal advisory services requiring payment of less than [$500]

Impersonal advisory services are defined as:

• Statements which do not purport to meet the objectives or needs of specific individuals or accounts
• Through the issuance of statistical information containing no expression of opinion as to the investment merits of a particular security
• Any combination of the foregoing services.

In plain English, impersonal advisory services don’t provide tailored recommendations to specific individuals.

Brochure updates

Investment advisers must keep their brochure current:

• Updating it when material changes occur, and
• Filing an annual update with regulators and providing an annual update to clients

NASAA summarizes the timing on its FAQ page:

When must Form ADV be amended?

A firm should file the annual updating amendment within 90 days of the close of its fiscal year (e.g., by March 31st for firms on a calendar-year basis). The firm should update information that has changed, including recalculating regulatory assets under management. During the year, if there are material changes to the information on the Form ADV, the firm should do an “other-than-annual” amendment within 30 days of the change. State regulators can answer questions about whether a change is deemed material.

🔑 Update deadlines

The annual amendment includes changes such as:

• New states where the adviser is registered
• Changes to the adviser’s investment philosophy
• Updated assets under management (which helps determine whether the adviser should be registered with the state or the SEC as a federal-covered adviser)

📌 NASAA doesn’t give a single fixed definition of “material,” but the idea is any significant change that regulators and/or clients should know about. Examples include:

• Criminal or civil enforcements
• Regulatory actions by the SEC or a state administrator
• Substantial changes to the business

Custody

Definitions

NASAA expansion — what else counts as custody

🔑 Obligations when an adviser takes custody

Investment advisers often use unaffiliated broker-dealers to maintain custody on their behalf. Although uncommon, an adviser may take custody directly (or through an affiliated business). If the adviser takes custody, these obligations apply:

Surprise audit outcomes

Registration withdrawal

• Investment advisers can operate indefinitely as long as they maintain registration, follow applicable rules, and operate ethically.
• Advisers do shut down for many reasons (for example, retirement or an inability to attract enough clients). When an adviser withdraws, the adviser must notify the state administrator.

If the adviser engaged in unethical or improper conduct before withdrawing, the administrator may suspend or revoke the adviser’s registration. Two practical effects:

• The disciplinary action becomes public.
• It can make it difficult for the adviser to re-enter the industry later.

Key points

Post-registration obligations for investment advisers

• Must maintain records of:
  • Accounts
  • Correspondence
  • Memoranda
  • Books and records
  • Any other record required by the administrator
• 5-year record maintenance requirement
• Most recent 2 years must be readily available
• Records may be maintained through:
  • Paper or hard copy
  • Micrographic media
  • Digital storage

Brochure delivery

• Clients of state advisers must be provided:
  • 48 hours prior to contract signing, or
  • Allow a 5-day “free look window”
• Clients of SEC advisers must be provided:
  • At or prior to contract signing

Brochure updates

• Material changes require a prompt update
• Annual updates
  • Required to be filed with administrator within 90 days of fiscal year end
  • Updated brochure sent to clients within 120 days of fiscal year end

When advisers take custody

• Must confirm state administrator allows custody
• Notify the state administrator
• Place funds with a qualified custodian
• Provide quarterly statements
• Annual surprise audit is conducted

Registration withdrawal

• Form ADV-W filed
• Takes effect 30 days after filing
• Disciplinary proceedings may take place up to 1 year after withdrawal

Sources

Primary/official references for the material in this chapter. Every link was fetched and returned HTTP 200 on 2026-08-15.