Before Hiring an Advisor, Check Item 11 on Their ADV

March 30^th was an important date for investment firms like BeManaged. Each year, we are required to file what is called a Form ADV. According to the SEC:

Before you hire someone to be your investment adviser, always ask for, and read carefully, both parts of the adviser's Form ADV. You can find a copy of an investment adviser's most recent Form ADV on the IAPD website. Most state-registered advisers file Form ADV electronically and their Form ADV (Part 1) filings also are available on IAPD.

Item 11 of Form ADV is labeled the “Criminal Disclosure Reporting Page”. The SEC describes this as follows:

In this Item, we ask for information about your disciplinary history and the disciplinary history of all your advisory affiliates. We use this information to determine whether to grant your application for registration, to decide whether to revoke your registration or to place limitations on your activities as an investment adviser, and to identify potential problem areas to focus on during our on-site examinations. One event may result in "yes" answers to more than one of the questions below.

You have to do your research! Before you make critical, long term decisions about your retirement assets, you have to examine documents like the ADV. For example, if you were to create of PDF of the Criminal Disclosure Reporting Page for a very popular national firm you will end up with 161 pages (no, that is not a typo). The PDF size for a company with no disciplinary disclosures (like BeManaged) is only five pages.

You can find both parts of the Form ADV for investment firms at http://www.adviserinfo.sec.gov/IAPD/Default.aspx.