Real world example of Form ADV Part 2B (Series 63, 65, 66)

Tyler York

Form ADV Part 2B is a key form that investment advisers use to make disclosures to government agencies. It can be hard to fully appreciate Form ADV Part 2B without context, so in this video, we walk you through a real world example of Form ADV Part 2B. This should help you in preparing for the Series 63, 65, and 66 exams.

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Full Real world example of Form ADV Part 2B (Series 63, 65, 66) video transcript:

Let's take a look at a Realworld version of Form ADV Part 2B, also known as the Brochure Supplement, so that we can better understand what these actually look like and to build some context to make it a little easier to remember this material for the exam. Earlier in this achievable chapter, we took a look at Intelligent Investing's Form ADV Part 2 way, also known as the Brochure, and now we're going to look at their brochure supplement. Intelligent Investing is a one person investment advisor firm out of Loveland Co.
Rado, we're only going to see one person named in this brochure supplement because of the status of the company. It's just one person again. All right, let's go ahead and put it up on the screen. Here's the title page. Not too much information here. Just gives Brian Joyce's name, who is the individual who runs this business, and the fact that he's an investment advisor representative for intelligent investing. Let's go ahead and move on from this to dive a little bit further in. Item 2 is educational background and business experience. We have Brian's information at the top of this.
But let's dive into the education. Education background is something that is disclosed by investment advisor representatives on this form. Looks like Brian obtained a degree in Accounting and Information Systems Accounting from the University of Massachusetts in 2001. Cool. We have his educational background. Beyond that, it also goes into designations and the first one is a really common designation in the securities field that is a CFP, also known as a Certified Financial Planner designation, although the CFP is not required to work in this part of the industry.
A lot of investment advisor representatives obtain the CFP to add another layer of legitimacy to what they do. It's not an easy thing to get. There's a lot of studying. Usually takes at least a year if not longer to go through the process of the CFP to take a bunch of classes, pass a bunch of tests. But once you get through that process, you can utilize this as a designation. Say, hey, I'm a certified financial planner. If we go on to the next page, Brian is also A/C, PA. He's a certified public accountant.
This is another tough designation to obtain and basically this allows Brian to act as an accountant. His second designation he lists out here underneath the CPA stuff. Here we see business background and it looks like he's worked for two firms in the past. In 2005 he was a financial planner for High Site LLC and that looks like that lasted until early 2017 and around early 2017 it seems like he founded Intelligent Investing himself. He is not only a managing member, but the Chief Compliance Officer. So basically he runs the business he.
Also make sure it's compliant with all relevant securities rules and regulations. That's a big job to fill, but he does basically both roles, gives advice and make sure he's compliant with laws and regulations. Item number 3 here, which starts in the bottom of one page and ends at the top of the following page is disciplinary information. This would be any criminal, any civil or any regulatory events where there was some kind of ruling against him that would be required to disclose to his clients. But good news for Brian.
He has no history of any kind of disciplinary actions and he puts that there. Hey, there are no legal or disciplinary events that are material to the client or prospective clients. Evaluation of the advisory business. Item 4 is other business activities or what we a lot of times call in the industry OBA's. This would be any instance of the investment advisor representative making money, typically through a form of employment that is not related to the securities firm. So for example, if I drive Uber on the weekend, I would have to list that in my Oba.
Section on the brochure supplement. Now Brian is an accountant and yes that's kind of related to giving financial advice. But technically accounting is just a different part of finance and this is another way that he makes income outside of just giving advice on securities. And also he discloses this is a potential conflict of interest. If he is giving investment advice, he might have the incentive to recommend his accounting services alongside that investment advice which may or may not be in the best interest of the client. I'm.
Sure it is, but it's important for him to disclose that and vice versa. If he's doing your taxes and he starts recommending his financial planning services to you, that also provides him an incentive to make recommendations that might put extra money in his pocket and possibly isn't in the clients best interest. But the point is he's disclosing this, letting you know, hey, I do accounting and sometimes I might recommend you to my tax preparation services. As long as those conflicts of interest are disclosed, we're good to go. For the most part. Item number 5, which is additional compensation, would be.
Any instance of receiving money other than just from your clients for the services you provide them. For example, if I recommend Oppenheimer Funds to my clients, and Oh yeah, by the way, on the side Oppenheimer is paying me to recommend their funds to my clients, that would be a form of additional compensation. Now Brian here discloses, hey, he doesn't receive any economic benefit from any person, company or organization other than intelligent investing in exchange for providing client advisory services. Another way of saying, hey, my.
Clients pay me to give them investment advice. I don't have any other third parties paying me behind the scenes that I need to let you know about. That of course would be a conflict of interest that must be disclosed, but hey, Brian doesn't have to disclose it because it doesn't exist in his practice. The last part of former DV, Part 2B that will at least point out here is a supervision section. That's item 6. And this just basically goes over who supervises Brian. Now the interesting thing is that he runs a one person business, so technically he can supervise himself, which I know.
Sounds a little funky, a little weird, but the reality is that he is responsible for making sure that he's compliant with the rules and regulations. If for whatever reason he's not following the proper rules or regulations, he could really get in double trouble. Not only as a supervisor and failing to supervise employees, but also as a representative potentially performing unethical actions. Of course, I'm not saying that there's anything happening behind the scenes. Seems like Brian runs a great ethical practice from what I can see, I have no endorsement for.
Or or against him? I just found his brochure randomly on the Investment Advisor Public Disclosure forum on the SE C's website and I just wanted to show you a real world example of what this looks like.
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