The plain English ADV deadline passed yesterday. Are we better off? Compliance consultant Chris Winn has doubts.
I spoke with compliance consultant Chris Winn of AdvisorAssist today and he sounded like a happy man.
Having completed the writing of hundreds of plain English ADVs for RIAs, Winn is unburdened.
But with the candor that I've grown to respect over the last couple of years in working with Winn, he said the new ADV disclosure form devised by the SEC is no better than the old one for consumers and may actually be a step backwards.
"The Plain English ADV was a good idea in concept," says Winn, "but the old ADV could probably have been fixed with a few checkboxes and that might have been a better solution."
Winn says that the idea of making the key disclosure document offered by RIAs to consumers easier to read was a good one but in practice it does not work. he has doubts that more consumers will read the new ADV because of its length.
"Now everything in buried in this 15 page plain-English document," says Winn.
"The old ADV, with its checkbox style, was easier to scan," Winn says. "Now we have a 15 page document that nobody is going to read."
Winn says that if the changes to the SEC 's Form ADV has not been so rushed, the resulting disclosure document probably would have been better.
The irony is that that Winn has every reason to like the new ADV. It's kept him and other RIA compliance consultants busier than ever over the past three months. Despite the boost to his business, Winn says consumers gain little from the new Form ADV.
The way I see it is that making the Form ADV plain English is a good start. Regulators now need to make the For ADV searchable and indexable by search engines.
Consumers need to be able to do a search for an RIA and be able to see its Form ADV high in the results. Then, when they open a firm's ADV, consumer should be able to search key terms, like "minimum investment" and "fees."
Making the Form ADV searchable on Google and other search engines and searchable when you open it would be a lot more important than changing the style of prose used to describe the RIA's services.