Form ADV Part 2B Brochure Supplement: Contents and Delivery

Form ADV Part 2B, the brochure supplement, is the disclosure document a registered investment adviser prepares for each individual at the firm who personally advises clients or controls their money. Where Part 2A describes the firm, Part 2B describes the person: education, work history, disciplinary record, outside business activities, extra compensation, and who supervises them. The client must receive it before that individual starts providing advisory services.

Who Needs a Supplement Written About Them

Not everyone at an advisory firm requires a Part 2B. The SEC’s instructions cover two groups of supervised persons: those who formulate investment advice for a client and communicate with that client directly, and those who exercise discretionary authority over a client’s assets even if they never speak to the client.

A person whose discretionary authority exists only as part of a team, with no direct client contact, does not require a separate supplement. When a team of more than five people provides discretionary advice to a single client, the firm delivers supplements only for the five individuals with the most significant day-to-day responsibility for that client’s account.¹

Sole proprietors who are the only person at their firm can skip a standalone Part 2B if the same information already appears in their Part 2A firm brochure.²

What Goes in the Six Items

Part 2B is a narrative document with no checkboxes. It has six items, and one supplement is prepared for each covered individual. A firm with ten client-facing advisors maintains ten supplements.

Item 1: Cover Page

The cover page identifies the supervised person by name, gives the firm’s name, office address, and telephone number, and shows the date of the supplement. That date must change every time the supplement is updated, so clients can see how recent the information is.

Item 2: Educational Background and Business Experience

This item lists the person’s year of birth or age, every post-high-school educational institution attended, degrees earned, and any professional designations held. For each designation, the supplement should explain enough for a client to understand what the credential means: the issuing organization, prerequisites, and any continuing education requirements.

Business experience covers the previous five years, including employer names and positions. Employment gaps or the absence of a college education must be stated plainly rather than omitted. False credentials in this section can trigger SEC enforcement.

Item 3: Disciplinary Information

Item 3 is the section clients scrutinize hardest. It requires disclosure of legal and disciplinary events that a reasonable client would consider important in deciding whether to entrust the person with money. The SEC presumes four categories are material:

Criminal or civil actions: felony convictions, investment-related misdemeanor convictions, pending criminal proceedings involving fraud or dishonesty, court findings of investment-related violations, and court orders limiting the person’s investment activities.
Administrative proceedings: findings by the SEC, state regulators, or foreign authorities that the person violated investment laws, resulting in denials, suspensions, bars, or civil penalties above $2,500.
Self-regulatory organization proceedings: similar findings and sanctions from bodies such as FINRA.
Other proceedings a client would still consider material to the person’s integrity.

Each presumptively material event must be disclosed for ten years after the date of the final order, judgment, or decree. Events resolved in the person’s favor or that were reversed, suspended, or vacated do not require disclosure. An event older than ten years still has to appear if it remains currently material to a client’s evaluation.²

A firm may rebut the presumption of materiality for a listed event, but it must document the basis for that determination in writing and keep the documentation. In practice, most firms disclose rather than argue the point later with an examiner.

Item 4: Other Business Activities

Item 4 addresses conflicts that arise when the supervised person holds another role. If the person is also a registered representative of a broker-dealer, an insurance agent, or holds any other position that consumes substantial time or produces meaningful income, the supplement says so. Those outside roles can create incentives to recommend commission-generating products rather than what best fits the client.

Item 5: Additional Compensation

Where Item 4 covers outside jobs, Item 5 covers outside money flowing to the supervised person within the advisory relationship itself. Any economic benefit from someone other than the client for providing advisory services must be disclosed. Sales awards, bonuses tied to selling particular products, and referral fees for directing clients elsewhere all belong here.

Item 6: Supervision

The last item names the person responsible for supervising the advisor and gives that supervisor’s direct telephone number. It also describes how the firm actually monitors the advisor’s activities, such as reviewing client communications, auditing trades, or using compliance software to flag deviations from stated strategies.

When It Must Reach the Client

The client must receive the supplement for a supervised person before or at the time that person begins providing advisory services. It cannot wait for a quarterly review.¹

When disciplinary information in Item 3 changes, the firm must promptly deliver an updated supplement or a written statement describing the material facts of the change. Rule 204-3 does not set a hard deadline in days; “promptly” means without unnecessary delay. The update can take the form of a sticker, a short addendum identifying what changed, the new information, and the date.²

Unlike Part 2A, Part 2B carries no automatic annual delivery. The firm must amend the supplement whenever information becomes materially inaccurate, but the redelivery obligation is tied specifically to disciplinary changes.

Clients Who Do Not Have To Receive One

Three categories of clients are exempt from the delivery requirement:

Registered investment companies and business development companies, provided the advisory contract meets Section 15(c) of the Investment Company Act of 1940.
Recipients of impersonal investment advice — advice not tailored to any specific individual’s objectives or account — for which the firm charges less than $500 per year.
Firm insiders who qualify as “qualified clients” under Rule 205-3(d)(1)(iii): executive officers, directors, trustees, general partners, or employees who participate in the firm’s investment activities and have done so for at least 12 months.

The insider exemption is narrow. It does not extend to outside high-net-worth clients, no matter how wealthy. It applies only to people already inside the firm who presumably have direct access to the same information the supplement would provide.¹

Delivering the Supplement Electronically

Electronic delivery is allowed, but posting the document to a website and waiting for clients to find it is not delivery. The SEC has rejected the “access equals delivery” approach. Three conditions apply:

Notice: a separate communication, by email or paper, telling the client the supplement is available and providing a direct link or URL.
Access: the client can reach and read the document without navigating a confusing series of menus, and can retain a copy comparable to a paper version.
Evidence of delivery: the firm can show delivery occurred, typically through the client’s informed consent to electronic delivery plus records of notice and access.

Uploading the supplement to the SEC’s Investment Adviser Public Disclosure system does not satisfy the delivery obligation. That system exists for public access, not for regulatory delivery.³

Filing and Recordkeeping

Filing obligations split by regulator. SEC-registered advisers are not required to file brochure supplements through IARD or anywhere else. They must preserve copies of every supplement and produce them for SEC staff on request. State-registered advisers must file a copy of each supplement through IARD for every supervised person doing business in that state.²

Beyond the supplements themselves, firms must maintain records of written communications relating to advice given, securities transactions, and fund movements under Rule 204-2. Preservation of electronic communications, including text messages and messages on personal devices or unapproved platforms, has drawn increasing SEC scrutiny.⁴

How To Look Up a Supplement

Clients do not have to rely on what the firm chooses to hand them. The SEC’s Investment Adviser Public Disclosure site at adviserinfo.sec.gov lets anyone search a firm by name or CRD/SEC number and view its Form ADV. Part 2A firm brochures filed through IARD appear there directly. Part 2B supplements for SEC-registered firms do not, because those firms are not required to file them electronically. A client can request them from the firm, and the firm must provide them.⁵

1
eCFR. 17 CFR 275.204-3 – Delivery of Brochures and Brochure Supplements
2
Securities and Exchange Commission. Form ADV Part 2 Instructions
3
Morgan Lewis. Compliance Corner – Electronic Delivery of Form ADV
4
Freiberger Haber LLP. Enforcement News: SEC Underscores Importance of Compliance With Recordkeeping Rules
5
Investor.gov. Investor Bulletin: Form ADV – Investment Adviser Brochure and Brochure Supplement