Brochure

Form ADV Part 1 is primarily:

1. A.The plain-English client brochureThis is the strongest distractor because it names the right document family and the wrong part. The plain-English brochure is Part 2, while Part 1 is the structured filing regulators use to screen and examine the firm.
2. B.A tax returnPart 1 does report figures such as assets under management and client counts, which may suggest a financial filing. But it goes to securities regulators through the electronic registration system and has nothing to do with tax reporting.
3. C.An advertisementPart 1 is a disclosure filing, and an adviser may not use the fact of registration as a selling point. Advertising is regulated separately, with its own limits on testimonials, performance claims, and endorsements.
4. D.A check-the-box filing for regulatorsCorrect - Part 1 is regulator-facing.

Why: Part 1 is a standardized, check-the-box filing used by regulators; Part 2 is the client brochure.

If an adviser does not deliver its brochure at least 48 hours before the contract is signed, the client must be given:

1. A.Nothing additionalThe 48-hour standard is not a suggestion that lapses quietly when missed. Failing it triggers a specific alternative protection, a five-business-day window in which the client may cancel the contract without penalty.
2. B.A five-day right to rescind the contractCorrect - the 48-hour/5-day brochure rule.
3. C.A full refund of all future feesThe remedy is release from the contract rather than a payout, and it is available only within the five-business-day window. Rescinding without penalty means the client is not charged for terminating, not that the adviser owes anything beyond that.
4. D.A guaranteed returnPerformance guarantees are prohibited outright, so no procedural failure can produce one as a remedy. What the client gets instead is time, a short period in which to walk away after finally reading the brochure.

Why: Without delivery 48 hours in advance, the client gets a five-business-day right to rescind without penalty.

An adviser's disclosure brochure (Form ADV Part 2) must be written in:

1. A.Plain EnglishCorrect - plain-English requirement.
2. B.CodeA document the reader must decipher cannot perform the function assigned to it. The brochure has to convey services, fees, conflicts, and disciplinary history in terms an ordinary client can follow.
3. C.Any language the adviser prefersThis makes the standard a matter of the adviser's preference when it is set by the client's ability to understand. Style is constrained here in a way it is not in ordinary business writing.
4. D.Dense legal jargonTechnical drafting can be accurate and still fail, which is the point of the requirement. Material information buried under jargon is effectively withheld from the client who was supposed to read it.

Why: The brochure must be in plain English so clients can understand it.

An adviser must deliver or offer an updated brochure to clients:

1. A.Annually, within 120 days of fiscal year-endCorrect - annual brochure delivery/offer.
2. B.Only once, at account openingDelivery at the outset is necessary but not sufficient, because an adviser's fees, conflicts, and disciplinary record can change over the life of the relationship. The obligation recurs each year, within 120 days of the adviser's fiscal year-end.
3. C.Never after signingThis treats the signature as the end of the disclosure obligation. In fact the relationship continues, and so does the duty to keep the client current through an annual delivery or offer of the updated brochure.
4. D.Every 5 yearsA five-year gap would leave a client relying on stale information about the firm advising them. The cycle is annual, tied to the adviser's fiscal year-end rather than to any multi-year interval.

Why: The brochure must be delivered or offered to clients annually, within 120 days of the adviser's fiscal year-end.