Brochure Rule

AAA

DEFINITION of 'Brochure Rule'

Under the Investment Advisor's Act of 1940, the Brochure Rule requires federally registered investment advisors provide a written disclosure statement to their clients at specified times during the advisory process.

INVESTOPEDIA EXPLAINS 'Brochure Rule'

There are two ways in which an advisor can satisfy the rule:
1) the advisor can provide such disclosure by giving the client Part II of Form ADV.
2) the advisor can provide an actual brochure that contains the same information that would be found in Part II of Form ADV.

The disclosure statement includes information such as the advisor's business practices, educational background, services and fees, third-party compensation (if any), any broker-dealer affiliations, any legal/disciplinary actions against the investment advisor in last 10 years, and any financial conditions that could impair their ability to meet client commitments.

RELATED TERMS
  1. Investment Advisors Act Of 194 ...

    A piece of legislation passed in 1940 that, among other things, ...
  2. Registered Investment Advisor - ...

    An advisor or firm engaged in the investment advisory business ...
  3. ADV Form

    A required submission to the Securities and Exchange Commission ...
  4. Investment Advisor

    As defined by the Investment Advisors Act of 1940, any person ...
  5. Mandatory Binding Arbitration

    A contract provision that requires the parties to resolve contract ...
  6. Mail Or Telephone Order Merchandise ...

    A regulation that controls businesses that sell products over ...
RELATED FAQS
  1. How does the risk of investing in the aerospace sector compare to the broader market?

    Investing in the aerospace sector is riskier than investing in the broader market. The most accurate measure of sector volatility, ... Read Full Answer >>
  2. How does a pension income drawdown work?

    While there are similar drawdown plans in the United States, a pension income drawdown plan most commonly refers to a specific ... Read Full Answer >>
  3. What is the most important section in an investment company's prospectus?

    It is important for investors to examine all information contained within an investment company’s prospectus. However, the ... Read Full Answer >>
  4. What option strategies can I use to earn additional income when investing in the ...

    A risk-averse investor should build his retirement portfolio by putting together a well-diversified portfolio and then regularly ... Read Full Answer >>
  5. Why are simple-interest loans preferred by payday loan companies and pawn shops?

    Investors use corporate bonds for a variety of reasons. These bonds can offer dependable income, safety, diversity, marketability ... Read Full Answer >>
  6. What is the difference between speculation and hedging?

    Speculators and hedgers are different terms that describe traders and investors. Speculation involves trying to make a profit ... Read Full Answer >>
Related Articles
  1. Investing

    The Case For Stocks Today

    Last week, U.S. equities advanced with the S&P 500 Index notching new records. Investors are now getting nervous with rate and currency volatility spiking.
  2. Investing

    Financial Gifts For Grads: Kindergarten To College

    If you really want to help your grad preparing for the future, consider a present that supports their long-term goals—an early start to financial planning.
  3. Mutual Funds & ETFs

    Why You May Want To Be (And Stay) In Bonds

    Bonds are complicated, and it’s easy to feel intimidated or confused. Fortunately, you don’t need to be a numbers geek to be an informed investor.
  4. Investing

    How To Implement A Smart Beta Investing Strategy

    Smart beta investing is the notion of re-writing investment rules to improve investment outcomes by targeting exposures to intuitive ideas or factors.
  5. Retirement

    Tips for Boosting Your Retirement Income

    Here are some best practices on how to generate as much retirement income as possible.
  6. Active Trading Fundamentals

    Reading And Adapting To Market Performance

    Performance that aligns with broad market direction exposes a major strategic weakness.
  7. Mutual Funds & ETFs

    Top Commodities ETFs for Your Retirement Portfolio

    There are many commodity-tracking ETFs, but only a few are must-adds to your retirement portfolio.
  8. Investing Basics

    What Does Overweight Mean?

    In the investing world, "overweight" refers to an expected stock performance, or a portfolio that is out of balance.
  9. Investing

    Market Crisis: Does Diversification Still Work?

    If you still aren’t sold on the benefits of international diversification, you may object that: Diversification didn’t work during the last market crisis.
  10. Investing

    Portfolio Tips For Pursuing The Outcome You Want

    If you have a portfolio, you probably know why you’re invested. Whether it’s a 401(k) or a brokerage account, your portfolio serves some purpose.

You May Also Like

Hot Definitions
  1. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  2. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  5. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  6. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
Trading Center