The Annual Drill—Calculating Regulatory Assets Under Management for Form ADV

The Annual Drill—Calculating Regulatory Assets Under Management for Form ADVWhile working on the chapter on Regulatory Assets Under Management for my new book about Dodd Frank and the Advisers Act, I realized that now would be a really good time to blog about the topic.  Soon, at the end of March to be exact, advisers will have to file the annual amendment to their Form ADV with the SEC, which requires the calculation of AUM.

The most basic rule is to include those securities portfolios for which advisers provide continuous and regular supervisory or management services.

More specifically, according to Item 5.b of the Form ADV instructions, a securities portfolio includes:

  • Assets of foreign clients;
  • Family or proprietary assets; and
  • Assets managed without compensation.

The latest Form ADV instructions also make clear that an adviser must calculate its regulatory assets under management on a gross basis. Therefore, an adviser should not deduct:

  • Unpaid accrued liabilities;
  • Outstanding loans;
  • Family or proprietary accounts;
  • Accounts managed without receiving compensation;
  • Accounts of foreign clients; and
  • Securities purchased on margin.

If you are looking for more details, please read my Practical Guide to Calculating Regulatory Assets Under Management, which I wrote when Dodd Frank had just come out and, coming next spring, my book. Of course, you can always call, tweet or just e-mail me.

Eckerle Law offers legal advice in a variety of transactional and regulatory matters and serves companies’ plenary business law needs. Its founder, Bettina Eckerle, is a veteran of Debevoise & Plimpton and Wachtell, Lipton, Rosen & Katz.  She also served as the General Counsel of two companies en route to IPO. Please visit the Eckerle Law website for more details.