How Allocators Use Form ADV Part 2 as a Qualitative Risk Lens

Form ADV Part 2 has become a key resource for allocators looking beyond the numbers. Unlike the quantitative disclosures in Part 1, it offers a narrative view into how a manager operates, communicates, and manages risk. 

A Brief History: From Legalese to Plain-English Transparency

In 2010, the SEC overhauled Form ADV Part 2 in response to criticism that advisers’ disclosures were too opaque, too legalistic, and too difficult for investors to interpret.

The result was a redesigned form:

• Written in plain English
• Structured as a narrative brochure
• Split into two key documents:
  • Part 2A: The "firm brochure," covering 18 core sections about the adviser’s operations, fees, risks, and conflicts
  • Part 2B: Supplementary brochures on key personnel (e.g., portfolio managers, principals) 

Form ADV Part 2A is where firms tell their story - and where allocators can learn how they operate, not just what they claim.