Regulation

How to Analyze Form ADV Part 1 Data: A Guide for Allocators

Small changes in Form ADV Part 1 can signal big red flags. Discover how technology can help spot shifts faster, without the manual legwork.

C M Nafi
Apr 24, 2025
Regulation

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Over the past two decades, Form ADV Part 1 has undergone major changes driven by crises, regulations, and the SEC’s push for transparency. What started as a simple compliance form now offers allocators a structured, regulator-sourced lens into the real-time state of an adviser’s business.

Key Milestones of Form ADV Part 1

  • 2000: SEC mandates electronic filing via IARD and enhances Item 11 for clearer disciplinary disclosures.
  • 2011: Post Dodd-Frank, new reporting on private funds via Section 7.B.(1) adds fund-level insights.
  • 2017: Major overhaul brings:
    • Item 5.K: Separately managed account (SMA) details.
    • Schedule R: Umbrella registration for related advisers.
    • Item 1.I: Disclosure of social media channels used for advisory business.
  • 2021: The new Marketing Rule introduces Item 5.L, disclosing whether performance marketing, testimonials, or endorsements are used.

Takeaway: ADV Part 1 isn’t static. It reflects the SEC’s evolving expectations - and offers allocators a window into how managers are responding to market, operational, and compliance pressures.

What ADV Part 1 Covers

Form ADV Part 1 is a structured set of disclosures that offers standardized insights across advisers. The first 12 items lay the groundwork for evaluating firm identity, complexity, affiliations, and risk exposure.

Items 1-12 Overview:

Item What it covers
1. Identifying Information

Firm name, SEC registration, contact details

2. SEC Registration

Basis for registering or exemption status

3. Form of Organization

Legal entity type and year of formation

4. Successions

Disclosure of any mergers or acquisitions

5. Employees

Total staff and number of advisory personnel

6. Other Business Activities

Roles outside advisory (e.g., broker-dealer)

7. Affiliations

Financial industry relationships and affiliates

8. Client Transactions

Proprietary trading and related conflicts

9. Custody

Whether adviser or affiliates hold client assets

10. Control Persons

Ownership structure and controlling entities

11. Disciplinary History

Criminal, regulatory, or civil disclosures

12. Small Adviser Exemption

For firms under $25M in regulatory AUM

Why Small Changes Can Signal Big Shifts

Annual Form ADV updates may seem routine, but the smallest change can indicate a big underlying story - especially in Part 1. For example:

  • A flip from “No” to “Yes” in Item 11 might mean a new enforcement action
  • A drop in staff (Item 5) could point to financial stress or downsizing
  • A new business line in Item 6 might reflect new conflicts or evolving strategy

Examples: What a Simple “Yes” Can Reveal and How Dasseti Helps

Item 11: Disciplinary Events

A manager with a clean history updates a single Item 11 field to “Yes.” The attached DRP reveals:

  • A regulatory settlement related to misleading performance marketing
  • A six-figure fine
  • Mandatory staff training and exam requalification

Dasseti flags the change and aggregates the DRP summary - no manual PDF review required.

Item 5: Staffing Decline

An equity fund drops from 52 to 37 employees - well past the 20% alert threshold. At the same time, advisory personnel shrink from 28 to 18.

Dasseti highlights the firm’s drop in both total and advisory headcount, showing historical context and peer benchmarks.

Item 6: New Business Activity

A previously pure-play investment adviser now discloses broker-dealer activity.

Dasseti categorizes this as a business model shift, flags new conflicts of interest, and surfaces whether the firm also updated Item 8 (client transactions).

Analyzing Form ADV Part 1 with Dasseti

Dasseti transforms Form ADV Part 1 from dense disclosures into actionable alerts:

  • Flags changes across 100+ fields, including "No" → "Yes" risk triggers
  • Aggregates DRP data (e.g., sanctions, resolution dates, allegations)
  • Highlights staffing shifts by firm size and advisory role
  • Links directly to changed sections or shows tracked versions

You don’t need to guess what changed, or why it matters. Dasseti surfaces the risk, provides context, and puts it in front of your compliance or due diligence team in real time.

Want to see how Dasseti can simplify your Form ADV review process?

Explore our Form ADV module and see how automated insights can drive faster, smarter due diligence.

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