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Form ADV Part 1A Item 7A(1) · Answer type: yn · Item 7 - Financial Industry Affiliations
Item 7A(1) asks whether the investment adviser has a related person that operates as a broker-dealer, municipal securities dealer, or government securities broker or dealer, registered or unregistered. The applicable Form ADV definition determines which persons are related.
A related person is connected to the adviser under the applicable Form ADV definition. The checkbox does not state whether the adviser uses that person for client transactions or whether money passes between the entities.
The affiliation can be relevant if the adviser directs or recommends client trades to the related person. Item 7A(1) does not report whether that occurs.
A firm marks Yes when it reports a related person in one of the dealer categories listed by the question.
Yes
The firm reports a related person in one of the dealer categories listed by 7A(1). Review Item 8 separately to see what client transaction practices the firm reports.
No
The firm reports No and does not report a related person under 7A(1). It can still report its own broker-dealer activity in 6A(1) or other brokerage arrangements in Item 8.
7A(1) - Broker-dealer, municipal securities dealer, or government securities broker or dealer (registered or unregistered) (Yes / No).
This checkbox is part of Item 7A, which covers financial industry affiliations and related person activities that could create conflicts of interest with the adviser's fiduciary duties.
A Yes identifies the related-person business type. Review Items 8C through 8F to determine what broker selection, direction, or recommendations the firm reports.
A Yes does not tell you whether the adviser actually directs trades to affiliated brokers, what percentage of client transactions go through related entities, how their execution quality compares to alternatives, what additional costs or benefits clients receive from these arrangements, or how the adviser manages conflicts between client interests and affiliate revenue.
If 7A(1) is Yes, review 8C through 8F for reported broker selection, direction, and recommendations. Ask whether advisory-client trades use the related person and what costs apply.
Yes
Check Items 8C through 8F to see whether the firm selects, uses, or recommends a related broker. If it does, request the broker name, commission schedule, and the execution comparison used for that routing decision.
Also review Schedule A for available details about related entities. Ask whether client trades use the related person and what costs apply.
No
The firm reports No under 7A(1). Check 6A(1) for the adviser's own reported broker-dealer activity and 8C through 8E for reported brokerage practices.
Look at 8E for broker recommendations and 8G for reported soft dollar benefits.