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Form ADV Part 1A Item 7A(12) · Answer type: yn · Item 7 - Financial Industry Affiliations
Item 7A(12) asks whether the investment adviser has a related person that operates as an insurance company or agency. 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 offers, recommends, or receives revenue from the related person's insurance products.
The relationship can be relevant if the adviser recommends or refers clients to the related person. Item 7A(12) does not report whether that occurs.
A firm marks Yes when it reports a related person that is an insurance company or agency.
Yes
The firm reports a related person that is an insurance company or agency. The answer does not prove that advisory clients receive offers or referrals to that person.
No
The firm reports No and does not report a related person under 7A(12). It can still report its own insurance activity in 6A(6) or other referral arrangements in Item 8.
7A(12) - Insurance company or agency (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.
The Yes answer identifies the relationship. To determine whether it affects clients, check the firm's reported insurance activity, employee licensing, referral compensation, and actual recommendations.
A Yes does not tell you what insurance products the affiliates offer, whether the adviser actually refers clients to affiliated insurance companies, what the costs and benefits are compared to alternatives, how the adviser manages conflicts between client interests and affiliate revenue, or whether using affiliated insurance products affects your investment advisory services.
If 7A(12) is Yes, review 6A(6), 5B(5), 8H, and 8I for separately reported insurance and referral facts. Ask whether advisory clients are referred to the related person and whether compensation applies.
Yes
Check 6A(6) for the adviser's own insurance activity, 5B(5) for employee insurance licenses, and 8H and 8I for referral compensation. Identify the affiliate in Schedule A, then request the insurance commission or referral disclosure for any product recommended to advisory clients.
No
The firm reports No under 7A(12). Check 6A(6) for the adviser's own reported insurance activity and 5B(5) for reported employee insurance licensing.
Look at 8H and 8I for the referral compensation the firm reports.