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Form ADV Part 1A Item 7A(2) · Answer type: yn · Item 7 - Financial Industry Affiliations
Item 7A(2) asks whether the investment adviser has a related person that operates as another investment adviser: meaning affiliated companies, subsidiaries, or sister firms under common ownership that also provide investment advisory or financial planning services.
A related person includes parent companies, subsidiaries, sister companies, or other entities under common ownership or control with the investment adviser. When an adviser has affiliated advisory firms, the organization can offer multiple advisory services, potentially serving different client segments, offering specialized expertise, or operating under different business models within the same corporate family.
These affiliations can create opportunities for client referrals between related firms, shared resources like research or model portfolios, or coordinated service offerings across the organization. However, they can also create conflicts when referral decisions or investment recommendations might benefit affiliated firms rather than serving client interests.
A wealth management firm that has both a registered investment adviser subsidiary and an affiliated financial planning firm would mark Yes. An independent advisory firm with no related advisory entities would mark No.
Yes
The adviser has related persons operating as investment advisers or financial planners. This means the organization includes multiple advisory entities that might share clients, coordinate services, or refer business among affiliated firms within the same corporate structure.
No
The adviser does not have related persons operating as investment advisers. The firm may still work with unaffiliated financial planners or other advisers through business relationships, but these would not be under common ownership or control.
7A(2) - Other investment adviser (including financial planners) (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.
Affiliated investment advisers create potential conflicts around client referrals, fee sharing, investment recommendations, and service coordination. A Yes answer means you should understand these relationships and how they might affect your advisory experience.
When an adviser has affiliated advisory firms, referral decisions might be influenced by family revenue rather than finding the best fit for your needs. Investment recommendations might favor strategies that benefit sister firms, or conflicts might arise in how fees are split between affiliated entities serving the same client.
A Yes does not tell you what services the affiliated advisers provide, whether you will be referred to or served by related firms, how fees are shared between affiliated entities, whether the firms coordinate investment strategies, or how referral decisions are made within the organization.
Check Items 8H and 8I for reported referral compensation. Then identify the affiliated adviser, the service provided, the referral payment, and the agreement that applies to the referred client.
Yes
The adviser reports having affiliated investment advisers. On the firm's Best Investors ADV panel, review Items 8H and 8I about referral compensation to see if they pay or receive referrals from related parties. Check their 5G services to understand what the organization offers across affiliated entities.
Also examine Schedule A for details about the specific affiliated advisory entities and their relationships. Ask the firm directly about their affiliated advisers, how referral decisions are made, and whether services are coordinated across related firms.
No
The adviser does not report affiliated investment advisers. However, they may still have referral relationships with unaffiliated advisers, which would appear in Items 8H and 8I. Review these sections to understand their third-party referral arrangements.
Look at their 5G services to understand what they offer directly, and check 5G(7) to see if they provide adviser selection services that might involve recommending unaffiliated firms.