Write What You Know and Know What You Write

In my first year of college, my English composition teacher accused me of plagiarism.  That’s right, this compliance professional was once accused of ethical misconduct.   In actuality, the first two essays I presented for homework were about topics for which I had no interest, and my third essay was about a topic to which I felt emotionally attached; and therefore it was more interesting, more appealing, and better written (therefore suspicious).

Are you emotionally attached to your disclosure brochure?

Years later I started writing disclosure documents for investment advisers and found that the same message held true.  Could there be any situation more unnecessary or uncomfortable than staring blankly at a regulator when trying to answer why something appears in your ADV that you are unfamiliar with or that is contrary to your actual practice?  If your ADV doesn’t sound like it was written in language you would use to describe how you manage money, how you charge fees, or what sorts of conflicts of interest you have, what is its use?  Do you feel emotionally attached and interested in your firm? If so, your disclosure documents should reflect that.

Is it written in English, plain English?

When the new ADV 2 format was launched, the SEC provided a guidebook to writing in plain English.  Plain English, as described in the 83 page “A Plain English Handbook” creates “clearer and more informative disclosure documents.” Wait… it takes 83 pages to tell people how write clearly?  I guess so.

But for those of us who do not want to spend an hour or two reading how to write, here are some general tips:

1. Use language that is clear and concise.Don’t spend paragraphs saying what could be said in a few sentences.
2. Use words that the average 6^thgrader understands. No, that doesn’t mean lingo from Minecraft or Fortnite, but if you have a bunch of “Wherefores” and “Hereafters” you are probably not doing it right.
3. Accurately describe what you do.This is your business and making sure the recipients of your disclosure documents can understand your services is both protection for you and for them.
4. Check the readability of your document.You can do this in Microsoft Word or you can just ask a friend who isn’t in the industry to read your ADV and see if they understand it.  Or if you are feeling adventuresome, read your ADV out loud in a sophisticated British accent, and if it sounds appropriate, go back and dumb down the language a bit.  Just kidding, sort of.

The point is… make sure your documents are an accurate reflection of you and what you do and that you understand what they say.  That way if a client or regulator asks you a question about how you have presented yourself you won’t be left looking puzzled and changing the subject to something like the weather or the happy news that Big 10 football is back.