Form ADV-W Supporting Statement 2020

OMB CONTROL NUMBER: 3235-0313
SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Rule 203-2 and Form ADV-W
A.
1.

JUSTIFICATION
Necessity for the Information Collection
Rule 203-2 under the Investment Advisers Act of 1940 establishes procedures for

an investment adviser to withdraw its registration, or a pending registration application,
with the Securities and Exchange Commission (“Commission” or “SEC”), and requires
every person withdrawing from investment adviser registration with the Commission to
file Form ADV-W electronically on the Investment Adviser Registration Depository
(“IARD”).
The potential respondents to this information collection are all investment
advisers registered with the Commission that withdraw their registrations or pending
registrations with the Commission. The collection of information is necessary to ensure
that the Commission and the public are notified when each of these investment advisers
withdraws its SEC registration.
The title of the affected collection of information is: “Rule 203-2 and Form ADVW under the Investment Advisers Act of 1940.” Its OMB control number is 3235-0313.
An agency may not conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a currently valid OMB control number. This
collection of information is found at 17 CFR 275.203-2 and 17 CFR 279.2 and is
mandatory.
2.

Purposes and Use of the Information Collection

Form ADV-W is used to withdraw an investment adviser’s registration with the
Commission. The purpose of the information collection is to notify the Commission and the
public when each investment adviser withdraws its SEC registration.
3.

Consideration Given to Information Technology

All SEC-registered investment advisers are required to file Part 1 and Part 2A of
Form ADV, the form used to register as an investment adviser, electronically through the
IARD. The IARD is an Internet-based system that investment advisers access through
computers in their offices, without the need for specialized software or hardware. The
information investment advisers submit to the IARD is stored in a database, and the general
public has Internet-access to the data. The IARD also permits investment advisers to meet
state notice filing requirements electronically.
In conjunction with mandating electronic filing of investment adviser registration
forms, the Commission also mandated electronic filing of the form used to withdraw from
registration. To withdraw an investment adviser registration, rule 203-2 requires the
electronic filing of Form ADV-W on the IARD.
4.

Duplication

The collection of information requirements of the rule and form are not duplicated
elsewhere.
5.

Effect on Small Entities

The requirements of rule 203-2 and Form ADV-W are the same for all investment
advisers registered with the Commission, including small entities. It would defeat the
purpose of the rule to exempt small entities from these requirements.
6.

Consequences of Not Conducting Collection

Rule 203-2 requires an adviser to notify the Commission when it is withdrawing its
SEC registration. If the Commission did not collect this information, the Commission and
the public would be unaware that an adviser had gone out of business or was ineligible to
remain registered with the Commission.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

The collection of information imposes no additional requirements regarding record
retention.
8.

Consultations Outside the Agency

The Commission and the staff of the Division of Investment Management continue
to participate in an ongoing dialogue with representatives of the investment adviser
profession through public conferences, meetings, and informal exchanges. These various
forums provide the Commission and the staff with a means of ascertaining and acting upon
paperwork burdens facing the industry.
The Commission requested public comments on the collection of information
requirements in rule 203-2 and Form ADV-W before submitting this request for extension
and approval to the OMB. The Commission received no comments in response to its
request.
9.

Payment or Gift

None.
10.

Confidentiality

The information collected pursuant to rule 203-2 and Form ADV-W are filings with
the Commission. These filings are not kept confidential.
11.

Sensitive Questions

Form ADV-W collects information on the investment adviser’s name, SEC file
number, CRD number (if applicable), and business address. Form ADV-W does not collect
Social Security Numbers. A System of Records Notice has been published in the Federal
Register at (SEC-50) 66 FR 7820 and can also be found at
http://www.sec.gov/about/privacy/secprivacyoffice.htm.
a.

No information of a sensitive nature, including social security numbers, will be

required under this collection of information.
b.

The information collection collects basic Personally Identifiable Information (PII)

that may include the investment adviser’s name, SEC file number, CRD number (if
applicable), and business address. The agency has determined that the information
collection constitutes a system of record for purposes of the Privacy Act has been published
in the Federal Register at 83 FR 6892 and can also be found at
http://www.sec.gov/about/privacy/secprivacyoffice.htm. A Privacy Act Statement is
applicable for the information collection and is available on the web form.
c.

In accordance with Section 208 of the E-Government Act of 2002, the agency has

conducted a Privacy Impact Assessment (PIA) of the IARD system, in connection with this
collection of information. The IARD PIA, published on July 8, 2014, is provided as a
supplemental document and is also available at https://www.sec.gov/privacy.
12.

Burden of Information Collection

The current approved total estimated collection of information burden imposed by
rule 203-2 and Form ADV-W is 588 hours per year. This burden was based on estimates,
derived from past filing volume, that approximately 871 respondents filed Form ADV-W
annually, that approximately 85 percent of those advisers ceased operations and

completed the entire form to withdraw from all jurisdictions in which they are registered
(full withdrawal), and that the remaining 15 percent withdrew from some, but not all, of
the jurisdictions in which they were registered and omitted certain items from the form
(partial withdrawal). Compliance with the requirement to complete Form ADV-W
imposes a total burden of approximately 0.75 hours (45 minutes) for an adviser filing for
full withdrawal and approximately 0.25 hours (15 minutes) for an adviser filing for
partial withdrawal, for a total of 588 hours.
We anticipate that the burden for this information collection is expected to
increase slightly due to a higher number of respondents filing Form ADV-W.
For purposes of this Paperwork Reduction Act extension, the Commission staff
estimates based on the number of Form ADV-W filings received in the past calendar year
that approximately 1,256 advisers file Form ADV-W each year. Of those advisers,
approximately 802 advisers (64%) filing for withdrawal file for full withdrawal and
approximately 454 advisers (36%) file for partial withdrawal. 1 Compliance with the
requirement to complete Form ADV-W imposes a total burden of approximately 0.75
hours (45 minutes) for an adviser filing for full withdrawal and approximately 0.25 hours
(15 minutes) for an adviser filing for partial withdrawal. Based on these estimates and
estimated total responses, we estimate the total annual hours to be 715 hours. 2

1

This information was based on data collected from Form ADV-Ws filed through the
IARD during 2019.

2

(802 full ADV-Ws x 0.75 hours) + (454 partial ADV-Ws x 0.25 hours) = 715 hours.

We anticipate that investment advisers would likely utilize a combination of
compliance professionals and clerical staff to complete Form ADV-W and file it with the
Commission. The Commission estimates the hourly wage rate for a compliance manager
to be $309 per hour, 3 including benefits, and the hourly wage rate for a general clerk to
be $62 per hour. 4 An investment adviser filing for full withdrawal would utilize an
estimated 50% professional time and 50% clerical time. For each full withdrawal, the
estimated cost would be approximately $124 per withdrawal, 5 or approximately $99,448
in total. 6 It is estimated that an investment adviser filing for partial withdrawal would
utilize only clerical staff. For each partial withdrawal, the estimated cost would be
approximately $15.50 per withdrawal, 7 or approximately $7,037 in total. 8 Accordingly,
the Commission staff estimates the total annual cost of Form ADV-W to be $106,485. 9
Table 1: Annual No. of Form ADV-W Submissions
Annual No. of Form ADV-W Submissions

3

Data from the SIFMA Management and & Professional Earnings in the Securities
Industry 2019 report, modified by Commission staff to account for an 1,800-hour workyear and inflation, and multiplied by 5.35 to account for bonuses, firm size, employee
benefits and overhead, suggest that the cost for a compliance manager is approximately
$309 per hour.

4

Data from the SIFMA Office Salaries in the Securities Industry 2019 report, modified by
Commission staff to account for an 1,800-hour work-year and inflation, and multiplied by
5.35 to account for bonuses, firm size, employee benefits and overhead, suggest that the
cost for a General Clerk is approximately $62 per hour.

5

((.75 hours x .5) x $309/hour)) + ((.25 hours x .5) x $62/hour)) = $123.63.

6

$124 x 802 = $99,448.

7

.25 hours x $62/hour = $15.50.

8

$15.5 x 454 = $7,037.

9

$99,448 + $7,037 = $106,485.

Total Form ADVW’s Submitted

Previously
Approved
871

Requested

Change

1,256

385

Table 2: Annual Time Burden of Form ADV-W Submissions
Annual Time Burden of Form ADV-W Submissions (Hrs.)

Total Time Burden
for All Form ADVW Submitted

Previously
Approved
588

Requested

Change

716

128

Table 3: Annual Cost Burden of Form ADV-W Submissions
Annual Cost Burden of Form ADV-W Submissions ($)

Total Cost Burden
for All Form ADVW’s Submitted

13.

Previously
Approved
$88,615

Requested

Change

$106,485

$17,870

Cost to Respondents

$0.
14.

Cost to the Federal Government

$0.
15.

Change in Burden

The revised annual responses for rule 203-2 and Form ADV-W is estimated to be
1,256 hours. This annual time burden represents an increase of 128 hours from the current

approved burden, which is attributable primarily to the fact that more investment advisers
have filed Form ADV-W in recent staff experience. 10
16.

Information Collections Planned for Statistical Purposes

Not applicable.
17.

Approval to Omit OMB Expiration Date

Not applicable.
18.

Exception to Certification Statement for Paperwork Reduction Act
Submission

Not applicable.
B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS

Not applicable.

10

716 current burden hours – 588 revised approved burden hours = 128 hours.