Supporting Statement_Rule 204-5 (2025)

PAPERWORK REDUCTION ACT SUPPORTING STATEMENT
FOR THE EXTENSION OF
RULE 204-5
OMB CONTROL NUMBER 3235-0767
The U.S. Securities and Exchange Commission (“Commission” or SEC) submits this
information collection request (ICR) pursuant to the Paperwork Reduction Act of 1995
(PRA), 44 U.S.C. Section 3501 et seq., with the following justification.

1.

Necessity of Information Collection
On June 5, 2019, the Securities and Exchange Commission (the “Commission” or

“SEC”) adopted amendments to Form ADV 1, and related rules, including, rule 204-5
under the Investment Advisers Act of 1940. 2 Rule 204-5 requires registered investment
advisers to provide a brief relationship summary to retail investors to inform them about
certain aspects of the relationships and services the firm offers (the “relationship
summary”). Rule 204-5 requires an investment adviser to deliver an electronic or paper
version of the relationship summary to each retail investor before or at the time the
adviser enters into an investment advisory contract with the retail investor. The adviser
must also have made a onetime initial delivery of the relationship summary to all existing

1

17 CFR 279.1.

2

Form CRS Relationship Summary; Amendments to Form ADV, Release Nos. IA-5247; 34-86032
(June 5, 2019) [84 FR 33492 (Jul. 12, 2019]. The amendments to Form ADV were proposed in
Form CRS Relationship Summary; Amendments to Form ADV; Required Disclosures in Retail
Communications and Restrictions on use of Certain Names or Titles, Investment Advisers Act
Release No. 4888. Exchange Act Release No. 83063 (Apr. 18, 2018) [83 FR 23848 (May 23,
2018)].

clients within a specified time period after the effective date of the rule. With respect to
existing clients, the adviser must also deliver the most recent relationship summary
before or at the time of (i) opening any new account that is different from the retail
investor’s existing account(s); (ii) recommending that the retail investor roll over assets
from a retirement account into a new or existing account or investment; or (iii)
recommending or providing a new brokerage or investment advisory service or
investment that does not necessarily involve the opening of a new account and would not
be held in the existing account. The adviser is required to post a current version of its
relationship summary prominently on its public website (if it has one), and is required to
communicate any changes in an amended relationship summary to retail investors who
are existing clients within 60 days after the amendments are required to be made and
without charge. The investment adviser also must deliver a current relationship summary
to each retail investor within 30 days upon request and make a copy of the relationship
summary available upon request without charge. Where a relationship summary is
delivered in paper format, the adviser may link to additional information by including
URL addresses, QR codes, or other means of facilitating access to such information. The
adviser must also include a telephone number where retail investors can request up-todate information and a copy of the relationship summary.
Rule 204-5 contains a “collection of information” within the meaning of the
Paperwork Reduction Act of 1995 (“Paperwork Reduction Act”). 3 The collection of
information is necessary to provide advisory clients, prospective clients and the
Commission with information about the investment adviser and its business, conflicts of
3

44 U.S.C. 3501 et seq.

2

interest, and personnel. The title for the collection of information is: “Rule 204-5 under
the Investment Advisers Act of 1940” and the Commission submitted this collection to
the Office of Management and Budget (“OMB”) for review in accordance with 44 U.S.C.
3507(d) and 5 CFR 1320.11. 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 will be found at 17 CFR 275.204-5
and will be mandatory. Responses will not be kept confidential.

2.

Purpose and Use of Information Collection
The purpose of Form CRS is to assist retail investors in making an informed

choice when choosing an investment firm and professional, and type of account. Retail
investors can use the information required in Form CRS to determine whether to hire or
retain an investment adviser, as well as what types of accounts and services are
appropriate for their needs. The Commission also will use the information to manage its
regulatory and examination programs.

3.

Use and Consideration of Information Technology
A firm will be permitted to deliver the relationship summary (including updates)

electronically, consistent with the Commission’s guidance regarding electronic delivery. 4
Rule 204-5 also requires that a firm that maintains a public website to post their
relationship summaries on their websites in a way that is easy for retail investors to find.

4

See Use of Electronic Media by Broker-Dealers, Transfer Agents, and Investment Advisers for
Delivery of Information; Additional Examples Under the Securities Act of 1933, Securities Exchange
Act of 1934, and Investment Company Act of 1940, Exchange Act Release No. 37182 (May 9, 1996)
[61 FR 24644 (May 15, 1996)]. See also Use of Electronic Media, Exchange Act Release No. 42728
(Apr. 28, 2000) [65 FR 25843 (May 4, 2000)]; and Use of Electronic Media for Delivery Purposes,
Exchange Act Release No. 36345 (Oct. 6, 1995) [60 FR 53458 (Oct. 13, 1995)].

3

Where a relationship summary is delivered in paper format, the adviser may link to
additional information by including URL addresses, QR codes, or other means of
facilitating access to such information. Firms also must include in their relationship
summaries a telephone number for investors to call to obtain documents.

4.

Identifying and Minimizing Duplication
The collection of information requirements of the form, including the

amendments to the form, are not duplicated elsewhere. 5 While Form ADV Part 3
requires firms to summarize topics also required to be discussed in Form ADV Part 1 or
Part 2, the Part 3 has a distinct purpose to help retail investors select or determine
whether to remain with a firm or financial professional by providing better transparency
and summarizing in one place selected information about a particular investment adviser.
The Commission periodically evaluates rule-based reporting and recordkeeping
requirements for duplication and reevaluates them whenever it proposes a rule or a
change in a rule.

5.

Effect on Small Entities
The information collection requirements of rule 204-5 do not distinguish between

investment advisers that are small entities and other investment advisers. Because the
protections of the Advisers Act are intended to apply equally to retail investor clients and
customers of both large and small firms, it would be inconsistent with the purposes of the
Advisers Act to specify differences for small entities under the proposed rules and rule

5

Firms are required to include cross-references to where investors could find additional information,
such as in the Form ADV Part 2 brochure and brochure supplement for investment advisers or on the
firm’s website or in the account opening agreement for broker-dealers. For electronic versions of the
relationship summary, we require firms to use hyperlinks to the cross-referenced document if it is
available online.

4

amendments. We believe that rule 204-5 and the relationship summary result in multiple
benefits to all retail investors, including alerting retail investors to certain information to
consider when choosing a firm and a financial professional and prompting retail investors
to ask informed questions. In addition, the content of the relationship summary facilitates
comparisons across firms. The Commission believes that these benefits should apply to
retail investors of smaller firms as well as retail investors of larger firms. To establish
different disclosure requirements for small entities would diminish this investor
protection for clients of small advisers. The Commission reviews all rules periodically,
as required by the Regulatory Flexibility Act, to identify methods to minimize
recordkeeping or reporting requirements affecting small businesses.

6.

Consequences of Not Conducting Collection and Obstacles to
Reducing Burden
The collection of information required by the form is necessary to protect

investors and deter potentially misleading sales practices by providing retail investors and
potential retail investors, as well as the Commission, with information about the
investment adviser, the services it offers to retail investors, applicable standard of
conduct, fees, conflict of interests, and disciplinary events. Providing this information
before or at the time the adviser enters into an investment advisory agreement with a
retail investor, as well as at certain points during the relationship (e.g., switching or
adding account types) helps retail investors to make a more informed choice among the
types of firms and services available to them. The consequences of not collecting this
information include continued retail investor confusion about the services and fees
advisers offer and the differences among broker-dealers, investment advisers, and firms
registered with the Commission as both broker-dealers and investment advisers. In
5

addition, if the information is either not collected or is collected less frequently, the
Commission’s ability to protect investors would be reduced.

7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)
Not applicable.

8.

Public Comment and Consultations Outside the Agency
The Commission and the staff of the Division of Investment Management

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 comment on the
collection of information requirements in rule 204-5 before it submitted this request for
extension and approval to the Office of Management and Budget. The Commission
received no comments in response to this request.

9.

Payment or Gift to Respondents
No payment or gift to respondents was provided.

10.

Assurance of Confidentiality and Privacy
Not Applicable.

11.

Collection Questions of a Sensitive Nature
No information of a sensitive nature, including social security numbers, will be

required under this collection of information. The information collection does not collect
personally identifiable information (PII). The agency has determined that a system of

6

records notice (SORN) and privacy impact assessment (PIA) are not required in
connection with the collection of information.

12.

Estimated Time Burden and its Cost Equivalent
We estimate the total collection of information burden for rule 204-5 to be 1,241,670

annual aggregate hours per year, 6 or 124 hours per respondent, 7 for a total annual
aggregate monetized cost of $95,678,622, 8 or $9,520 9 per adviser.
The likely respondents to this information collection are approximately 10,050 10
investment advisers registered with the Commission that are required to deliver a
relationship summary to retail investors pursuant to rule 204-5.11 We also note that these
figures include the 291 registered broker-dealers that are dually registered as investment
advisers.

6

173,248 hours for additional delivery to existing clients based on material changes to accounts or scope
of relationship + 8,124 annual hours to post amended relationship summary to website + 998,993 hours
for delivery to existing clients to communicate updated information in amended relationship
summaries + 56,280 hours for delivery to new or prospective clients + 5,025 hours to make paper
copies of the relationship summary available upon demand = 1,241,670 annual total hours for
investment advisers to post and deliver the relationship summary under proposed rule 204-5.

7

1,241,670 hours (initial and other deliveries) / 10,050 advisers = 124 hours per adviser.

8

$13,340,096 for delivery to existing clients based on material changes to accounts or scope of
relationship + $625,580 to post amended relationship summary to website + $76,992,461 for delivery
to existing clients to communicate updated information in amended relationship summaries +
$4,333,560 for delivery to new or prospective clients + $386,925 for making paper copies of the
relationship summary available upon demand = $95,678,622 in total annual aggregate monetized cost
for investment advisers to post and deliver the relationship summary under proposed rule 204-5.

9

$95,678,622 / 10,050 advisers = $9,520 per adviser.

10

Although we use numbers of individual clients and RAUM attributable to individual clients reported in
Form ADV Item 5.D. to estimate “retail RIAs” and “retail investors,” some of these individual clients
may not be “retail investors” for purposes of Form CRS delivery requirements and we have not
reviewed whether these advisers are in fact required to comply with Form CRS delivery requirements.

11

This figure includes the 291 registered broker-dealers that are dually registered as investment advisers
as of December 31, 2021.

7

A. Posting of the Relationship Summary to Website
Under rule 204-5, advisers are required to post a current version of their
relationship summary prominently on their public website (if they have one). However,
as rule 204-5 has now been in effect for several years, we expect that advisers have
already fulfilled the initial requirement to post a relationship summary on their public
website if they have one. The expected burden of updating posted relationship summaries
is discussed in section B.iii below.
B. Delivery to Existing Clients
i. One-Time Initial Delivery to Existing Clients
Rule 204-5 required investment advisers to make a one-time initial delivery of
their relationship summary to each of their retail investors. However, as rule 204-5 has
now been in effect for several years, we expect that this one-time initial obligation has
been completed and do not expect any further burdens. The expected burden of
communicating changes to amended relationship summaries is discussed in section B.iii
below.
ii. Additional Delivery to Existing Clients
Investment advisers are required to deliver the relationship summary to existing
clients before or at the time they open a new account that is different from the retail
investor’s existing account(s). In addition, delivery is required before or at the time the
adviser (i) recommends that the retail investor roll over assets from a retirement account
into a new or existing account or investment, or (ii) recommends or provides a new
brokerage or investment advisory service or investment that does not necessarily involve
the opening of a new account and would not be held in the existing account.

8

While these specific triggers may still impose operational and supervisory
burdens on firms, we believe that they are more easily identified and monitored, such that
firms should not incur significant burdens as described by commenters to implement
entirely new supervisory, administrative, and operational processes needed to monitor
events that cause a material change. We expect that such delivery takes place among 10%
of an adviser’s retail investors annually and we estimate each adviser incurs 16 hours per
year to deliver the relationship summary in these situations. We therefore estimate a total
annual aggregate hours of 173,248,12 with a monetized cost of $1,232 per adviser 13 and
$13,340,096 in aggregate. 14
iii. Posting of Amended Relationship Summaries to Websites and
Communicating Changes to Amended Relationship Summaries, Including by Delivery
Investment advisers are required to amend their relationship summaries within 30
days of when any of the information becomes materially inaccurate. Investment advisers
are also required to communicate any changes in an amended relationship summary to
existing clients who are retail investors within 60 days after the updates are required to be
made and without charge. Based on the historical frequency of amendments made on

12

16 hours x (10,050 existing advisers + 778 new advisers) = 173,248 total aggregate hours.

13

Based on data from the SIFMA Office Salaries Report, we expect that delivery requirements of rule
204-5 will most likely be performed by a general clerk at an estimated cost of $77 per hour. 16 hours
per adviser x $77 = $1,232 per adviser. We anticipate that advisers do not incur any incremental
postage costs in the delivery of the relationship summary to existing clients for changes in accounts,
because we anticipate that advisers make such deliveries with another mailing the adviser was already
delivering to clients, such as new account agreements and other documentation normally required in
such circumstances.

14

$1,232 in monetized costs per adviser x (10,050 existing advisers + 778 newly registered advisers) =
$13,340,096 in total aggregate costs.

9

Form ADV Parts 1 and 2, we estimate that on average, each adviser preparing a
relationship summary likely amends the disclosure an average of 1.71 times per year. 15
We estimate that preparation of the relationship summary for posting to the web and the
posting itself requires 0.5 hours. Using the same percentage of investment advisers
reporting public websites, 94% of 10,050 advisers would incur a total annual burden of
0.86 hours per adviser, or 8,124 hours in aggregate, 16 to post the amended relationship
summaries to their website. This translates into an annual monetized cost of $66.22 per
adviser, or $625,580 in the aggregate for existing registered advisers with relationship
summary obligations. 17
Investment advisers are also required to communicate any changes in an amended
relationship summary to existing clients who are retail investors. The communication
can be made by delivering the relationship summary or by communicating the
information in another way. For this requirement, we estimate that 50% of advisers will
choose to deliver the relationship summary to communicate the updated information, and
that the delivery will be made along with other disclosures already required to be
delivered. We believe that it is likely that the other 50% of advisers will incorporate all
of the updated information in their Form ADV Part 2, like the summary of material

15

This estimate is based on IARD system data regarding the number of filings of Form ADV
amendments.

16

0.5 hours to post the amendment x 1.71 amendments annually = 0.86 hours per adviser annually to post
amendments to the website. 0.86 x 10,050 existing advisers amending the relationship summary x
94% of advisers with public websites = 8,124 aggregate annual hours to post amendments of the
relationship summary.

17

Based on data from the SIFMA Office Salaries Report, we expect that the posting requirements of rule
204-5 will most likely be performed by a general clerk at an estimated cost of $77 per hour. 0.86 hours
per adviser x $77 = $66.22 per adviser. $66.22 per adviser x 94% x 10,050 existing advisers =
$625,580 in annual monetized costs.

10

changes or other disclosures, which they are already obligated to deliver in order to avoid
having to deliver two documents. We estimate a burden of 998,993 hours, 18 or 198.80
hours per adviser, 19 at a monetized cost of $76,992,461 in aggregate, 20 or $15,308 per
adviser, 21 for the 50% of advisers that choose to deliver amended relationship summaries
in order to communicate updated information. 22
The Commission is also requiring that all firms make available a copy of the
relationship summary upon request without charge. Where a relationship summary is
delivered in paper format, the adviser may link to additional information by including
URL addresses, QR codes, or other means of facilitating access to such information.
Firms also must include in their relationship summaries a telephone number for investors

18

10,050 advisers amending the relationship summary x 5,813 retail clients per adviser x 50% delivering
the amended relationship summary to communicate updated information x 0.02 hours per delivery x
1.71 amendments annually = 998,993 hours to deliver amended relationship summaries.

19

5,813 retail clients per adviser x 0.02 hours per delivery x 1.71 amendments annually = 198.80 hours
per adviser.

20

Based on data from the SIFMA Office Salaries Report, we expect that delivery requirements of rule
204-5 will most likely be performed by a general clerk at an estimated cost of $77 per hour. 998,993
hours x $77 = $76,992,461. We estimate that advisers will not incur any incremental postage costs to
deliver the relationship summary for communicating updated information by delivering the
relationship summary, because we expect that advisers will make the delivery along with other
documents already required to be delivered, such as an interim or annual update to Form ADV, or will
deliver the relationship summary electronically.

21

Based on data from the SIFMA Office Salaries Report, modified to account for an 1,800-hour workyear and multiplied by 2.93 to account for bonuses, firm size, employee benefits and overhead, we
expect that delivery requirements of rule 204-5 will most likely be performed by a general clerk at an
estimated cost of $77 per hour. 198.80 hours per adviser x $77 per hour = $15,308 per adviser.

22

For the other 50% of advisers that may choose to communicate updated information in another
disclosure, we estimate no added burden because these advisers will be communicating the information
in other disclosures they are already delivering like the Form ADV Part 2 brochure or summary of
material changes.

11

to call to obtain documents. We estimate that the 10,050 advisers with relationship
summary obligations, on average, require 0.5 hours each annually to comply with this
requirement. Therefore, we estimate that the 10,050 advisers incur a total of 5,025
aggregate burden hours to make copies of the relationship summary available upon
request, 23 with a monetized cost per adviser of $38.5, or $386,925 in aggregate
monetized cost. 24 We acknowledge that the burden may be more or less than 0.5 hours
for some advisers, but we believe that, on average, 0.5 hours is an appropriate estimate
for calculating an aggregate burden for the industry for this collection of information.
C. Delivery to New Clients or Prospective New Clients
Data from the IARD system indicates that of the 15,882 advisers registered with
the Commission, 10,050 have retail investors, and on average, each has 5,813 clients who
are retail investors. 25 We estimate that the client base for investment advisers will grow
by approximately 4.8% annually.26 Based on our experience with Form ADV Part 2, we
estimate the annual hour burden for initial delivery of a relationship summary is the same

23

0.5 hours to make paper copies of the relationship summary available upon request x 10,050 advisers
with relationship summary obligations = 5,025 hours.

24

Based on data from the SIFMA Office Salaries Report, we expect that the requirement for advisers to
make paper copies of the relationship summary available upon request will most likely be performed
by a general clerk at an estimated cost of $77 per hour. 0.5 hours per adviser x $77 = $38.5 in
monetized costs per adviser. $38.5 per adviser x 10,050 advisers with relationship summary
obligations = $386,925 total aggregate monetized cost.

25

This average is based on advisers’ responses to Item 5 of Part 1A of Form ADV as of December 31,
2021.

26

In the Proposing Release, we determined this estimate based on IARD system data. See Proposing
Release, supra footnote 2 at section V. The number of retail clients reported by RIAs changed by
2.8% between December 2021 and 2022, 4.2% between December 2022 and 2023 and by 7.4%
between December 2023 and 2024. (2.8% + 4.2% + 7.4%) / 3 = 4.8% average annual rate of change
over the past two years. We did not receive comments on this estimate.

12

by paper or electronic format, at 0.02 hours for each relationship summary, 27 or 5.6
annual hours per adviser.28 Therefore, we estimate that the aggregate annual hour burden
for initial delivery of the relationship summary to new clients is 56,280 hours, 29 at a
monetized cost of $4,333,560, or $431 per adviser. 30

27

This is the same as the estimate for the burden to deliver the brochure required by Form ADV Part 2.

28

5,813 clients per adviser with retail clients x 4.8% = 279 new clients per adviser. 279 new clients per
adviser x 0.02 hours per delivery = 5.6 hours per adviser for delivery of a relationship summary to new
or prospective new clients.

29

5.6 hours per adviser for delivery obligation to new or prospective clients x 10,050 advisers = 56,280
hours.

30

Based on data from the SIFMA Office Salaries Report, modified to account for an 1,800-hour workyear and multiplied by 2.93 to account for bonuses, firm size, employee benefits and overhead, we
expect that delivery requirements of rule 204-5 will most likely be performed by a general clerk at an
estimated cost of $77 per hour. 56,280 hours x $77 = $4,333,560. We estimate that advisers will not
incur any incremental postage costs to deliver the relationship summary to new or prospective clients
because we estimate that advisers will make the delivery along with other documentation normally
provided in such circumstances, such as Form ADV Part 2. $4,333,560 / 10,050 investment advisers =
$431 per adviser.

13

Table 1: Summary of Revised Annual Responses, Burden Hours, and Burden Hour Costs Estimates for Each Information
Collection
Rule 204-5
Annual No. of Responses
under the
Investment
Advisers Act of
1940
Description of
Requested Previously Change
Parts of IC
Approved
Third Party
0
0
0
Disclosure
(Posting of the
Relationship
Summary to
Website)
Third Party
0
0
0
Disclosure
(One-time Initial
Delivery to
Existing Clients)
Third Party
3,996,589 3,693,929
302,660
Disclosure
(Additional
Delivery to
Existing Clients)
Third Party
16,154
14,639
1,515
Disclosure
(Posting of
Amended
Relationship
Summaries to
Website)
Third Party
49,949,656 42,420,779
7,528,877
Disclosure

Annual Time Burden (Hrs.)

Requested

0

0

0

Previously
Approved
0

0

0

0

0

0

0

173,248

160,128

13,120

13,340,096

10,888,704

2,451,392

8,124

7,362

762

625,580

500,627

124,953

998,993

848,416

150,577

76,992,461

57,692,288

19,300,173

0

14

Previously
Approved

Monetized Time Burden ($)

Change

Requested

Change
0

(Communicating
Changes to
Amended
Relationship
Summaries)
Third Party
10,050
Disclosure
(Making Copies
of the
Relationship
Summary
Available Upon
Demand)
Third Party
2,804,191
Disclosure
(Deliver to New
Client or
Prospective
Clients)
Total 56,776,640

9,205

845

5,025

4,603

422

386,925

312,970

73,955

5,823,279

(3,019,088)

56,280

116,904

(60,624)

4,333,560

7,949,472

(3,615,912)

51,961,831

4,814,809

1,241,670

1,137,413

104,257

95,678,622

77,344,061

18,334,561

15

13.

Estimated Additional Cost Burden
There is no cost burden other than the cost of the hour burden described above.

External costs for the preparation of the relationship summary are already included for
the collection of information estimates for Form ADV, in a separate collection of
information associated with Part 3: Form CRS under the Advisers Act. We do not
anticipate external costs to rule 204-5 for several reasons, as follows: (i) investment
advisers without a public website are not required to establish or maintain one; (ii) we do
not expect advisers to incur external costs related to deliveries of the relationship
summary due to new account type openings, or material changes to the nature or scope of
the relationship, because we expect that advisers will deliver the relationship summary
along with new account agreements and other information normally required in such
circumstances; (iii) we do not expect investment advisers to incur external costs in
delivering amended relationship summaries because we expect that they will make this
delivery with other disclosures required to be delivered, such as an interim or annual
update to Form ADV; and (iv) we do not expect that advisers will incur external costs to
deliver the relationship summary to new or prospective clients because we anticipate that
advisers will make the delivery along with other documentation normally provided in
such circumstances, such as Form ADV Part 2, or will deliver the relationship summary
electronically.

14.

Annual Cost to the Federal Government
The SEC is in the process of revising its methodologies to estimate annualized

costs to the Federal government for all its relevant collections of information. The SEC

16

anticipates that future extensions of this collection of information will reflect the revised
methodologies.

15.

Reasons for Changes in Burden
We have revised the estimated burden based on new information on the number

of SEC-registered investment advisers and the average number of retail investor clients
for each adviser who has retail investors that we obtained from Form ADVs filed through
the IARD. The number of responses per investment adviser and hour burden have
increased due to an increase in the estimated number of respondents overall (there was an
increase in the number of registered investment advisers and the average number of retail
investor clients for each adviser who has retail investors).

16.

Plans for Publishing Results
Not applicable.

17.

Approval to Omit Display of OMB Expiration Date
Not Applicable.

18.

Exceptions to the Certification for Paperwork Reduction Act
Submissions
The Commission is not seeking an exception to the certification statement.

17