SEC Extends Rule 204-5 for Adviser Disclosures to Retail Investors
Published Date: 10/1/2025
Notice
Summary
The SEC is asking for comments to extend a rule that makes investment advisers give a clear, easy-to-understand summary to retail investors before starting a contract. About 10,050 advisers spend time and money creating these summaries to help people make smart choices about their investments. This extension keeps the rule going without changes, with an estimated yearly cost of about $95.7 million across all advisers.
Analyzed Economic Effects
2 provisions identified: 1 benefits, 1 costs, 0 mixed.
Compliance Burden on Advisers Quantified
The SEC estimates about 10,050 registered investment advisers must deliver the relationship summary and that complying requires 1,241,670 aggregate hours per year (about 124 hours per respondent) and a total annual monetized cost of $95,678,622 (about $9,520 per adviser). The SEC notes these figures include 291 broker-dealers that are dually registered as investment advisers.
Advisers Must Give Retail Summaries
Under Rule 204-5, an investment adviser must give each retail investor an electronic or paper relationship summary before or at the time the adviser enters into an investment advisory contract. The summary is meant to help you decide whether to hire or keep an adviser and which types of accounts and services suit your needs.
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