June 13, 2000
VIA U.S. MAIL AND ELECTRONIC FILING
Mr. Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609
Re:Proposed Amendments to Form ADV, File No. S7-10-00
Dear Mr. Katz:
Standish, Ayer & Wood, Inc. ("Standish") appreciates the opportunity to provide these comments regarding the Securities and Exchange Commissionís proposed rules related to substantial revisions to Form ADV. Standish was established in 1933 and manages more than $44 billion in assets for institutional and individual investors in the U.S. and abroad. Standish and its affiliate, Standish International Management Company, LLC, offer a broad array of investment services that include management of domestic and international equity and fixed income portfolios.
On April 5, 2000, the Commission proposed substantial amendments to Form ADV, designed to modernize the registration process and enhance information that investment advisers provide to its existing and prospective clients. As part of this enhanced disclosure, a firm would be required to provide clients with a narrative brochure in plain English describing its practices, policies, and procedures, along with brochure supplements providing additional information regarding specific employees of the firm.
Although Standish is taking this opportunity to comment separately on the proposed amendment to Form ADV, we fully support the views expressed in the Investment Counsel Association of America ("ICAA") comment letter. We are a member firm of the ICAA.
The SEC has presented the advisory community with the opportunity to improve disclosure to its clients. As it presently stands, Form ADV has not provided useful information to clients. In our annual offering, very few clients take us up on the offer and those that do are the client's treasury or administrative departments where the sole purpose appears to be to "paper a file". We fully support the initiative for better disclosure, but we feel that the proposal needs substantial reevaluation and revision in order to provide clients with what they really want to know about their investment adviser at the commencement of the relationship and every year thereafter.
First, we feel that disclosure of policies, practices and procedures in Form ADV is not useful to clients. It is difficult for a client to evaluate the efficacy of a procedure, policy or practice on the basis of summary narrative disclosure.
Investment advisers should be in a position to maintain written policies and procedures on all items proposed in Part 2A, and provide them to clients upon request. Indeed, the question of whether each of these policies exists in written form and whether the investment advisor would furnish them upon request could be asked in a check-the-box format. This would motivate investment advisers to institute written procedures on all of the required items.
In our opinion, after asking our portfolio managers the subject matter of client inquiry, the following represents a list of items advisory clients would find useful in an initial and annual disclosure format:
From our experience, clients are largely concerned with what changed at the firm, not what remained the same.
Our intention is to provide the Commission with some ideas that would create a disclosure document of real substance that could act as a model for other types of fiduciary relationships.
Please do not hesitate to contact us if we may provide additional information or clarification to the Commission regarding any of these matters.
Beverly E. Banfield
Associate Director and Director of Compliance
Standish, Ayer & Wood
cc: Paul F. Roye, Esq.