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Federal Register / Vol. 86, No. 42 / Friday, March 5, 2021 / Rules and Regulations investment adviser per year for Form ADV. We estimate that the average total annual collection of information burden for registered investment advisers who are obligated to prepare and file relationship summaries will increase 0.5
hour to 38.97 hours per registered investment adviser per year for Form ADV. We do not expect that the amendments will increase or decrease the currently approved total burden estimate of 3.60 per exempt reporting adviser completing Form ADV. We are not modifying our estimates from the proposal. Although one commenter claimed that we underestimated the Form ADV burden, this commenter mischaracterized our statements in the
Number of advisers to be included in the final burden.
Final total annual hour estimate per adviser.
Final aggregate burden hours.
Final aggregate monetized cost.

increases due to increased number in RIAs since the burden estimate was last approved but a decreased number in ERAs, the revised annual aggregate burden hours for Form ADV Parts 1, 2
and 3 for all registered advisers and exempt reporting advisers will be 544,053 hours per year, with a monetized value of $148,526,578.1053
This will be an aggregate increase of 29,256 hours, or $7,956,996 in the monetized value of the hour burden, from the currently approved annual aggregate burden estimates, increases which are attributed to the factors described above.
Estimated new annual hour burden for advisers:

RIAs not obligated to prepare and file relationship summaries
RIAs obligated to prepare and file relationship summaries
Exempt reporting advisers
5,506 + 571 expected newly registered RIAs annually.
29.72

8,218 + 656 expected newly registered RIAs annually.
38.97

4,455 + 441 expected new ERAs annually.

180,608 hours

345,819.8 hours

17,625.6 hours

544,053.4 hours.

$49,306,104

$94,408,800

$4,811,789

$148,526,578.

All advisers
3.60 hours

We are adopting amendments to rule 20641 now known as the marketing rule, which we adopted in 1961 to target advertising practices that the Commission believed were likely to be misleading. We are also incorporating into rule 20641 certain aspects of rule 20643 previously referred to as the cash solicitation rule, which we adopted in 1979 to help ensure clients are aware that paid solicitors who refer
them to advisers have a conflict of interest. We are accordingly eliminating rule 20643.
As discussed above, we are adopting amendments to rule 20641 to impose:
i General prohibitions of certain advertising practices applicable to all advertisements; ii tailored restrictions or conditions on specific practices applicable to testimonials, endorsements, and third-party ratings;
and iii tailored requirements for the presentation of performance results, including predecessor performance. The final rule is designed to restrict or place conditions on specific practices we believe may cause investors to be misled without appropriate conditions or limitations. The final rule will also include a new definition of advertisement that is intended to be flexible enough to remain relevant and effective in the face of advances in technology and evolving industry practices. The reasons for, and objectives of, the final amendments are
discussed in more detail in sections I
and II, above. The burdens of these requirements on small advisers are discussed below as well as above in sections III and IV, which discuss the burdens on all advisers. The professional skills required to meet these specific burdens are also discussed in section IV.
We believe that our final amendments are appropriate and in the public interest and will improve investor protection. We are adopting amendments to the current rule because while we believe that the concerns that motivated the Commission to adopt rule 20641 and 20643 still exist today, we also believe that we can achieve our regulatory goals in a more tailored manner. We believe that our final amendments will update the rules coverage to reflect regulatory changes and evolution of industry practices, improve the quality of disclosures to investors, and streamline elements of the rules our 40 years of experience has
1050 In the proposal, we estimated that the amendments would not change the burden for exempt reporting advisers because they will not be required to complete the new portion of Form ADV.
1051 Id., at nn.4445 and accompanying text, 1052 Id., at nn.4647 and accompanying text.
1053 544,053.4 aggregate annual hour burden is the sum of: i 29.72 hours 5,506 RIAs + 571
expected newly registered RIAs annually = 180,608

total aggregate annual hour burden for RIAs not obligated to prepare and file relationship summaries; ii 38.97 hours 8,218 + 656 expected newly registered RIAs annually = 345,819.8 total aggregate annual hour burden for RIAs not obligated to prepare and file relationship summaries; iii 3.60
hours 4,455 + 441 expected new ERAs annually = 17,625.6 total aggregate annual hour burden for ERAs. We believe that performance of this function
will most likely be equally allocated between a senior compliance examiner and a compliance manager. Data from the SIFMA Management and Professional Earnings Report suggest that costs for these positions are $237 and $309 per hour, respectively, with a blended rate of $273. Therefore:
544,053.4 hours $273 = $148,526,578.
1054 5 U.S.C. 603a.

V. Final Regulatory Flexibility Analysis The Commission has prepared the following Final Regulatory Flexibility Analysis FRFA in accordance with section 4a of the Regulatory Flexibility Act RFA.1054 It relates to: i Final amendments to rule 20641 under the Investment Advisers Act; ii final amendments to rule 2042, and iii final amendments to Form ADV Part 1A.
A. Reason for and Objectives of the Final Amendments 1. Final Rule 20641

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proposal.1050 We stated in the proposal that the Form ADV amendments would not increase the time required to complete the form for exempt reporting advisers not registered investment advisers, which we continue to believe is the case.
The currently approved annual aggregate burden for Form ADV for all registered advisers and exempt reporting advisers is 514,797 hours, for a monetized cost of $140,569,582.1051
This is an annual blended average per adviser burden for Form ADV of 29.28
hours, and $7,996 per adviser.1052
Factoring in the new questions on Part 1 of Form ADV that will be required for all registered investment advisers but not for exempt reporting advisers, and
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