AI disclosure language for Form ADV Part 2A.
Sample text for Items 4 and 8, and the materiality test that comes first. Most firms need two sentences, not a page.
There is no AI-specific item in Form ADV Part 2A. If your use of AI is material to the advisory relationship, it belongs in the item it already relates to: Item 4 if it changes the services you provide, Item 8 if it is part of your methods of analysis or investment strategies, together with the material risks it brings. If the use is not material, adding it creates its own exposure rather than reducing it.
The materiality test, before the wording.
The standard is whether a reasonable client would consider the fact important in deciding to engage or stay with you. That phrasing is hard to apply to software, so here is the narrower version that actually decides cases: does the tool influence what advice the client receives?
A model that drafts an internal meeting summary does not. A model that produces the analysis a recommendation rests on does. A model that screens which securities you ever look at is on the wrong side of the line even though it never writes a word the client sees.
Recording a client meeting is a separate question and does not belong here. That is governed by state consent law, which the advisory agreement page covers.
Sample text, by level of involvement.
Use the one that describes your firm and delete the rest. Bracketed text is a fill-in, not decoration — a brochure that keeps the brackets is worse than one that says nothing.
Internal use only
The firm uses commercially available software incorporating artificial intelligence for administrative tasks such as drafting internal correspondence and summarizing documents. These tools do not generate investment advice and are not used as a method of analysis in formulating recommendations. All client-facing work product is prepared and reviewed by supervised persons.
Part of the analysis
As part of its methods of analysis, the firm uses software incorporating artificial intelligence to [assist in screening securities / analyze portfolio holdings / prepare draft planning analyses]. Output from these tools is reviewed by a supervised person before it informs any recommendation. These tools can produce incomplete or inaccurate results, may reflect limitations in the data available to them, and are not a substitute for the firm's judgment. The firm does not delegate investment decisions to them.
Changes the service itself
The firm's [service name] uses software incorporating artificial intelligence to [describe what the client actually receives that they would not otherwise]. Clients should understand that [describe the specific limitation, the human review that applies, and what the firm remains responsible for].
Over-disclosure is the failure mode nobody expects.
Firms approach this asking how much they have to admit to. The enforcement record points the other way. In March 2024 the SEC settled charges against two advisers for describing AI capabilities they did not have, with penalties of $225,000 and $175,000.
A brochure is the document the SEC reads first, and a paragraph describing a roadmap as though it were a running system is a misstatement sitting in it. The test is whether you could substantiate every sentence this afternoon. If a claim needs a deployment to become true, it does not go in.
Three documents, one story.
The brochure, the advisory agreement and your marketing all describe the same firm, and examiners read them together. The most common finding in this area is not a missing disclosure — it is a brochure that is quieter than the website.
Before you file, put the three side by side and check that the AI described in each is the same AI. If the marketing is more ambitious, the marketing is the thing to change.
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Sources and standing.
Form ADV Part 2A is the narrative brochure required of registered investment advisers, and its items are set out in the form's own instructions. The sample language above is drafting starting points, not filings — every one of them needs your facts and your counsel before it goes anywhere. Last reviewed at source: September 2026.
- SEC, Form ADV Part 2 and its instructions (checked 2026-10-27)
- 17 CFR 275.204-3, Delivery of brochures and brochure supplements (checked 2026-10-27)
This is not legal advice. It is how a practitioner who implements these systems reads the requirement, written down so you can check it. If something here is wrong, tell me and it gets corrected.
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