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Why examiners care
What records are covered
Rule 204-2 enumerates the categories advisers must keep. The list is long, but the substantive groupings are:
- Financial books — journals, ledgers, trial balances, financial statements.
- Advisory records — client agreements, written communications received and sent that relate to advice given, account statements, recommendations.
- Code of ethics records — personal trading reports, access-person designations, attestations.
- Marketing materials — every advertisement, including emails, social posts, newsletters, and website snapshots.
- Performance and composite records — supporting calculations and source data.
- Custody-related records when the adviser has custody.
- Compliance program records — written policies, the annual review (Rule 206(4)-7), and supporting evidence.
Retention periods
Most records must be kept for at least five years from the end of the fiscal year in which the record was created, with the most recent two years immediately accessible at the firm's principal office. Some categories — corporate records and certain custody records — have longer requirements.
Electronic records and the modernization rule
The 2024 amendments brought Rule 204-2 fully into the electronic era. Records may be maintained in electronic form provided the firm has reasonable safeguards: tamper-evident storage, indexing for prompt retrieval, periodic reviews of access controls, and the ability to produce non-rewriteable copies on demand. Cloud storage is permitted with the same controls.
Why the rule matters in examinations
The first thing the SEC asks for in an examination is the records. Firms that cannot produce a requested record within the requested window — typically two weeks for the initial request — start the exam in a deficiency posture. Common failures: archived emails not searchable, marketing materials not retained, supporting calculations for performance composites missing.
How StratiFi thinks about books and records
The bar is not "we have the records somewhere." It is "we can produce any required record, accurately and quickly, when an examiner asks." Firms that meet that bar treat recordkeeping as a system — connected to the annual compliance review and the supervisory framework — rather than a periodic cleanup task.
Frequently asked questions
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How long do adviser records need to be kept?
Most records must be kept for at least five years from the end of the fiscal year in which they were created, with the first two years immediately accessible at the firm's principal office. Some categories have longer retention requirements. -
Does the rule cover emails and chats?
Yes. Any written communication received or sent that relates to advice given to clients is a covered record. This includes business email, business-purpose chats on platforms the firm permits, and client-facing social media. -
Is cloud storage allowed for adviser records?
Yes, with the same safeguards as physical or on-prem electronic storage: tamper-evident, indexed for prompt retrieval, access-controlled, and producible in non-rewriteable form.