Module 9 (Financial Advisor Regulation) Flashcards
(65 cards)
Are financial planners regulated by the federal or state government or neither?
Neither
What law or Act controls the regulation of a financial planner?
Investment Advisors Act of 1940
What are the 3 things that will have to be in place for the Investment Advisors Act of 1940 to apply?
- The person is giving advice about securities
- The person is in a business that provides securities
- The person is being paid
Name 8 types of securities.
- stocks
- mutual funds
- bonds
- insurance products
- options
- derivatives
- commercial paper
- limited partnerships
The Investment Advisors Act of 1940 has many ways to determine if a financial planner is in business. But what are the two key ways the book speaks about?
- Checks the public view and see if they view the planner as a business that sales securities
- Looks at business cards and advertising
True or false.
Fees for advice as well as commissions on securities, do they both count as compensation under the Investment Advisors Act of 1940?
Yes
Who do investment advisors register with?
SEC
If you are not considered an investment advisor you do not have
register with SEC
Investment Advisors who are exempt from registration ____________ required to register with the SEC.
are not
If you are required to register with the state, are you required to register with the SEC?
No
A bank or bank holding company is _____ considered an investment advisor.
not
Is someone who only performs incidental investment services (e.g. Lawyer, engineer, teacher, or accountant) considered an investment advisor?
No
Is a broker or dealer performing services outside of their practice, and gets no special compensation, considered an investment advisor?
No
Is someone that gives advice only on US government securities considered an investment advisor?
No
An investment advisor whose clients reside in their home state and they don’t provide advice on securities listed on the national exchange, do they have to register with the SEC?
No
An investment advisor who’s clients are only insurance companies, do they have to register with the SEC?
No
Does an investment advisor who has less than 15 clients within 12 month span have to register with the SEC?
No
An investment advisor who is a director, employee, or volunteer of a charity required to register with the SEC?
No
Does a commodity trading advisor not acting as an investment advisor required to register with the SEC?
No
Advisors with less than $100 million assets under management has to register with the…
state.
The state determines this every year
Who are the 6 groups of advisors that must register with the SEC?
– Advisers who already registered because their investment company is already registered.
– If your office is in Wyoming or outside of the US
– Rating organizations that are registered as advisers (Moody’s)
– Internet investment advisors
– Pension consultants that has more than $50 million in assets
– Start up advisers that are expected to be eligible for registration with the SEC within 120 days
If a financial planner is subject to the SEC regulation, they are responsible for the following…
RRCAUDA
– Registration – Recordkeeping – Charging fees – Assigning contracts – Using labels – Delivering brochures – Avoiding fraud
Advisers are required to comply with the Investment Advisors Act of 1940 and become a registered investment advisor by completing form…
ADV.
Under Form ADV, fees that are charged are based on…
the assets you have under management.
