An investment adviser (IA) can be either an individual or a company. If you are providing investment advisery services as an employee of an IA, you are actually an investment adviser representative (IAR).
If you are listed as a partner, officer, or director of an IA at the time of initial registration, you do not need to register separately as an IAR. If not, you must register as an IAR through your state. Your employing firm will supply the necessary information for registration.
IA employees who perform any of these functions must register as an IAR:
- Making investment recommendations or giving securities advice
- Managing client accounts or portfolios
- Soliciting or offering investment advisery services
- Supervising employees who perform any of the above
IA employees who have only clerical duties do not have to register as IARs.
Watch for questions that ask if an office manager who supervises account managers or solicitors has to register as an IAR. While those who have only clerical duties do not needto register, those who supervise IAR employees must do so.
Exam Tips and Tricks
Watch out for the distinction between an IA and an IAR when you are reading exam questions, since there may be differences in registration requirements. You will likely find a number of questions that refer to both IAs and IARs, such as these two examples:
All of the following statements regarding individuals who transact business in the state are true EXCEPT:
- Investment adviser representatives must register in the state
- Investment advisers must register in the state
- Representatives of federal covered advisers must register in the state
- Federal covered advisers must register in the state
The correct answer is "d", since federal covered advisers are not required to also register with the state.
- The "consent to service of process" must accompany which of the following?
- Investment adviser's initial registration application
- Investment adviser representative's initial registration application
- Investment adviser representative's renewal registration application
- Non-criminal complaint filed against an investment adviser
- II & III
- I & IV
- I & II
- I, II & III
The correct answer is "c" - the consent to service of process is only necessary at the time of initial registration for both investment advisers and investment adviser representatives.
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