IA 770 was issued in 1981 to clarify the definition of investment advisers. It provided guidance on the following matters:
- What is a "security" - life insurance and fixed securities are not securities, so those who give advice solely on these financial instruments are not required to register as IAs
- What is "advice" - the guideline here is very broad - simply recommending that a client buy "stocks" instead of insurance is considered advice
- Who is "in the business" of giving advice about securities - the standard requires only that you "hold yourself out" as a financial planner or investment adviser (e.g., by advertising, making business cards, etc.) even if you have no clients yet
- What is "compensation" for giving advice about securities - compensation includes fees, commissions, assigning a liability of the adviser to the client or requiring the purchase of another product
IA 1092 was issued in 1987 as a result of the increased activity in financial planning and investment advice. It essentially reaffirmed the definition of an IA as stated in IA 770, with some refinements:
- Pension consultants and advisers to athletes and entertainers are considered to be providers of investment advice
- Firms that recommend investment advisers may have to register themselves
- An IA does not have to give advice as his/her principal business activity - simply doing so with some regularity is enough to require registration
- If a registered representative of a broker-dealer sets up a separate business entity to provide financial planning or investment advice for a fee, he/she may not rely on the broker-dealer exemption from registration (this is known as a statutory investment adviser)
- "Compensation" does not have to be monetary to fall under the definition - receipt of products, services or discounts is also considered compensation
In regard to sports or entertainment agents, those who negotiate contracts but do not render investment advice would be excluded from the definition of an IA.
The complete IA 1092 release can be viewed here.
State Registered Investment Advisers
Financial AdvisorLearn the importance of having a financial adviser whom you can trust and why questioning the funds he selects is part of that process.
Financial AdvisorDiscover what a career as a financial adviser entails, and learn what pros and cons an individual faces when embarking on a career in this field.
InvestingLook at how Facebook's Instant Articles feature works, and how it differs from the new Accelerated Mobile Pages feature from Google and Twitter.
Financial AdvisorDiscover what the best financial advisers share in terms of the traits they possess, and learn what clients value most in their advisers.
Financial AdvisorUnderstand what creates dissatisfaction between financial advisers and their firms, and learn the top reasons advisers ultimately make the decision to leave.
Financial AdvisorRead an in-depth review of the differences between a career as a financial Adviser versus a career as a Financial Analyst, including how to decide which is best.
Financial AdvisorLearn how the worst financial advisers tend to share common traits, including greed, arrogance, ignorance and being difficult to reach when times are tough.
RetirementWhat you need to know in order to check.
Financial AdvisorFind out which digital platforms financial advisers should look to as the trend toward adviser-based digital advice continues into 2016.
Financial AdvisorPay attention to the habits of your financial adviser to avoid him ripping you off by commingling, churning, scamming or embezzling your money.