The term investment advisor representative DOES NOT include an individual who:

  • performs only clerical or ministerial acts.
     
  • is an agent whose performance of investment advice is solely incidental to the individual acting as an agent and who does not receive special compensation for investment advisory services.
     
  • is a federal covered investment advisor representative (however, if a federal covered investment advisor has a place of business in a state where a representative conducts business, the representative may be required to register with the Administrator). Do not confuse federal covered with an investment advisor that is required to file on a state level.

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 IARs:

  • Making investment recommendations or giving securities advice
  • Managing client accounts or portfolios
  • Soliciting or offering investment advisory services
  • Supervising employees who perform any of the above

Example 1
If John calls Excellent Money Managers, Inc. to speak with someone about his portfolio and ends up talking to Kathy Kash, is he talking to the investment advisor representative or to the investment advisor?

Answer
John is talking to the investment advisor representative (Kathy Kash), an employee of the investment advisor: Excellent Money Managers, Inc.

Example 2
Big Bubba Bob is an investment advisor representative of Kamikaze Portfolio Managers, a federal covered investment advisor (meaning it is registered with the SEC). Bob has clients in California, New York, Colorado and Alaska. The company's offices are located in Georgia. In which states must he register with the Administrator to work as an investment advisor representative?

Answer
None, except Georgia if he does any business there. However, because Kamikaze Portfolio Managers is a federal covered investment advisor (registered with the SEC), he does not have to register in the state where his firm has no physical address.

Watch out 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 need to register, those who supervise IAR employees must do so.

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:

  1. investment advisor representatives must register in the state.
  2. investment advisors must register in the state.
  3. representatives of federal covered advisors must register in the state.
  4. federal covered advisors must register in the state.

The correct answer is "d", since federal covered advisors are not required to also register with the state.

  1. The "consent to service of process" must accompany which of the following?
    1. advisor's initial registration application
    2. Investment advisor representative's initial registration application
    3. Investment advisor representative's renewal registration application
    4. Non-criminal complaint filed against an investment advisor
    1. II & III
    2. I & IV
    3. I & II
    4. 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 advisors and investment advisor representatives.



Introduction

Related Articles
  1. Investing

    Series 63, Series 65 Or Series 66?

    When joining the world of investment professionals, you must take the right exams.
  2. ETFs & Mutual Funds

    What's an Investment Advisor?

    An investment or financial advisor makes investment recommendations and analyzes securities.
  3. Financial Advisor

    5 Things to Ask Before Hiring a Financial Advisor

    Choosing a financial advisor isn't an easy task. Here's a list of the most important things to consider when planning for your financial future.
  4. Financial Advisor

    Essential Questions for a Financial Advisor

    If you're a prospective financial advisor client (or an adviser), here are some questions you should ask ... and be prepared to answer.
  5. Financial Advisor

    7 Steps To Evaluate A Financial Advisor

    Looking to hire a financial advisor but unsure what you want or need? Follow these seven steps.
  6. Personal Finance

    How to Interview Your Financial Advisor

    When it comes to choosing a financial advisor, investors have to do homework. That means interviewing multiple advisors and asking the tough questions.
  7. Financial Advisor

    Ethical Standards You Should Expect From Financial Advisors

    Professional ethics in the financial services profession can be confusing. Here are some ways to ensure you are getting the best out of your advisor.
  8. Financial Advisor

    Can You Afford a Financial Advisor?

    Don't think you can afford a financial advisor? Think again. Here's why you should reconsider hiring an advisor.
  9. Investing

    6 Key Questions to Ask Your Financial Advisor in 2016

    While hiring a financial advisor is a good idea for your investments, it can be hard to know who to trust. These 6 questions will help you choose.
  10. Investing

    Advisory Fees On The Series 66 Exam

    Learn what you need to know about investment advisory fees and contracts to pass the Series 66 exam.
Trading Center