An advisor has all client advisory fees automatically deducted from their accounts by the custodian. 

By Investopedia Staff AAA
Q:
An advisor has all client advisory fees automatically deducted from their accounts by the custodian.  Under this circumstance, the advisor is not considered to have custody of client funds if which of the following conditions are met?
I. The advisor sends the client a copy of the bill within 10 days after deduction from their account
II. The custodian sends the client a statement at least quarterly
III. The client has provided written authorization for the fees to be deducted
IV. The advisor sends the client the value of the assets and how the fee was calculated
A) I and III only
B) I, II and III
C) II, III and IV
D) I, II, III and IV
A:

The correct answer is c)
An advisor is not deemed to have custody of client funds when debiting management fees from the client account directly if all of the following conditions are met:  the client must have provided written authorization to do so, the custodian agrees to send the client statements at least quarterly, and a copy of the bill and the manner in which the fee was calculated is provided to the client and custodian at the same time.


RELATED FAQS

  1. Sometimes investment banking firms allocate shares of hot issues to the personal ...

    The correct answer is a) Spinning is the act of selling hot issues to the personal accounts of corporate officers which in ...
  2. Donald has been putting aside money for his retirement into a Roth IRA for six years.  Although ...

    The correct answer is A) In a Roth IRA, there is no required distribution date as there is in a traditional IRA.
  3. A 7-year, 6% coupon callable bond is currently trading at 96.25.  The ...

    Free info on financial certification exams including study guides, exam questions, and much more!
  4. According to SEC Release IA-1092, which of the following would NOT qualify as an ...

    The correct answer is C). SEC Release IA-1092 considers financial planners, pension consultants and sports and entertainment ...
RELATED TERMS
  1. Series 79

    A examination to ensure a candidate is qualified to become a ...
  2. Research Analyst

    A person who prepares investigative reports on equity securities. ...
  3. Series 34

    An exam required for individuals seeking to engage in off-exchange ...
  4. Financial Advisor

    One who provides financial advice or guidance to customers for ...
  5. Series 23

    An exam offered by the Financial Industry Regulatory Authority ...
  6. Series 28

    An exam given by the Financial Industry Regulatory Authority ...

You May Also Like

Related Articles
  1. Professionals

    Should You Add A Securities License ...

Trading Center