Investment Adviser Association (IAA)

What Is the Investment Adviser Association (IAA)?

The Investment Adviser Association (IAA) (formerly known as the Investment Counsel Association of America or ICAA) is a non-profit organization whose members work in the investment advisory profession. The Investment Counsel Association of America represents the interests of its members to regulatory bodies, such as the Securities and Exchange Commission (SEC).

It also establishes standards and principles designed to govern the actions of its members, including those involving fiduciary duty. The ICAA played an active role in the United States Congress with the creation of the Investment Advisers Act of 1940, a federal law regulating investment advisors and professionals. 

Understanding the Investment Adviser Association (IAA)

Founded in 1937, the Investment Counsel Association of America (ICAA), as it was known at the time, played a major role in the enactment of several pieces of federal legislation regulating the investment adviser and investment industry. In 2005, the organization changed its name to the Investment Adviser Association (IAA).

Today, the IAA’s growing membership consists of more than 650 firms that manage $25 trillion in assets for a wide variety of clients, including individuals, trusts, investment companies, private funds, pension plans, state and local governments, endowments, foundations, and corporations.

The IAA is comprised of more than 300 investment advisory firms that collectively manage client assets in excess of $4 trillion. The investment advisers manage assets for a spectrum of clients including individuals, families, institutions such as public and private pension plans, corporate funds, mutual funds, hedge funds, charitable organizations, and endowments.

All IAA constituent firms may represent themselves as "investment counsel" under section 208(c) of the Advisers Act. As such, IAA members are restricted to selling only investment advice and investment management services to clients, but they may not collect any commissions or generate profits from the transactions they facilitate. IAA members may be compensated strictly based on negotiated fees for investment services rendered, where the money they collect is primarily a function of a percentage of assets under management (AUM).

Investment Adviser Association Regulations

While the specific rules IAA members must follow are granular, generally speaking, they embrace a fiduciary duty to clients, with a basic premise of making suitable recommendations for their clients. And by statute, IAA members must adhere to the following regulations:

• The Investment Advisers Act of 1940
• All rules and regulations that the Securities and Exchange Commission has issued under the Advisers Act
• The Securities Act of 1933
• The Securities Exchange Act of 1934
• The Commodities Exchange Act (CEA)
• All of the rules and bylaws created by the Municipal Securities Rulemaking Board (MSRB)

Advisers who fail to live up to the rules and regulations are subject to a range of civil fines and criminal penalties.