RIAs

Question 1

when must an advisor register with the SEC?

Answer 1

when the advisor has assets under management of over $110 million

Question 2

when must an advisor register with the state?

Answer 2

when the advisor has assets under management of less than $100 million

Question 3

when does an advisor have the option to register with either the SEC or the state?

Answer 3

when the advisor has assets under management between $100 million and $110 million

Question 4

what form must an advisor file to register with the SEC?

Answer 4

Form ADV

Question 5

what form must an advisor file to withdraw registration with the SEC?

Answer 5

Form ADV-W

Question 6

what is the Form ADV - Part 1?

Answer 6

this form contains the investment business, ownership, clients, employees, business practices, affiliations, and disciplinary events of the advisor or its employees

Question 7

what is the Form ADV - Part 2?

Answer 7

this form contains the advisor’s compensation, fees, education, investment objectives, conflicts of interest, and the background of advisory personnel

Question 8

what is the Form ADV - Part 3?

Answer 8

this form contains the information from Form CRS, and provides a retail investor succinct information about the relationship and service the firm offers including fees, costs, specified conflicts of interest, standard of conduct, and disciplinary history

Question 9

what people have an exception to registration with the SEC?

Answer 9

TABLEs

• Teachers
• Accountants
• Brokers
• Lawyers
• Engineers

Question 10

what people meet the definition of investment advisor, but are exempt from registering with the SEC?

Answer 10

VIPs are SaFE
investment advisors dealing only with:
- Venture capital
- Insurance companies
- Private funds less than $150 million
- home State clients
- Foreign advisors
- securities not on a national Exchange

Question 11

what is the Brochure Rule?

Answer 11

requires written disclosures to every client of the following:

• advisory services that are provided and the fees pertaining to those services
• types of securities that are part of investments
• education background of the advisor
• participation/interest in securities transactions

Question 12

what does FINRA stand for?

Answer 12

Financial Industry Regulatory Authority

Question 13

what form must a person file to register with FINRA?

Answer 13

Form U-4

Question 14

what does the Series 6 exam permit someone to sell?

Answer 14

mutual funds, UITs, variable life insurance, and variable annuities

note: to sell variable insurance or variable annuities, you must also have a state insurance license

Question 15

what does the Series 7 exam permit someone to sell?

Answer 15

everything except commodities and futures

Question 16

what does the Dodd-Frank Wall Street Reform and Consumer Protection Act declare?

Answer 16

• lenders must now verify whether, based on income, credit history, and other data, a borrower can reasonably be expected to repay their loan
• lenders are prohibited from refinancing borrowers unless the new mortgage provides a benefit to the borrower
• after losing their jobs, homeowners who are unable to pay may qualify for up to $50k in loan assistance
• banks must retain at least 5% of risky loan exposure on their books
• the FDIC limit was made permanent at $250k

Question 17

what qualifies someone to be an accredited investor?

Answer 17

• have $1 million net worth exclusive of a personal residence, OR
• make a minimum of $200k in each of the two most recent years if single ($300k joint income with a spouse) and have a reasonable expectation of the same income level in the current year

Question 18

what 4 components satisfy the general obligation of Regulation Best Interest?

Answer 18

1. Disclosure of Obligation
2. Care Obligation
3. Conflict of Interest Obligation
4. Compliance Obligation