Definitions of Investment Advisers
Chapters in this video
- 0:00 The ABC three-prong test for investment adviser status
- 1:00 Compensation prong traps: indirect and third-party pay
- 2:56 Why financial planners cannot escape the IA definition
- 3:35 The L.A.T.E. exclusion and the solely incidental rule
- 4:17 Broker-dealer exclusion and the wrap fee poison apple
- 4:49 Publisher exclusion and the tailoring destroyer
- 5:25 De minimis exemption: five clients, no office
- 6:35 Excluded versus exempt versus ERA versus registered
- 7:33 Rapid-fire exam recap
What this video covers
- The three-prong test for investment adviser (IA) status: advice about securities, regular business, and any form of compensation (direct or indirect)
- Why financial planners providing securities advice as a component of comprehensive plans cannot escape the IA definition, per SEC Release IA-1092
- The L.A.T.E. exclusion and why advice must be solely incidental to the person's primary professional practice
- The broker-dealer exclusion and why a wrap fee destroys it by constituting special compensation
- The publisher exclusion and why tailoring advice to a specific client's financial situation destroys it
- The de minimis exemption: the five-retail-client cap, the 12-month lookback, the exclusion of institutional clients, and why an office in the state voids the exemption
- The critical distinction between excluded (not an IA at all), exempt (an IA who need not register), exempt reporting adviser (ERA), and registered IA, plus why antifraud provisions apply to every category
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