Client Funds and Securities
Chapters in this video
- 0:00 Introducing Adam the Advisor and the custody minefield
- 0:58 Custody triggers: keys to the house versus the window
- 2:23 Safe harbors: the three-business-day bomb defusal
- 3:00 Custody safeguards and the fee-deduction exception
- 4:45 Discretion and suitability: asset, action, amount
- 6:46 Uniform Prudent Investor Act versus the old Prudent Man Rule
- 7:36 Anti-money laundering: SAR, CTR, and cash aggregation traps
- 9:20 Rapid-fire exam recap
What this video covers
- What triggers custody versus what does not: deduction of advisory fees, trustee status, and withdrawal-capable login access versus view-only access
- The two three-business-day safe harbors and why a check payable to the adviser instead of a third party detonates instant custody
- The five custody safeguards: qualified custodian, quarterly custodian statements, reasonable basis, legend on adviser statements, and annual surprise examination
- The fee-deduction exception versus the pooled-vehicle audit exception, and which accountant inspection body applies to each
- The AAA memory aid for discretion: asset, action, amount, plus the 10-business-day written-authority rule for investment advisers versus the zero-grace-period rule for broker-dealer agents
- The two layers of suitability: reasonable basis and customer specific, with the Uniform Prudent Investor Act (UPIA) portfolio-level standard and mandatory diversification
- The SAR and CTR thresholds, the per-customer-per-business-day aggregation rule for cash, and the no-tipping-off requirement
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