Definitions
Chapters in this video
- 0:00 The ABC test and Adam the advisor
- 1:06 Compensation traps: referral fees count
- 2:30 LATE exclusions and the solely incidental catch
- 3:14 Bank subsidiary trap and other exclusions
- 4:19 AUM thresholds: $110M mandatory SEC, $100M optional zone
- 5:17 The $25M federal fallback and $90M drop trigger
- 6:14 Rapid-fire exam recap
What this video covers
- The three-part ABC test for investment adviser status: advice about securities, in the business, and compensation (which includes any economic benefit, not just direct fees)
- Why referral fees, soft dollars, and indirect benefits count as compensation and trigger the definition
- The LATE exclusions (lawyers, accountants, teachers, engineers) and why the "solely incidental" condition is easily lost
- Why bank subsidiaries and affiliates are never excluded, even when the parent bank itself is excluded
- The broker-dealer exclusion conditions: solely incidental advice plus no special compensation
- The AUM thresholds for mandatory SEC registration ($110 million and up), optional SEC registration ($100 million to under $110 million), and state registration (under $100 million, with the $25 million mandatory federal fallback)
- The $90 million AUM drop trigger that forces a switch from SEC back to state registration
Read the full lesson, free
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