An investment adviser representative changes employment from Adviser Firm A to a newly formed, unaffiliated Adviser Firm B in the same state on June 1. Which statement correctly describes her registration status on June 2?

Her registration with Firm A terminates upon the change, and a new application must generally be filed to register her with Firm B.

An individual holds an active CFP certification and has taken neither the Series 65 nor the Series 66. She wants to register as an investment adviser representative in a state that follows NASAA's model rule. What is the correct position?

She may qualify for a waiver of the Series 65 examination requirement based on the CFP certification.

A broker-dealer agent occasionally offers general portfolio commentary to clients as part of standard brokerage services, but the firm charges no separate or special fee for this commentary — compensation is limited to standard commissions on trades executed. Under the Uniform Securities Act, does this activity, by itself, require the broker-dealer to register as an investment adviser?

No, because broker-dealers whose investment advice is solely incidental to brokerage services and who receive no special compensation for it are excluded from the adviser definition.

Series 63 Investment Adviser Registration Practice Questions

Question 1
An investment adviser representative changes employment from Adviser Firm A to a newly formed, unaffiliated Adviser Firm B in the same state on June 1. Which statement correctly describes her registration status on June 2?
- A. Her registration automatically transfers to Firm B without any new filing because she remains an IAR in the same state.
- B. Her registration with Firm A terminates upon the change, and a new application must generally be filed to register her with Firm B.
- C. She may act as an unregistered IAR for up to 90 days while the transfer paperwork is pending.
- D. No registration action is needed because IAR registration attaches to the individual, not the firm, under the Uniform Securities Act.
Show answer and explanation
Correct answer: B. Her registration with Firm A terminates upon the change, and a new application must generally be filed to register her with Firm B.
IAR registration is tied to the sponsoring firm. A change of employer terminates the existing registration, and the new employer must file a new application to register the representative before she conducts advisory business on its behalf.
- A. Registration doesn't automatically transfer between unaffiliated firms — a new filing is generally required.
- B. Correct. Her registration with Firm A terminates upon the change in employment, and a new application must generally be filed to register her with the new, unaffiliated Firm B.
- C. There's no 90-day grace period allowing her to act as an unregistered IAR while paperwork is pending.
- D. IAR registration is tied to the sponsoring firm, not solely the individual — a change in employer requires a new registration action.
Question 2
An individual holds an active CFP certification and has taken neither the Series 65 nor the Series 66. She wants to register as an investment adviser representative in a state that follows NASAA's model rule. What is the correct position?
- A. She must pass the Series 65 regardless of any professional designation she holds.
- B. She may qualify for a waiver of the Series 65 examination requirement based on the CFP certification.
- C. She must pass the Series 7 before she can register as an IAR in any state.
- D. The waiver applies to the Series 63 examination but not to the Series 65.
Show answer and explanation
Correct answer: B. She may qualify for a waiver of the Series 65 examination requirement based on the CFP certification.
NASAA's model rule allows the qualifying examination to be waived for individuals who hold certain designations, including the CFP certification. She can therefore seek registration without sitting for the Series 65.
- A. Certain designations, including CFP, exempt a candidate from the Series 65 requirement.
- B. Correct. The CFP certification is a recognized basis for waiving the Series 65.
- C. The Series 7 is a prerequisite for the Series 66, not a general requirement for IARs.
- D. The designation waiver relates to the adviser qualifying examination, not the Series 63.
- Source: NASAA Model Rule: Examination Requirements for Investment Adviser Representatives
Question 3
A broker-dealer agent occasionally offers general portfolio commentary to clients as part of standard brokerage services, but the firm charges no separate or special fee for this commentary — compensation is limited to standard commissions on trades executed. Under the Uniform Securities Act, does this activity, by itself, require the broker-dealer to register as an investment adviser?
- A. Yes, because giving investment-related commentary to clients triggers adviser registration, even when the commentary is incidental to brokerage services and no separate fee is charged.
- B. Yes, because the Act provides no exclusion from the investment adviser definition for broker-dealers, so a firm giving portfolio commentary to clients must also register as an adviser.
- C. No, provided the firm has fewer than 5 total clients nationwide and limits its portfolio commentary to written reports rather than oral discussions with clients.
- D. No, because broker-dealers whose investment advice is solely incidental to brokerage services and who receive no special compensation for it are excluded from the adviser definition.
Show answer and explanation
Correct answer: D. No, because broker-dealers whose investment advice is solely incidental to brokerage services and who receive no special compensation for it are excluded from the adviser definition.
The Act excludes broker-dealers from the investment adviser definition when advisory services are incidental to their brokerage business and no special compensation is charged for the advice itself. Standard commission income does not count as special compensation.
- A. Wrong -- commentary that is incidental to standard brokerage services and not separately compensated does not trigger adviser registration.
- B. Wrong -- the Act specifically provides a broker-dealer exclusion for advice that is solely incidental to brokerage and not specially compensated.
- C. There is no client-count or written-versus-oral test in the broker-dealer's incidental-advice exclusion.
- D. Correct. Broker-dealers whose investment advice is solely incidental to brokerage services, and who receive no special compensation for it, are excluded from the investment adviser definition.
- Source: Investment Advisers Act Section 202(a)(11), 15 U.S.C. 80b-2 (definition of investment adviser)
Considering a career as an advisor?
Explore careers at Parsonex
Question 4
Under the uniform de minimis exemption, an investment adviser with no place of business in a state may avoid registering in that state if, during the preceding 12 months, it has had no more than how many non-institutional clients who reside in that state?
- A. 5
- B. 3
- C. 15
- D. There is no numerical limit as long as the adviser does not advertise in the state
Show answer and explanation
Correct answer: A. 5
The uniform de minimis exemption allows an investment adviser with no place of business in the state to avoid state registration if, during the preceding 12 months, it has had no more than 5 clients who are state residents and are not institutional clients (banks, insurance companies, and similar financial institutions). Exceeding 5 non-institutional retail clients triggers the registration requirement.
- A. Correct. The uniform de minimis exemption allows an adviser with no place of business in the state to avoid registration if it has no more than 5 non-institutional (retail) clients residing there in the preceding 12 months.
- B. 3 is below the actual threshold used in the uniform de minimis exemption for investment advisers.
- C. 15 overstates the actual client cap set by the uniform de minimis exemption.
- D. There is a specific numerical limit (5 clients); the exemption isn't simply conditioned on not advertising in the state.

Series 63 Investment Adviser Registration Practice Questions

More Investment Adviser Registration questions

More Series 63 topics