IACCP UPDATED 2026 EXAM SCRIPT QUESTIONS AND
SOLUTIONS RATED A+
✔✔Who are Advisory Affiliates? - ✔✔(1) all of your officers, partners, or directors (or
any person performing similar functions);
(2) all persons directly or indirectly controlling or controlled by you; and
(3) all of your current employees (other than employees performing only clerical,
administrative, ...
✔✔What AUM requires SEC Registration? - ✔✔Over $100 Million
✔✔What is an "Investment Advisor? - ✔✔Person/firm compensated for engaging in
business of (directly or indirectly) advising others on securities or the advisability of
investing (or) who issues analysis/reports concerning securities
✔✔When is SEC Registration Required? - ✔✔1) definition of "IA" is met (unless
otherwise excepted from definition or exempt/prohibited from registration); AND $100M
in AUM (optional for Mid-Sized Advisers AUM $100-115M Buffer Zone)
- OR -
2) when ADVISING a Registered Investment Company
- OR -
3) AUM $25-100M AND NOT registered/required to register with State OR NOT Subject
to EXAMS by State
Registration withdraw required for AUM under $90M
✔✔Who is EXCLUDED from Definition of "IA"? - ✔✔1) Domestic banks and bank
holding companies;
2) Services SOLELY Incidental by lawyers, accountants, engineers, teachers, (and)
3) BD advisory services w/out special compensation;
4) Publishers of bona fide newspapers/mags w/Regular Circulation;
5) Advising Direct Obligations of US (bonds);
6) NRSROs (Nationally Recognized Statistical Rating Orgs;
7) Family Offices; and
8) Others designated by SEC rulemaking (such as those otherwise prohibited or
exempt)
✔✔Private Fund Adviser Exemption Criteria: - ✔✔Advise SOLELY private funds
(unlimited) so long as aggregate assets of such NOT EXCEEDING $150M (per ADV
annual calculation), including Non-US Advisers when ALL US clients are Qualifying
Private Funds
,✔✔Foreign Private Fund Exemption Criteria: - ✔✔No place of business in US, Less
than 15 private fund clients/investors in US, Less than $25M aggregate AUM attributed
to clients/private fund investors, AND doesn't hold out to US public as an IA
✔✔Venture Capital Adviser Exemption Criteria: - ✔✔Any advising SOLELY venture
capital funds
✔✔When is Form PF Required?
Form PF (intended to Monitor Systematic Risk to US Financial System) - ✔✔is required
by advisers to Hedge & other Private Funds, and SEC-Registered Advisers to 1 or More
Private Funds having at least $150M AUM attributable to such as of last fiscal year-end
Form PF filing EXEMPTION: Advisers NOT registered/required to register with SEC
✔✔When is IAR licensing required and what are the exceptions? - ✔✔when it has more
than 5 and with more than 10% of which are natural person clients.
EXCEPTIONS:
1) Qualified Clients (person/company that immediately after entering into contract has at
least $1 million AUM by IA or net worth of $2 million;
2) Irregular communication;
3) Impersonal Advisory Services are NOT required for consideration when determining
an IARs licensing requirement
✔✔State Notice Filing is generally required when: - ✔✔an SEC-registered IA must
notice file in any state in which it has 5 or more clients (de minimus). Exceptions: LA,
NE, NH & TX
✔✔When is a State Adviser Registration generically required? - ✔✔where they have a
principal place of business and any states where they maintain de minimus (5 or more
clients in that state with the exception of LA, NE, NH & TX which have their own de
minimus)
✔✔Define a "client" according to The Adviser's Act - ✔✔1) a natural person, and: (i) any
minor child; (ii) any relative, spouse, or relative of spouse having same residence; (iii) all
accounts of which the person is the only primary beneficiary; and (iv) all trusts of the
person or of which the person is the only primary beneficiary;
2) A corporation, general partnership, limited partnership, LLC, trust, or other legal org
receiving advice based on investment objectives rather than individual objectives of
shareholders/partners/etc. INCLUDING two or more legal orgs having identical owners
, ✔✔Define "Suitability" - ✔✔Recommendations in light of a clients experience, situation
and objectives
✔✔Describe the characteristics of fulfilling suitability obligation - ✔✔Render
disinterested/impartial advice, exercise high degree of care to ensure adequate and
accurate recommendations/info is presented, and prior due diligence on holdings
selected
✔✔Describe 3 requirements related to client investment objectives/restrictions -
✔✔Advisor must:
1) match portfolio decisions with client mandates,
2) create and maintain client profile,
3) execute investment advisory agreement
✔✔What is the goal of the Safe Harbor Rule? - ✔✔To provide certain investment
advisory programs (such as wrap fees, model accounts and others having similar
objectives and investments traded simultaneously with all clients being treated similarly)
a non-exclusive safe harbor from the definition of an investment company and from
being deemed to be a mutual fund, therefore requiring registration as such.
✔✔What conditions must be met for a program to qualify for the Safe Harbor Rule? -
✔✔1. Each account within the program received individualized treatment (managed
according to each client's specifics);
2. Client specific information is obtained by each upon account openings;
3. Annual contact confirming no changes;
4. Advisor to notify clients quarterly (a reminder) requesting contact if any changes
apply;
5. Advisor consultation reasonably accessible to clients;
6. Ability to impose reasonable restrictions, such as specific securities or sectors;
7. Quarterly statements to clients reporting all activity; and
8. Indication of securities ownership retained by each client
✔✔Disclosure requirements for Mutual Funds managed within program qualifying for
Safe Harbor - ✔✔1. Clients will pay advisory fees and fund expenses at the mutual fund
level in addition to any account fees; and
2. MFs may be purchased directly without advisory services
✔✔Principal/Agency Cross Transactions - ✔✔PRINCIPAL: Adviser (owned 25% or
more) & Advisory Client
AGENCY: Advisory & Brokerage Clients
(1-sided Discretion w/ trade using broker to represent Brokerage client side. Broker gets
commission if any)
SOLUTIONS RATED A+
✔✔Who are Advisory Affiliates? - ✔✔(1) all of your officers, partners, or directors (or
any person performing similar functions);
(2) all persons directly or indirectly controlling or controlled by you; and
(3) all of your current employees (other than employees performing only clerical,
administrative, ...
✔✔What AUM requires SEC Registration? - ✔✔Over $100 Million
✔✔What is an "Investment Advisor? - ✔✔Person/firm compensated for engaging in
business of (directly or indirectly) advising others on securities or the advisability of
investing (or) who issues analysis/reports concerning securities
✔✔When is SEC Registration Required? - ✔✔1) definition of "IA" is met (unless
otherwise excepted from definition or exempt/prohibited from registration); AND $100M
in AUM (optional for Mid-Sized Advisers AUM $100-115M Buffer Zone)
- OR -
2) when ADVISING a Registered Investment Company
- OR -
3) AUM $25-100M AND NOT registered/required to register with State OR NOT Subject
to EXAMS by State
Registration withdraw required for AUM under $90M
✔✔Who is EXCLUDED from Definition of "IA"? - ✔✔1) Domestic banks and bank
holding companies;
2) Services SOLELY Incidental by lawyers, accountants, engineers, teachers, (and)
3) BD advisory services w/out special compensation;
4) Publishers of bona fide newspapers/mags w/Regular Circulation;
5) Advising Direct Obligations of US (bonds);
6) NRSROs (Nationally Recognized Statistical Rating Orgs;
7) Family Offices; and
8) Others designated by SEC rulemaking (such as those otherwise prohibited or
exempt)
✔✔Private Fund Adviser Exemption Criteria: - ✔✔Advise SOLELY private funds
(unlimited) so long as aggregate assets of such NOT EXCEEDING $150M (per ADV
annual calculation), including Non-US Advisers when ALL US clients are Qualifying
Private Funds
,✔✔Foreign Private Fund Exemption Criteria: - ✔✔No place of business in US, Less
than 15 private fund clients/investors in US, Less than $25M aggregate AUM attributed
to clients/private fund investors, AND doesn't hold out to US public as an IA
✔✔Venture Capital Adviser Exemption Criteria: - ✔✔Any advising SOLELY venture
capital funds
✔✔When is Form PF Required?
Form PF (intended to Monitor Systematic Risk to US Financial System) - ✔✔is required
by advisers to Hedge & other Private Funds, and SEC-Registered Advisers to 1 or More
Private Funds having at least $150M AUM attributable to such as of last fiscal year-end
Form PF filing EXEMPTION: Advisers NOT registered/required to register with SEC
✔✔When is IAR licensing required and what are the exceptions? - ✔✔when it has more
than 5 and with more than 10% of which are natural person clients.
EXCEPTIONS:
1) Qualified Clients (person/company that immediately after entering into contract has at
least $1 million AUM by IA or net worth of $2 million;
2) Irregular communication;
3) Impersonal Advisory Services are NOT required for consideration when determining
an IARs licensing requirement
✔✔State Notice Filing is generally required when: - ✔✔an SEC-registered IA must
notice file in any state in which it has 5 or more clients (de minimus). Exceptions: LA,
NE, NH & TX
✔✔When is a State Adviser Registration generically required? - ✔✔where they have a
principal place of business and any states where they maintain de minimus (5 or more
clients in that state with the exception of LA, NE, NH & TX which have their own de
minimus)
✔✔Define a "client" according to The Adviser's Act - ✔✔1) a natural person, and: (i) any
minor child; (ii) any relative, spouse, or relative of spouse having same residence; (iii) all
accounts of which the person is the only primary beneficiary; and (iv) all trusts of the
person or of which the person is the only primary beneficiary;
2) A corporation, general partnership, limited partnership, LLC, trust, or other legal org
receiving advice based on investment objectives rather than individual objectives of
shareholders/partners/etc. INCLUDING two or more legal orgs having identical owners
, ✔✔Define "Suitability" - ✔✔Recommendations in light of a clients experience, situation
and objectives
✔✔Describe the characteristics of fulfilling suitability obligation - ✔✔Render
disinterested/impartial advice, exercise high degree of care to ensure adequate and
accurate recommendations/info is presented, and prior due diligence on holdings
selected
✔✔Describe 3 requirements related to client investment objectives/restrictions -
✔✔Advisor must:
1) match portfolio decisions with client mandates,
2) create and maintain client profile,
3) execute investment advisory agreement
✔✔What is the goal of the Safe Harbor Rule? - ✔✔To provide certain investment
advisory programs (such as wrap fees, model accounts and others having similar
objectives and investments traded simultaneously with all clients being treated similarly)
a non-exclusive safe harbor from the definition of an investment company and from
being deemed to be a mutual fund, therefore requiring registration as such.
✔✔What conditions must be met for a program to qualify for the Safe Harbor Rule? -
✔✔1. Each account within the program received individualized treatment (managed
according to each client's specifics);
2. Client specific information is obtained by each upon account openings;
3. Annual contact confirming no changes;
4. Advisor to notify clients quarterly (a reminder) requesting contact if any changes
apply;
5. Advisor consultation reasonably accessible to clients;
6. Ability to impose reasonable restrictions, such as specific securities or sectors;
7. Quarterly statements to clients reporting all activity; and
8. Indication of securities ownership retained by each client
✔✔Disclosure requirements for Mutual Funds managed within program qualifying for
Safe Harbor - ✔✔1. Clients will pay advisory fees and fund expenses at the mutual fund
level in addition to any account fees; and
2. MFs may be purchased directly without advisory services
✔✔Principal/Agency Cross Transactions - ✔✔PRINCIPAL: Adviser (owned 25% or
more) & Advisory Client
AGENCY: Advisory & Brokerage Clients
(1-sided Discretion w/ trade using broker to represent Brokerage client side. Broker gets
commission if any)
