Series 63 UPDATED Exam Questions and
CORRECT Answers
Definition of an investment advisor - CORRECT ANSWER - 1. Offers advice or analysis
concerning securities
2. Is in the business of offering such advice
3. Receives compensation for offering these services
What professions are excluded from investment advisor definition - CORRECT
ANSWER - Lawyer, accountant, teacher, engineer who's performance of investment
advice is solely incidental to the practice of the persons profession
If an IA is no longer eligible for SEC registration, it has ____ days to file ADV-W and register at
the state level. - CORRECT ANSWER - 180
If an AI is registered with the SEC they are - CORRECT ANSWER - Exempt from
registration in the states
Called federally covered advisor
If an IA has over $110 million is AUM - CORRECT ANSWER - must register SEC as
federal covered
If an IA has in between $100-$110 AUM - CORRECT ANSWER - It CAN register with
SEC or the states
If an IA has less than $100 million of AUM - CORRECT ANSWER - Typically registers
with the states
IAs with less than $100 million have to register with SEC instead of states if they - CORRECT
ANSWER - • serve as an advisor to registered investment companies (mutual funds)
• act as a pension consultant of > $200 million
,• share the same home office w an SEC reg advisor
• have a principal office outside of US
IAs with less than $100 million can CHOOSE to register w SEC instead of the states if they are -
CORRECT ANSWER - • mid sized investors ($25 mill-$100 mill) that would be required
to register in 15 or more states
• investment advisors that expect to be eligible for federal registration within 120 days
• internet investment advisors who have fewer than 15 in person clients
Who registers with the states? - CORRECT ANSWER - Small independent IAs that do
business with retail clients
A notice filing must be renewed - CORRECT ANSWER - No later than Dec 31 of each
year
Under Investment Advisors Act, which IAs are exempt from registration with SEC - CORRECT
ANSWER - - advisors to insurance company's
- advisors to charity's
- foreign private advisors w no business w US
- advisors to a private fund or $150 or less from clients in US
- advisors to venture capital funds
- advisors to licensed small business investment companies
De Minimis Exemption - CORRECT ANSWER - - no place of business in state
- no more than 5 noninstitutional clients
- 12 consecutive months
*for IA, NOT B/D*
, Part 1 of Form ADV - CORRECT ANSWER - - Nature of the business
- Names of the principals involved
- Location of the main office and a list of other offices used
- Types of services offered
- Whether the advisor has custody of customer assets
- Location of books and records
- any relevant regulatory/disciplinary history
Part 2A form ADV (the brochure) - CORRECT ANSWER - - Fees or Fee structure for the
services provided
- Types of advisory services offered
- Methods of analyzing investments
- Any disciplinary action information
- any conflicts of interest
- Educational and business background of management and key advisory personnel
What must go along with form 2A if it has custody or discretionary authority over client
accounts, or is state registered that accepts payments of $500 or more or an FCA that accepts at
least $1200 at least 6 months in advance - CORRECT ANSWER - Audited balance sheet
Part 2B of Form ADV - CORRECT ANSWER - Brochure supplement
Provides information about educational background, employment qualifications, disciplinary
history, other business activities, and other sources of compensation for registered individuals
working with clients
Part 3 of form ADV is also called? - CORRECT ANSWER - Form CRS
When does an application for registration become effective - CORRECT ANSWER -
Noon on the 30th day after it is initially filed
CORRECT Answers
Definition of an investment advisor - CORRECT ANSWER - 1. Offers advice or analysis
concerning securities
2. Is in the business of offering such advice
3. Receives compensation for offering these services
What professions are excluded from investment advisor definition - CORRECT
ANSWER - Lawyer, accountant, teacher, engineer who's performance of investment
advice is solely incidental to the practice of the persons profession
If an IA is no longer eligible for SEC registration, it has ____ days to file ADV-W and register at
the state level. - CORRECT ANSWER - 180
If an AI is registered with the SEC they are - CORRECT ANSWER - Exempt from
registration in the states
Called federally covered advisor
If an IA has over $110 million is AUM - CORRECT ANSWER - must register SEC as
federal covered
If an IA has in between $100-$110 AUM - CORRECT ANSWER - It CAN register with
SEC or the states
If an IA has less than $100 million of AUM - CORRECT ANSWER - Typically registers
with the states
IAs with less than $100 million have to register with SEC instead of states if they - CORRECT
ANSWER - • serve as an advisor to registered investment companies (mutual funds)
• act as a pension consultant of > $200 million
,• share the same home office w an SEC reg advisor
• have a principal office outside of US
IAs with less than $100 million can CHOOSE to register w SEC instead of the states if they are -
CORRECT ANSWER - • mid sized investors ($25 mill-$100 mill) that would be required
to register in 15 or more states
• investment advisors that expect to be eligible for federal registration within 120 days
• internet investment advisors who have fewer than 15 in person clients
Who registers with the states? - CORRECT ANSWER - Small independent IAs that do
business with retail clients
A notice filing must be renewed - CORRECT ANSWER - No later than Dec 31 of each
year
Under Investment Advisors Act, which IAs are exempt from registration with SEC - CORRECT
ANSWER - - advisors to insurance company's
- advisors to charity's
- foreign private advisors w no business w US
- advisors to a private fund or $150 or less from clients in US
- advisors to venture capital funds
- advisors to licensed small business investment companies
De Minimis Exemption - CORRECT ANSWER - - no place of business in state
- no more than 5 noninstitutional clients
- 12 consecutive months
*for IA, NOT B/D*
, Part 1 of Form ADV - CORRECT ANSWER - - Nature of the business
- Names of the principals involved
- Location of the main office and a list of other offices used
- Types of services offered
- Whether the advisor has custody of customer assets
- Location of books and records
- any relevant regulatory/disciplinary history
Part 2A form ADV (the brochure) - CORRECT ANSWER - - Fees or Fee structure for the
services provided
- Types of advisory services offered
- Methods of analyzing investments
- Any disciplinary action information
- any conflicts of interest
- Educational and business background of management and key advisory personnel
What must go along with form 2A if it has custody or discretionary authority over client
accounts, or is state registered that accepts payments of $500 or more or an FCA that accepts at
least $1200 at least 6 months in advance - CORRECT ANSWER - Audited balance sheet
Part 2B of Form ADV - CORRECT ANSWER - Brochure supplement
Provides information about educational background, employment qualifications, disciplinary
history, other business activities, and other sources of compensation for registered individuals
working with clients
Part 3 of form ADV is also called? - CORRECT ANSWER - Form CRS
When does an application for registration become effective - CORRECT ANSWER -
Noon on the 30th day after it is initially filed
