IACCP EVALUATION EXAM 2026 QUESTIONS AND
SOLUTIONS RATED A+
✔✔An IAR (supervised person of an Investment Advisor) is required to be licensed
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 - ✔✔When is IAR licensing required
and what are the exceptions?
✔✔Varies by state but generally 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 - ✔✔State
Notice Filing is generally required when
✔✔Investment Advisers are generally required to register in the state 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) - ✔✔When is State Adviser Registration generally required?
✔✔The following are deemed a SINGLE CLIENT
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 client according to Advisers Act
✔✔recommendations in light of a clients experience, situation and objectives -
✔✔Define suitability
✔✔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 characteristics fulfilling suitability obligation
✔✔Advisor must: match portfolio decisions with client mandates, create and maintain
client profile, execute investment advisory agreement - ✔✔Describe 3 requirements
related to client investment objectives/restrictions
✔✔Goal is 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 is the goal of 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 - ✔✔What conditions must
be met for a program to qualify for the Safe Harbor Rule?
✔✔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 - ✔✔Disclosure
requirements for MFs managed within program qualifying for Safe Harbor
✔✔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)
INTERNAL: Client Accounts w/out Broker use
(2-sided Discretion w/ trade crossed internally) - ✔✔Principal/Agency Cross
Transactions
✔✔PRINCIPAL: 1) Written Disclosure before trade completion, and 2) Client Consent
each transaction before execution or settlement
AGENCY: 1) Client Consent, 2) Trade summary at/before completion, 3) Annual notice
disclosing for prior period total # agency trades including total $ received by Adviser,
and 4) Notice consent may be revoked any time
*NOT permitted where adviser acts on behalf of buyer AND seller
INTERNAL: 1) Best interest both parties including fair price and best execution to both,
2) Practice described in ADV 2A, and 3) for Investment Companies, compliance with
Rules of Investment Company Act; or ERISA accounts, ONLY when both accounts are
Index or Model driven AND meet DOL Terms or Act Exemptions - ✔✔Requirements for
each type of cross transaction include
SOLUTIONS RATED A+
✔✔An IAR (supervised person of an Investment Advisor) is required to be licensed
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 - ✔✔When is IAR licensing required
and what are the exceptions?
✔✔Varies by state but generally 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 - ✔✔State
Notice Filing is generally required when
✔✔Investment Advisers are generally required to register in the state 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) - ✔✔When is State Adviser Registration generally required?
✔✔The following are deemed a SINGLE CLIENT
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 client according to Advisers Act
✔✔recommendations in light of a clients experience, situation and objectives -
✔✔Define suitability
✔✔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 characteristics fulfilling suitability obligation
✔✔Advisor must: match portfolio decisions with client mandates, create and maintain
client profile, execute investment advisory agreement - ✔✔Describe 3 requirements
related to client investment objectives/restrictions
✔✔Goal is 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 is the goal of 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 - ✔✔What conditions must
be met for a program to qualify for the Safe Harbor Rule?
✔✔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 - ✔✔Disclosure
requirements for MFs managed within program qualifying for Safe Harbor
✔✔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)
INTERNAL: Client Accounts w/out Broker use
(2-sided Discretion w/ trade crossed internally) - ✔✔Principal/Agency Cross
Transactions
✔✔PRINCIPAL: 1) Written Disclosure before trade completion, and 2) Client Consent
each transaction before execution or settlement
AGENCY: 1) Client Consent, 2) Trade summary at/before completion, 3) Annual notice
disclosing for prior period total # agency trades including total $ received by Adviser,
and 4) Notice consent may be revoked any time
*NOT permitted where adviser acts on behalf of buyer AND seller
INTERNAL: 1) Best interest both parties including fair price and best execution to both,
2) Practice described in ADV 2A, and 3) for Investment Companies, compliance with
Rules of Investment Company Act; or ERISA accounts, ONLY when both accounts are
Index or Model driven AND meet DOL Terms or Act Exemptions - ✔✔Requirements for
each type of cross transaction include
