Common Mistakes to Avoid
Watch out for these exam traps that candidates frequently miss on Regulation of Investment Adviser Representatives questions:
Forgetting IARs always register with states, not SEC
Confusing notice filing vs full state registration
Not understanding IAR exclusions from definition
Sample Practice Questions
An individual working for a federal covered investment adviser makes securities recommendations to clients in multiple states. This individual must register as an IAR with:
B is correct. Investment adviser representatives (IARs) always register with states, never with the SEC. This is true even when the IAR works for a federal covered investment adviser that registers with the SEC. The IAR must register in each state where they have a place of business or meet with retail clients.
A (SEC only) is incorrect because IARs never register with the SEC under any circumstances. C (Either/or) is incorrect because there is no choice. State registration is mandatory for IARs. D (No registration) is incorrect because the firm being federal covered does not exempt individual IARs from state registration requirements.
This is the #1 most commonly missed concept about IAR regulation. Many candidates incorrectly assume that if an investment adviser is federal covered (registered with SEC), then its IARs also register with the SEC. That's wrong. IARs always register with states, period. This distinction appears on virtually every Series 65 exam. Remember: firms can be federal covered, but individual IARs are always state-registered.
Which of the following activities would require an individual to register as an investment adviser representative?
A is correct. Supervising personnel who make recommendations, manage accounts, or provide investment advice is one of the five functions that triggers IAR registration. Supervisors are considered IARs even if they don't personally interact with clients.
B (Clerical/administrative) is incorrect because these functions are specifically excluded from the IAR definition. C (Impersonal advice) is incorrect because providing only impersonal advice (such as through mass-market newsletters with no individual tailoring) is an exclusion from the IAR definition. D (IT/no contact) is incorrect because employees with no regular client contact and no advisory functions are excluded.
Understanding what triggers IAR registration is essential for compliance and exam success. The five functions are: making recommendations, managing accounts, soliciting advisory services, supervising those who do these activities, and providing advice. This question tests the often-overlooked supervision requirement. Even back-office supervisors who never meet clients must register if they supervise advisory personnel. Questions about IAR exclusions appear frequently on the exam.
An individual seeking to register as an IAR must file which form through the Central Registration Depository (CRD)?
C is correct. Investment adviser representatives register using Form U4 (Uniform Application for Securities Industry Registration) filed through the Central Registration Depository (CRD). This is the same form used by broker-dealer agents.
A (ADV Part 1) is incorrect because Form ADV Part 1 is used by investment adviser firms, not individual IARs. B (ADV Part 2) is incorrect because Part 2 is the brochure delivered to clients by advisory firms. D (Form BD) is incorrect because this form is used by broker-dealer firms to register, not individuals.
Form U4 filing requirements appear regularly on the Series 65. The exam tests whether you understand that individuals use Form U4 while firms use Form ADV. This distinction is important because it affects disclosure obligations, registration timing, and ongoing amendment requirements. Form U4 captures employment history, disciplinary events, and personal background information. IARs must update this form within 30 days of any material changes.
All of the following professional designations may allow an individual to waive the Series 65 examination requirement EXCEPT:
C is correct. An MBA degree, while valuable, does not provide a waiver from the Series 65 exam requirement. Only specific professional designations recognized by state regulators qualify for exam waivers.
A (CFA), B (CFP), and D (ChFC) are all incorrect because these designations do qualify for Series 65 exam waivers in most states. Other qualifying designations include CIC (Chartered Investment Counselor) and PFS (Personal Financial Specialist). These designations have rigorous requirements that demonstrate investment knowledge equivalent to the Series 65 exam.
Exam waiver questions test whether you can distinguish between recognized professional credentials and general educational degrees. The Series 65 can be challenging, and knowing which designations offer waivers is practical information for career planning. The exam frequently presents scenarios where candidates have various credentials and asks which ones satisfy registration requirements. Remember the big three: CFA, CFP, and ChFC all qualify. General degrees like MBA do not.
An individual who holds a Series 7 license and wants to become an IAR must also pass which exam?
D is correct. An individual with a Series 7 license can become an IAR by passing either the Series 65 or the Series 66. The Series 66 exam (Uniform Combined State Law Exam) was specifically created for Series 7 holders who want to add IAR registration. It covers only the state law topics, not the securities fundamentals already tested in Series 7.
B (Series 65 only) is incorrect because it's not the only option. The Series 66 is an alternative. C (Series 66 only) is incorrect because Series 65 alone also qualifies. A (Series 63) is incorrect because the Series 63 is for broker-dealer agents registering at the state level, not for IARs.
Understanding the Series 65 versus Series 66 distinction appears on most Series 65 exams. If someone doesn't have a Series 7, they must take the Series 65. If they already hold a Series 7, they can choose either Series 65 or the shorter Series 66. The Series 66 is about half the length of Series 65 because it assumes Series 7 knowledge. This is practical knowledge for anyone planning a securities career or advising others about licensing paths.
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Access Free BetaAn IAR registration becomes effective at what time after filing, assuming it is not denied?
C is correct. IAR registration becomes effective at noon on the 30th day after filing, unless the state administrator denies or approves it earlier. This timing gives regulators an opportunity to review the application and conduct background checks.
A (Immediately) is incorrect because there is always a waiting period for regulatory review. B (15th day) is incorrect because it understates the standard waiting period. D (45th day at 5:00 PM) is incorrect on both the day count and the time. The standard is specifically noon on the 30th day.
Registration timing questions appear regularly on the Series 65, often in scenario-based questions about when an individual can begin providing advisory services. Understanding the 30-day waiting period is crucial for compliance. An individual who begins acting as an IAR before registration is effective faces serious regulatory consequences. The "noon" timing detail may seem trivial but appears on exams. Some questions test whether you know registration can become effective earlier if the administrator approves it.
Which of the following statements about IAR registration requirements is TRUE?
B is correct. IARs must register in any state where they have a place of business or meet with retail clients (individuals, not institutions). This can mean registering in multiple states depending on where the IAR conducts business.
A (Register with SEC) is incorrect and represents the most common misconception. IARs never register with the SEC, regardless of whether their firm is federal covered. C (Unlimited states if firm registered) is incorrect because each IAR must individually register in applicable states. D (Notice filing same as registration) is incorrect because notice filing is a simplified process for federal covered advisers operating in a state, while IARs must fully register.
This tests multiple common mistakes in one question. The #1 error is thinking IARs register with the SEC when working for federal covered firms. The #2 error is confusing notice filing (which federal covered advisers do) with full state registration (which IARs must do). Understanding place of business triggers is also crucial. An IAR with an office in Texas and clients in California must register in both states. Questions often present multi-state scenarios to test this understanding.
All of the following are specifically excluded from the definition of investment adviser representative EXCEPT:
A is correct. Soliciting advisory services is one of the five functions that requires IAR registration. An individual who solicits new clients for an investment adviser must register as an IAR, making this the exception to the exclusions listed.
B (Clerical/no contact), C (Impersonal advice), and D (Administrative staff) are all excluded from the IAR definition. These individuals perform support functions that don't involve personalized investment advice, account management, or client solicitation, so registration is not required.
EXCEPT questions are common on the Series 65 and require careful attention. This question tests whether you know both the activities that require registration AND the exclusions. The five functions requiring IAR registration are: making recommendations, managing accounts, soliciting advisory services, supervising those who do these activities, and providing personalized advice. Clerical workers, those providing only impersonal advice, and those with no regular client contact are excluded. Solicitors are never excluded.
An IAR wants to open a second office location in a state where the advisory firm is already registered. What is the IARs registration obligation?
B is correct. Having a place of business in a state triggers IAR registration requirements in that state. If the IAR is not already registered in the state where the new office will be located, they must register there. The firm being registered in that state does not eliminate the individual IAR's separate registration obligation.
A (No additional registration) is incorrect because it confuses firm registration with IAR registration. They are separate requirements. C (Notice only) is incorrect because opening a place of business requires full registration, not just notice filing. D (Re-register in all states) is incorrect because the IAR only needs to register in the new state, not re-register where already registered.
Place of business rules appear frequently on the exam, often in scenario questions about IARs expanding their practice. Understanding that firm registration and IAR registration are separate is crucial. An IAR with an office in a state must register in that state, even if the advisory firm is already registered there. The exam tests whether you understand that opening any office location from which advisory services are regularly provided triggers state registration for that IAR.
An IAR for a state-registered investment adviser provides advice only to institutional clients such as pension funds and insurance companies. The IAR:
C is correct. The definition of IAR does not provide an exemption based on client type. Even if an IAR works exclusively with institutional clients rather than retail clients, they must still register with the state. The IAR definition is based on the individual's functions (making recommendations, managing accounts, etc.), not the type of clients served.
A (Exempt from state) is incorrect because there is no institutional client exemption for IARs. B (Register with SEC) is incorrect because IARs never register with the SEC under any circumstances. D (Can choose) is incorrect because state registration is mandatory for anyone meeting the IAR definition, regardless of client type.
This tests a subtle but important point. While investment adviser firms may have exemptions or different registration requirements based on client type (such as the private fund adviser exemption), individual IARs do not get such exemptions. If you're providing advice or managing accounts, you're an IAR and must register with the state. The exam often tries to trick candidates by suggesting that working with sophisticated institutional clients creates an exemption. It doesn't. Questions about who must register as an IAR appear on virtually every Series 65 exam.
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