Welcome to Investment Adviser Regulation, the unit that explains who qualifies as an investment adviser under state law, how they register, and what distinguishes state-registered advisers from federal covered advisers.
Exam Weight: 5% (approximately 3 questions)
What You'll Learn
In this unit, you'll cover:
- Definition of "Investment Adviser": The three-part ABC test and how compensation is broadly interpreted
- Exclusions from the Investment Adviser (IA) Definition: Seven categories of persons excluded, including professionals and broker-dealers
- Registration Requirements: State registration procedure, Form ADV, exemptions for out-of-state advisers
- State vs. Federal Registration: Assets under management (AUM) thresholds that determine whether an IA registers with the state or SEC
Why This Matters
Investment adviser regulation is a core Series 63 topic. The exam tests your ability to:
- Distinguish who is and who is not an investment adviser
- Understand when state registration is required versus federal registration
- Recognize when an out-of-state adviser is exempt from state registration
These concepts overlap with broker-dealer and agent regulation you studied in earlier units, but IA regulation has its own unique rules: the ABC test, the "solely incidental" standard, and the state/federal dividing line are all distinct from what you've seen before.
Let's start with the definition of "investment adviser" and the ABC test.