This chapter covers 5% of the Series 63 exam (approximately 3 questions).
What You'll Learn
| Unit | Topic | Key Concepts |
|---|---|---|
| 1 | Definitions of Investment Advisers | IA definition, the three-prong test, exclusions, federal vs. state registration, Form ADV |
Why This Chapter Matters
Investment advisers are regulated on a different track from broker-dealers. The exam tests whether you can apply the three-prong test (advice about securities, as a business, for compensation) and whether you know which exclusions carry conditions and which do not.
Exam Strategy
At 5% of the exam, this chapter produces about 3 questions. Focus on:
- Three-prong test: advice + business + compensation. All three must be met
- Exclusions differ by clause: banks and trust companies are unconditional; the professions (lawyer, accountant, teacher, engineer) require advice solely incidental; broker-dealers require solely incidental and no special compensation. Do not graft one clause's condition onto another
- Federal vs. state: the $100 million and $110 million thresholds, and the $90 million drop-back
- Form ADV is the application; Form ADV-W withdraws it