IACCP EXAM 2 2026 CHILD CARE
PROFESSIONAL PRACTICES ASSESSMENT
STUDY GUIDE COMPLETE QUESTIONS AND
ANSWERS
◉ What is an "Investment Advisor? Answer: Person/firm
compensated for engaging in business of (directly or indirectly)
advising others on securities or the advisability of investing (or)
who issues analysis/reports concerning securities
◉ When is SEC Registration Required? Answer: 1) definition of "IA"
is met (unless otherwise excepted from definition or
exempt/prohibited from registration); AND $100M in AUM (optional
for Mid-Sized Advisers AUM $100-115M Buffer Zone)
- OR -
2) when ADVISING a Registered Investment Company
- OR -
3) AUM $25-100M AND NOT registered/required to register with
State OR NOT Subject to EXAMS by State
,Registration withdraw required for AUM under $90M
◉ Who is EXCLUDED from Definition of "IA"? Answer: 1) Domestic
banks and bank holding companies;
2) Services SOLELY Incidental by lawyers, accountants, engineers,
teachers, (and)
3) BD advisory services w/out special compensation;
4) Publishers of bona fide newspapers/mags w/Regular Circulation;
5) Advising Direct Obligations of US (bonds);
6) NRSROs (Nationally Recognized Statistical Rating Orgs;
7) Family Offices; and
8) Others designated by SEC rulemaking (such as those otherwise
prohibited or exempt)
◉ Private Fund Adviser Exemption Criteria: Answer: Advise SOLELY
private funds (unlimited) so long as aggregate assets of such NOT
EXCEEDING $150M (per ADV annual calculation), including Non-US
Advisers when ALL US clients are Qualifying Private Funds
◉ Foreign Private Fund Exemption Criteria: Answer: No place of
business in US, Less than 15 private fund clients/investors in US,
Less than $25M aggregate AUM attributed to clients/private fund
investors, AND doesn't hold out to US public as an IA
,◉ Venture Capital Adviser Exemption Criteria: Answer: Any advising
SOLELY venture capital funds
◉ When is Form PF Required?
Form PF (intended to Monitor Systematic Risk to US Financial
System) Answer: is required by advisers to Hedge & other Private
Funds, and SEC-Registered Advisers to 1 or More Private Funds
having at least $150M AUM attributable to such as of last fiscal year-
end
Form PF filing EXEMPTION: Advisers NOT registered/required to
register with SEC
◉ When is IAR licensing required and what are the exceptions?
Answer: 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
◉ State Notice Filing is generally required when: Answer: 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
◉ When is a State Adviser Registration generically required?
Answer: 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)
◉ Define a "client" according to The Adviser's Act Answer: 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
PROFESSIONAL PRACTICES ASSESSMENT
STUDY GUIDE COMPLETE QUESTIONS AND
ANSWERS
◉ What is an "Investment Advisor? Answer: Person/firm
compensated for engaging in business of (directly or indirectly)
advising others on securities or the advisability of investing (or)
who issues analysis/reports concerning securities
◉ When is SEC Registration Required? Answer: 1) definition of "IA"
is met (unless otherwise excepted from definition or
exempt/prohibited from registration); AND $100M in AUM (optional
for Mid-Sized Advisers AUM $100-115M Buffer Zone)
- OR -
2) when ADVISING a Registered Investment Company
- OR -
3) AUM $25-100M AND NOT registered/required to register with
State OR NOT Subject to EXAMS by State
,Registration withdraw required for AUM under $90M
◉ Who is EXCLUDED from Definition of "IA"? Answer: 1) Domestic
banks and bank holding companies;
2) Services SOLELY Incidental by lawyers, accountants, engineers,
teachers, (and)
3) BD advisory services w/out special compensation;
4) Publishers of bona fide newspapers/mags w/Regular Circulation;
5) Advising Direct Obligations of US (bonds);
6) NRSROs (Nationally Recognized Statistical Rating Orgs;
7) Family Offices; and
8) Others designated by SEC rulemaking (such as those otherwise
prohibited or exempt)
◉ Private Fund Adviser Exemption Criteria: Answer: Advise SOLELY
private funds (unlimited) so long as aggregate assets of such NOT
EXCEEDING $150M (per ADV annual calculation), including Non-US
Advisers when ALL US clients are Qualifying Private Funds
◉ Foreign Private Fund Exemption Criteria: Answer: No place of
business in US, Less than 15 private fund clients/investors in US,
Less than $25M aggregate AUM attributed to clients/private fund
investors, AND doesn't hold out to US public as an IA
,◉ Venture Capital Adviser Exemption Criteria: Answer: Any advising
SOLELY venture capital funds
◉ When is Form PF Required?
Form PF (intended to Monitor Systematic Risk to US Financial
System) Answer: is required by advisers to Hedge & other Private
Funds, and SEC-Registered Advisers to 1 or More Private Funds
having at least $150M AUM attributable to such as of last fiscal year-
end
Form PF filing EXEMPTION: Advisers NOT registered/required to
register with SEC
◉ When is IAR licensing required and what are the exceptions?
Answer: 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
◉ State Notice Filing is generally required when: Answer: 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
◉ When is a State Adviser Registration generically required?
Answer: 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)
◉ Define a "client" according to The Adviser's Act Answer: 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
