IACCP Examination With Complete
Updated Solution 2023-2024
"Investment Adviser" 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 - answersSEC vs Capital Gains Research Bureau basis of Fiduciary Rule,
specifically Best Interest
SEC Registration Required when 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 - answersSEC Registration Optional when 1)
AUM $25-100M (except NY req. at $25M) - OR - 2) Advisers Registered in 15 or more States
(AUM $25M or less PROHIBITED from registering w/ SEC but held to various state requirements)
EXCLUDED from Definition of "IA" are:
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) -
answersEXEMPTIONS from SEC Registration:
1) Intrastate Advisers: NOT advising, analyzing or reporting on NSE Listed Securities* and ALL Clients
reside in same state as principal office (*includes securities w/ unlisted trading privileges); 2)
Advisers to ONLY Insurance Companies; 3) Private Fund Advisers w/ AUM less than $150M, and
,Advisers to Foreign Private and Venture Capital Funds; 4) Church Plans, and certain 5) Charitable
organizations 6) Registered Commodity Trading 7) Small Business Investment Companies
Private Fund Adviser Exemption Criteria:
PRIVATE FUND: 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
VENTURE CAPITAL: Any advising SOLELY venture capital funds
FOREIGN PRIVATE: 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 - answersForm PF (intended to Monitor Systematic Risk to US Financial System) 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
Dodd-Frank also resulted in changes to AUM by 1) raising registration threshold to $100M, and
creating Mid-Sized adviser category w/ AUM $25-100M (w/ $100-115 Buffer Zone); and 2) "RAUM"
Uniform Calculation of Gross Basis at Market Value (or fair value if n/a) to include: (i) "Securities
Portfolios" (any consisting of at least 50%) and/or Private Funds to which adviser provides
Regular/Continuous Supervisory or Management services; (ii) Proprietary accounts (owned in
aggregate 25% or more), accts managed w/out compensation and those of foreign clients; and (iii)
uncalled capital commitments to private fund(s) - answersRepeal of Private Adviser Exemption (per
Dodd-Frank) brought into SEC's regulatory view hedge, private equity, venture capital, and other
private funds by adding regulation to circumvent adviser's use of a loop-hole to avoid registration in
which each fund, and not it's underlying investors, is counted as a "client"
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 - answersWhen 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 - answersState 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) - answersWhen 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 -
answersDefine client according to Advisers Act
recommendations in light of a clients experience, situation and objectives - answersDefine 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 - answersDescribe
characteristics fulfilling suitability obligation
Advisor must: match portfolio decisions with client mandates, create and maintain client profile,
execute investment advisory agreement - answersDescribe 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. - answersWhat 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;
Updated Solution 2023-2024
"Investment Adviser" 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 - answersSEC vs Capital Gains Research Bureau basis of Fiduciary Rule,
specifically Best Interest
SEC Registration Required when 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 - answersSEC Registration Optional when 1)
AUM $25-100M (except NY req. at $25M) - OR - 2) Advisers Registered in 15 or more States
(AUM $25M or less PROHIBITED from registering w/ SEC but held to various state requirements)
EXCLUDED from Definition of "IA" are:
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) -
answersEXEMPTIONS from SEC Registration:
1) Intrastate Advisers: NOT advising, analyzing or reporting on NSE Listed Securities* and ALL Clients
reside in same state as principal office (*includes securities w/ unlisted trading privileges); 2)
Advisers to ONLY Insurance Companies; 3) Private Fund Advisers w/ AUM less than $150M, and
,Advisers to Foreign Private and Venture Capital Funds; 4) Church Plans, and certain 5) Charitable
organizations 6) Registered Commodity Trading 7) Small Business Investment Companies
Private Fund Adviser Exemption Criteria:
PRIVATE FUND: 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
VENTURE CAPITAL: Any advising SOLELY venture capital funds
FOREIGN PRIVATE: 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 - answersForm PF (intended to Monitor Systematic Risk to US Financial System) 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
Dodd-Frank also resulted in changes to AUM by 1) raising registration threshold to $100M, and
creating Mid-Sized adviser category w/ AUM $25-100M (w/ $100-115 Buffer Zone); and 2) "RAUM"
Uniform Calculation of Gross Basis at Market Value (or fair value if n/a) to include: (i) "Securities
Portfolios" (any consisting of at least 50%) and/or Private Funds to which adviser provides
Regular/Continuous Supervisory or Management services; (ii) Proprietary accounts (owned in
aggregate 25% or more), accts managed w/out compensation and those of foreign clients; and (iii)
uncalled capital commitments to private fund(s) - answersRepeal of Private Adviser Exemption (per
Dodd-Frank) brought into SEC's regulatory view hedge, private equity, venture capital, and other
private funds by adding regulation to circumvent adviser's use of a loop-hole to avoid registration in
which each fund, and not it's underlying investors, is counted as a "client"
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 - answersWhen 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 - answersState 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) - answersWhen 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 -
answersDefine client according to Advisers Act
recommendations in light of a clients experience, situation and objectives - answersDefine 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 - answersDescribe
characteristics fulfilling suitability obligation
Advisor must: match portfolio decisions with client mandates, create and maintain client profile,
execute investment advisory agreement - answersDescribe 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. - answersWhat 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;
