CFP® Practice Question: Investment Advisors Act of 1940

Which of the following individuals need to register with the SEC under the Investment Advisers Act of 1940?

Adam, who retired last year from a big brokerage house but he recently started providing services to 12 clients who live in his neighborhood that he met while out golfing.
Belinda, who writes weekly investment articles for a local newspaper.
Carter, who provides incidental services as an accountant.
Diane, who provides investment services only to three large insurance companies.

A is the answer. Adam holds himself out to the public on the golf course. Adam would not be required to register if he has fewer than 15 clients and did not hold himself out to the public. Belinda is not required to register since her articles are for general and regular circulation. Carter is not required to register as accountants are given an exception if the service is only incidental. Diane does not have to register as she is exempted since all of her clients are insurance companies.

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