MENU
Which of the following would not have to register as an investment adviser or an investment adviser representative under the Investment Advisers Act of 1940?
i. an insurance agent who sells only whole life and term life policies
ii. a commodity futures broker
iii. a bank employee who sells the bank's customers only CDs and other bank securities that are FDIC-insured
IV. a person that is registered as a broker-dealer with the SEC that also provides investment advice to its customers for additional compensation
Suggested Answer: B
Get Premium Series-6 Questions
as Interactive Web-Based Practice Test or PDF
Real Exam Format
Detailed Explanations
Instant Access
Get Your Practice Test
Only the persons described in Selections I, II, and III would not have to register as an investment adviser or an investment adviser representative under the Investment Advisers Act of 1940. Whole life and term life policies, commodity futures, and FDIC-insured bank products are excluded from the definition of a security, and those persons selling these products need not register. Therefore, the insurance agent, the commodity futures broker, and the bank employee who sells only FDIC-insured bank securities need not register. Even if a person is registered as a broker-dealer with the SEC, if that entity also provides investment advice to its customers for additional compensation, it must register as an investment adviser.
32 comments · newest first
JA
Jannette
10 months ago
I thought all financial advisors had to register, this is surprising!
AS
Ashlyn
11 months ago
Wait, why wouldn’t the broker-dealer need to register?
VE
Venita
11 months ago
Totally agree, I and III are safe!
AA
Aaron
11 months ago
Seems odd that a bank employee is off the hook.
RO
Rosio
11 months ago
I think I and III don’t need to register.
SH
Sharika
12 months ago
I believe options I and III are correct, but I’m not entirely confident about the bank employee's situation.
JI
Jina
12 months ago
I’m a bit confused about the commodity futures broker. I feel like they might have different rules compared to investment advisers.
TH
Theresia
1 year ago
I practiced a similar question where a broker-dealer was involved, and I think they do have to register if they give advice for extra fees.
GO
Golda
1 year ago
I think I remember that insurance agents selling only life policies don't need to register, but I'm not sure about the bank employee.
VA
Valentin
1 year ago
I've got a good feeling about this one. The insurance agent and the bank employee seem like they would be exempt since they're not providing investment advice for a fee. But I'll double-check the specifics just to be sure.
BR
Brice
1 year ago
I'm a little confused on the difference between a broker-dealer and an investment adviser. I'll need to make sure I understand that distinction before I can answer this question confidently.
SY
Sylvia
1 year ago
Okay, let's see. I think the key here is to identify which of these individuals or entities are providing investment advice for compensation. That's the key trigger for the registration requirement.
GL
Glendora
1 year ago
Hmm, this looks like a tricky one. I'll need to carefully review the details of the Investment Advisers Act to determine which of these scenarios would not require registration.
CH
Charlena
1 year ago
Option B, all the way! I mean, come on, an insurance agent selling life policies? That's about as far from investment advice as you can get. And a bank employee selling FDIC-insured products? That's just common sense.
DE
Delmy
1 year ago
Hmm, this is a tough one. I'm going to have to go with option D, just to be on the safe side. Better to cover all my bases, you know? After all, you can never be too careful when it comes to these financial regulations.
PA
Paulina
1 year ago
User 4: Option D it is then, better safe than sorry.
EL
Elliott
1 year ago
User 3: Yeah, you never know with these regulations.
MI
Ming
1 year ago
User 2: I agree, it's better to cover all the possibilities.
EL
Elvis
1 year ago
User 1: I think option D is the safest choice.
AN
Annita
2 years ago
I'm going to have to go with option C on this one. The insurance agent and bank employee are clearly exempt, and a commodity futures broker is not an investment adviser, so that leaves II and III as the correct answer.
RO
Rosendo
2 years ago
I'm going with option B as well. The way I see it, the only one who would need to register is the broker-dealer who provides investment advice for additional compensation. The rest are just doing their regular jobs.
MA
Matthew
1 year ago
That makes sense. It's important to know the different roles and responsibilities under the Investment Advisers Act to ensure compliance.
CA
Carlene
1 year ago
Yeah, I think you're right. The broker-dealer is the only one who would need to register because they are providing investment advice for additional compensation.
JA
Janna
1 year ago
I agree, option B seems to be the correct choice. The insurance agent and bank employee are not providing investment advice, and the commodity futures broker is not covered under the Investment Advisers Act.
SA
Sage
2 years ago
Option B seems like the obvious choice here. I mean, insurance agents and bank employees clearly don't need to register as investment advisers, right? And a commodity futures broker? Come on, that's a no-brainer.
LA
Lavonda
1 year ago
Definitely, option B covers all the individuals who do not have to register under the Investment Advisers Act of 1940.
SA
Sabine
1 year ago
It's clear that option B is the best choice here. None of those individuals need to register as investment advisers.
SH
Sherron
1 year ago
Commodity futures brokers are also exempt, so it makes sense that option B includes all of them.
PA
Pa
2 years ago
I agree, option B is the correct choice. Insurance agents and bank employees are exempt from registration.
EV
Evan
2 years ago
I'm not sure about that. I think the answer might be C) II and III only because commodity futures brokers are also exempt.
GR
Gracia
2 years ago
I agree with Mozell. Insurance agents and bank employees selling only certain products are exempt from registration.
MO
Mozell
2 years ago
I think the answer is A) I and III only.