FREE IAR Regulations & Compliance Questions and Answers

Question 1

Which regulatory body primarily oversees Investment Advisory Representatives (IARs) in the U.S.?

Accepted Answer

Securities and Exchange Commission (SEC) or state regulators

Answer

Federal Reserve

Answer

Financial Industry Regulatory Authority (FINRA)

Answer

Federal Deposit Insurance Corporation (FDIC)

Question 2

What is the primary purpose of Form ADV?

Accepted Answer

To disclose fees, conflicts of interest, and disciplinary history to clients

Answer

To report quarterly trades to the SEC

Answer

To register as a broker-dealer

Answer

To apply for a Series 65 license

Question 3

Under the Investment Advisers Act of 1940, which activity is prohibited for IARs?

Accepted Answer

Engaging in insider trading or making false statements

Answer

Providing personalized investment advice

Answer

Charging performance-based fees

Answer

Registering with the SEC

Question 4

What is the fiduciary duty of an IAR?

Accepted Answer

To act in the client's best interest, with full transparency

Answer

To maximize the firm's profits

Answer

To follow the client's instructions without question

Answer

To prioritize high-commission products

Question 5

Which of the following triggers a requirement to register as an IAR with the SEC?

Accepted Answer

Managing $100 million or more in assets

Answer

Having more than 10 clients

Answer

Working for a broker-dealer

Answer

Holding a Series 7 license

Question 6

What must an IAR do when disclosing conflicts of interest to clients?

Accepted Answer

Provide written disclosure in plain language

Answer

Verbally mention the conflict during meetings

Answer

Only disclose if the client asks

Answer

Report it internally but not to clients

Question 7

Which compliance document outlines an RIA's policies and procedures?

Accepted Answer

The firm's written compliance manual

Answer

Form ADV Part 1

Answer

Form CRS

Answer

A broker-dealer agreement

Question 8

How often must IARs typically update their Form ADV?

Accepted Answer

Annually and for material changes

Answer

Every 5 years

Answer

Only when changing firms

Answer

Quarterly

Question 9

What is a key requirement under the SEC's Marketing Rule for IARs?

Accepted Answer

Ensuring testimonials include clear disclosures

Answer

Using celebrity endorsements

Answer

Avoiding all performance data in ads

Answer

Sending unsolicited emails