Series 63 – Uniform Securities Agent State Law Exam Investment Advisers and Investment Adviser Representatives 2

Question 1

Under the USA, which of the following persons is excluded from the definition of 'investment adviser representative'?

Accepted Answer

An employee who performs only clerical or administrative functions

Answer

An employee who solicits new advisory clients

Answer

An employee who provides investment analysis for the firm

Answer

An employee who manages individual client portfolios

Question 2

Under the USA, what is a 'wrap fee' program offered by investment advisers?

Accepted Answer

A fee program that bundles investment advice, brokerage, and administration services for a single all-inclusive fee

Answer

A fee charged to clients who exceed a specified number of trades per year

Answer

A fee structure based on investment performance relative to a benchmark

Answer

A fee charged when clients terminate their advisory relationship

Question 3

Under the USA, the 'pay-to-play' rule generally prohibits investment advisers from doing what?

Accepted Answer

Making political contributions to government officials who influence the selection of investment advisers for public pension funds

Answer

Charging performance-based fees to retail clients

Answer

Advertising on radio or television without prior approval

Answer

Sharing client information with affiliated companies

Question 4

Under the USA, which type of fee arrangement for investment advisers is generally prohibited without meeting specific conditions?

Accepted Answer

Performance-based fees that give the adviser a share of capital gains

Answer

Flat annual fees based on assets under management

Answer

Hourly fees for specific investment advice

Answer

Fixed fees for financial planning services

Question 5

Under the USA, what must an investment adviser disclose regarding compensation received from third parties for recommending securities?

Accepted Answer

Full disclosure of the compensation arrangement to clients before or at the time of the recommendation

Answer

Nothing, as long as the recommendation is suitable

Answer

Only the name of the third party, not the amount of compensation

Answer

Disclosure is only required if compensation exceeds $1,000

Question 6

Under the USA, which of the following is a requirement for investment adviser contracts?

Accepted Answer

They must not contain a provision allowing the adviser to be assigned without client consent

Answer

They must be approved by the state Administrator before taking effect

Answer

They must specify minimum investment performance guarantees

Answer

They must be renewed annually by both parties