- Everything is covered by the Uniform Securities Act's anti-fraud statute
- Agents can not use the word "guaranteed"
- As long as they have no more than 5 clients, the RIA or IAR are exempt from registration
- Investment advice has to be on specific securities to count as "investment advice"
- The word "fee" = investment adviser or IAR; the word "commission' = broker-dealer or agent
Let's take them one at a time. Number 1--the investment has to meet the definition of a "security" to be subject to anything under a securities act, right? Whole life insurance and fixed annuities are not securities and, therefore, not covered by the Uniform Securities Act. Period. Number 2--broker-dealers can't guarantee investors against a loss; however, all US Treasury securities and a small handful of corporate bonds are guaranteed. The agent simply has to explain what the "guarantees" do and do not involve. US Treasury securities are guaranteed as to interest and principal by the US Treasury. A guaranteed corporate bond or preferred stock has a third party promising to make up any payments the issuer cannot make. Number 3--the much more important fact is whether they have a physical presence/place of business in the state. If they do, they register, regardless of the number or type of clients they serve. Number 4--the advice can be extremely general in nature, but if it is specific to the client to whom it is given, then it becomes investment advice. If a sports agent tells his client to put 1/3 into real estate, 1/3 into insurance products, and 1/3 into securities, that is investment advice. It involves securities and it's specific to the client. Number 5--the question is, "How are they functioning?" Are they compensated to tell people to buy or sell securities? If so, they're functioning like an investment adviser, even if they only earn commissions when clients buy the products in the financial plan delivered for "free." You hold yourself out as a financial planner, the regulators take your word for it. On the other side, agents earn 12b-1 fees, and these fees are a % of assets, yet these things are still just commissions or "asset-based sales charges." If the agent is getting compensated to sell securities, he's not acting as an investment adviser.Need Help with your Series 65?