Key Concepts for Series 65 Exam Preparation

Form ADV Overview

• Form ADV: Essential for both state and federal registration of investment advisors.
  • Uses: Registration document and disclosure brochure.
  • Divided into two parts: Part 1 and Part 2.
    • Part 1: General information about the firm.
      • Principal addresses.
      • Form of business (LLC, C-Corp, etc.).
      • Type of business specialization (e.g., bond portfolios, estate planning).
      • Information about officers, directors, and owners, including biographical background and disciplinary actions.
      • Officers, directors, and partners are automatically registered as investment advisor representatives (IARs).
    • Part 2: Used as the disclosure brochure.
      • Part 2A: General information (fees, charges, etc.).
      • Part 2B: Biographical information about reps (mnemonic: B = Bodies).

Test Questions on Form ADV

• Content: General and simple; doesn't go into fine distinctions between parts A and B.
• Disclosure Brochure: More commonly referred to as Form ADV Part 2 on the test.
• Timing for Providing Form: Various rules for state vs. federal advisors.
  • State: Must be provided 48 hours before contract date, or client gets a 5-day rescission period (free look period).
  • Federal: Must be provided at or before the contract date.
• Annual Updates:
  • State Advisors: Only if there are material changes or upon client request.
  • Federal Advisors: Must be re-sent annually within 120 days of fiscal year-end. (Test questions often ask about this timeframe).

Investment Advisor Solicitors

• Role: Firms (not individuals) that solicit clients on behalf of IAs.
  • Usually affiliate with independent advising firms like LPL or Commonwealth Financial.
• Form ADV Part 2: Must be provided along with IA solicitor's brochure, and client must sign this and the advisor's brochure.
• Registration: Individuals working for the solicitor must register as IARs.
• Test Questions: Often about disclosure requirements or the need to register as IARs.

Client Referral Fees

• Referral Scenario: When CPAs, attorneys, etc., refer clients to an IA.
  • Permitted: Fixed referral fees (e.g., $500 flat fee).
  • Not Permitted: Referral fees based on the size of the client's account.
• Test Questions: Can test both from positive or negative scenarios.

Resources

• Series 65 Video Course: Available for comprehensive preparation.
• Private Tutoring: Offered via Skype across the country.

Contact Information

• Email: brian@testyelpexamprep.com (for questions, comments, private tutoring inquiries).