Series 65 Quiz: Apply Adviser Registration Rules
20 questions · exam conditions
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Apply Adviser Registration RulesQuestion 1 of 20

A state-registered investment adviser has custody of client funds and is required to maintain a minimum net worth of $35,000. If the firm's net worth falls to $30,000, what action must the adviser take?

Notify the state Administrator by the close of business the next business day.
Cease all advisory activities until the net worth requirement is met.
Notify all clients within five business days.
File a corrective action plan with the SEC within 30 days.
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Series 65 Quiz

Series 65 Quiz: Apply Adviser Registration Rules

Practice Apply Adviser Registration Rules in Series 65 with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Apply Adviser Registration Rules, giving you a quick way to practice the rules, question types, and explanations that matter most for Series 65.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

A state-registered investment adviser has custody of client funds and is required to maintain a minimum net worth of $35,000. If the firm's net worth falls to $30,000, what action must the adviser take?

  1. Notify the state Administrator by the close of business the next business day. (correct answer)
  2. Cease all advisory activities until the net worth requirement is met.
  3. Notify all clients within five business days.
  4. File a corrective action plan with the SEC within 30 days.
Explanation: If a state-registered investment adviser's net worth falls below the required minimum, it must notify the state Administrator by the close of business on the following business day. After providing this initial notice, the adviser must also file a report of its financial condition.

Question 2

An investment adviser is organized as a partnership. One of the two founding partners, who holds a 60% ownership stake, retires and sells her interest to a new individual. Under the Uniform Securities Act, this event is considered:

  1. a reason for immediate registration withdrawal.
  2. an assignment of advisory contracts, requiring client consent. (correct answer)
  3. a minor change requiring only an internal record.
  4. a non-event as long as the firm name does not change.
Explanation: A change in the majority interest of a partnership is considered an 'assignment' of the investment advisory contracts to the new partnership. Assignment of a contract is not permitted without the consent of the client. The adviser must notify clients and obtain their consent to continue the advisory relationship.

Question 3

A state-registered investment adviser has seen its assets under management (AUM) grow steadily. In its most recent calculation for its annual updating amendment, the firm's AUM is reported as $110 million. The adviser is now required to:

  1. remain registered with the state, as it has the choice to do so up to $120 million AUM.
  2. file for an exemption from federal registration.
  3. register with the SEC and withdraw its state registration. (correct answer)
  4. notify the state Administrator that it will be subject to dual registration.
Explanation: Once an investment adviser's AUM reaches $110 million, registration with the SEC becomes mandatory. The adviser has 90 days from the date its AUM is reported at this level (on its annual updating amendment) to register with the SEC. Following successful SEC registration, it must withdraw its registration at the state level.

Question 4

A new client signs an advisory agreement with a state-registered investment adviser on Monday. The adviser realizes on Tuesday that they forgot to provide the client with the firm's brochure (Form ADV Part 2). To comply with the brochure rule, the adviser must now:

  1. send the brochure immediately and allow the client five business days to terminate the contract without penalty. (correct answer)
  2. terminate the contract as it is invalid and start the process over.
  3. provide the brochure at the next scheduled meeting with the client.
  4. wait to provide the brochure with the first quarterly performance report.
Explanation: The brochure rule requires delivery of the brochure at or before entering into an advisory contract. If it is not delivered at least 48 hours before, the client must be given a five-day penalty-free termination right. Since the brochure was not delivered before signing, the adviser must now provide it and inform the client of this right.

Question 5

Alpha Advisers, a state-registered sole proprietorship, is being acquired by Beta Capital, a corporation. To ensure continuity of business, what must Beta Capital do regarding registration?

  1. Continue to operate under Alpha Advisers' registration until the end of the year.
  2. File a new application for registration, and upon approval, the registration will be effective for the unexpired portion of the year without an additional fee. (correct answer)
  3. Wait for Alpha Advisers to file Form ADV-W to withdraw its registration before applying for a new one.
  4. Pay prorated registration fees for both firms for the remainder of the year.
Explanation: When an investment adviser is acquired, the new entity (the successor firm) must file a new registration application. The filing of a successor registration is coordinated so there is no lapse in business. The successor's registration covers the unexpired portion of the predecessor's registration period without an additional fee.

Question 6

An Investment Adviser Representative (IAR) is employed by a federal covered adviser. The IAR's only office is located in State X. The IAR has several institutional clients in State Y but does not maintain a place of business there. According to the National Securities Markets Improvement Act (NSMIA), where must the IAR register?

  1. Only in State X. (correct answer)
  2. Only in State Y.
  3. In both State X and State Y.
  4. The IAR is not required to register in any state because they work for a federal covered adviser.
Explanation: An Investment Adviser Representative of a federal covered adviser is only required to register in states where they have a place of business. Since the IAR's only office is in State X, they must register in State X. They are not required to register in State Y, where they have clients but no physical office.

Question 7

An investment adviser representative files a complete application for registration with a state securities Administrator on March 15. Assuming no disciplinary issues or accelerated approval, on what date does the registration become effective?

  1. At noon on April 14. (correct answer)
  2. Immediately upon payment of the registration fee.
  3. At the close of business on March 15.
  4. On April 1, the beginning of the next month.
Explanation: Under the Uniform Securities Act, registration for investment advisers and their representatives becomes effective at noon on the 30th day after the filing of a complete application, unless the Administrator specifies an earlier date or a denial/suspension proceeding is underway.

Question 8

According to the record-keeping rules of the Uniform Securities Act, an investment adviser must maintain most records for five years from the last entry date. For what portion of this period must the records be maintained in the principal office of the adviser and be easily accessible?

  1. The first year.
  2. The first two years. (correct answer)
  3. The last three years.
  4. The entire five-year period.
Explanation: State record-keeping rules require that an investment adviser's books and records be preserved for five years. For the initial two years of this period, the records must be kept in an easily accessible location, which is typically the adviser's principal office.

Question 9

An SEC-registered investment adviser with its principal office in Illinois wants to conduct business in Wisconsin, where it has no office. Under the Uniform Securities Act, what must the adviser do before soliciting clients in Wisconsin?

  1. File a full registration application with the Wisconsin Administrator.
  2. Obtain an exemption from the Wisconsin Administrator since it is federally covered.
  3. Submit a notice filing to the Wisconsin Administrator, which typically consists of copies of its SEC filings and a fee. (correct answer)
  4. Register all of its Investment Adviser Representatives with the state of Wisconsin.
Explanation: A federal covered adviser is not required to register with the state but may be required to make a notice filing. This process involves filing copies of documents filed with the SEC (such as Form ADV) and paying a state filing fee. Full registration is not required, and an exemption is not the correct procedure for transacting business.

Question 10

A state-registered investment adviser accepts the prepayment of advisory fees of $1,000 per client, covering one full year of service. This practice requires the adviser to include an audited balance sheet with its Form ADV Part 2A. This requirement is triggered by the prepayment of fees of more than:

  1. $250, six months or more in advance.
  2. $500, six months or more in advance. (correct answer)
  3. $1,200, one year or more in advance.
  4. $100, three months or more in advance.
Explanation: Under state rules, if an investment adviser requires prepayment of fees of more than $500 per client, six months or more in advance, it is considered to have custody and must file an audited balance sheet with its brochure. The amount of $1,200 is used for federal covered advisers.

Question 11

Under the Uniform Securities Act, which of the following professionals would be EXCLUDED from the definition of an investment adviser?

  1. A pension consultant who advises corporate clients on asset allocation for their 401(k) plans for a fee.
  2. An individual who publishes a monthly newsletter with specific stock recommendations and charges a subscription fee.
  3. A lawyer who provides estate planning advice, including recommendations on mutual funds, as part of their regular legal practice and for no special compensation. (correct answer)
  4. A financial planner who charges an hourly rate to create financial plans that include investment advice.
Explanation: The L.A.T.E. exclusion applies to Lawyers, Accountants, Teachers, and Engineers whose investment advice is solely incidental to the practice of their profession and for which they receive no special compensation. The lawyer in this case fits the exclusion. The others are all providing investment advice for compensation as a regular part of their business.

Question 12

Which of the following records is a state-registered investment adviser required to maintain?

  1. A copy of the personal federal income tax return for each executive officer.
  2. The original copy of every advisory contract entered into by the adviser. (correct answer)
  3. A list of all political contributions made by employees in their personal capacity.
  4. A log of all websites visited from the adviser's office computers.
Explanation: Investment advisers are required to maintain specific books and records, which include originals or copies of all written advisory agreements with clients. Personal tax returns of officers, personal political contributions, and general web browsing logs are not part of the specifically required books and records.

Question 13

An investment adviser has made several material changes to its business practices during the year. The firm must deliver an updated brochure or a summary of material changes to its existing clients:

  1. promptly after each material change occurs.
  2. within 30 days of filing a prompt amendment with the Administrator.
  3. within 120 days of the adviser's fiscal year-end. (correct answer)
  4. only if the client requests it in writing.
Explanation: While material changes must be promptly filed with regulators via an amendment to Form ADV, the delivery requirement to existing clients is different. Advisers must annually deliver, within 120 days of their fiscal year-end, either a new, updated brochure or a summary of material changes with an offer to provide the full brochure.

Question 14

An investment adviser's registration application may be denied by a state Administrator if the applicant:

  1. has been accused of, but not yet convicted of, a securities-related felony.
  2. was convicted of any misdemeanor 15 years ago.
  3. is subject to an order from a foreign securities regulator denying registration within the past 5 years. (correct answer)
  4. has filed for personal bankruptcy within the past 7 years.
Explanation: A state Administrator can deny registration based on statutory disqualifications. These include convictions for any felony or a securities-related misdemeanor within the past 10 years, or being subject to a disciplinary order from a domestic or foreign securities regulator. An accusation without conviction or a very old misdemeanor would not be grounds for denial.

Question 15

A state-registered investment adviser files Form ADV-W to withdraw its registration. The Administrator has no pending actions against the firm. When does the withdrawal become effective?

  1. Immediately upon filing.
  2. On the 30th day after filing. (correct answer)
  3. On the 60th day after filing.
  4. At the beginning of the next calendar quarter.
Explanation: Under the Uniform Securities Act, withdrawal from state registration becomes effective 30 days after the filing of Form ADV-W, provided no revocation or suspension proceedings are in progress. Withdrawal from federal (SEC) registration takes 60 days.

Question 16

During IA registration, what is the primary role of the state administrator?

  1. Approve or deny registration and enforce state IA rules (correct answer)
  2. Set federal custody rules and examine SEC-registered advisers
  3. Guarantee investment performance disclosures are accurate
  4. Act as the IA's client advocate in all contract disputes
Explanation: This question tests Series 65 applicants on their ability to apply registration, notice filing, and post-registration maintenance requirements for Investment Advisers. The registration process for IAs involves understanding both federal and state requirements, including documentation, notice filings, and ongoing maintenance obligations. In the scenario, during the IA registration process, the state administrator plays a key role in oversight. Choice A is correct because it accurately reflects the required step or document needed according to regulatory guidelines, focusing on state-level approval and enforcement. Choice B is incorrect because it confuses state roles with federal SEC responsibilities, a common error when overlooking jurisdictional boundaries. To assist candidates, emphasize understanding the distinction between state and federal requirements, the necessity of accurate document submissions, and maintaining timely compliance updates. Practice identifying common regulatory terms and their correct applications.

Question 17

Which of the following is a requirement for an IA's annual compliance update?

  1. Update Form ADV annually and deliver updated brochure when required (correct answer)
  2. Refile Form U4 for each client account and obtain signatures
  3. Submit quarterly audited financials to the state administrator
  4. Renew registration only when the firm adds a new office
Explanation: This question tests Series 65 applicants on their ability to apply registration, notice filing, and post-registration maintenance requirements for Investment Advisers. The registration process for IAs involves understanding both federal and state requirements, including documentation, notice filings, and ongoing maintenance obligations. In the scenario, an IA must perform annual compliance updates to maintain registration. Choice A is correct because it accurately reflects the required step or document needed according to regulatory guidelines for Form ADV and brochure delivery. Choice C is incorrect because it confuses adviser rules with broker-dealer financial reporting, a common error when applying incorrect filing frequencies. To assist candidates, emphasize understanding the distinction between state and federal requirements, the necessity of accurate document submissions, and maintaining timely compliance updates. Practice identifying common regulatory terms and their correct applications.

Question 18

A federal covered adviser forgets a state notice fee; what is the most likely compliance consequence?

  1. The state may treat the adviser as not properly notice filed in that state (correct answer)
  2. The adviser's SEC registration is automatically revoked the same day
  3. Clients must rescind all contracts and receive triple damages by rule
  4. No consequence exists because federal covered advisers are exempt from all fees
Explanation: This question tests Series 65 applicants on their ability to apply registration, notice filing, and post-registration maintenance requirements for Investment Advisers. The registration process for IAs involves understanding both federal and state requirements, including documentation, notice filings, and ongoing maintenance obligations. In the scenario, a federal covered adviser forgets a state notice fee, the adviser must face potential non-compliance issues. Choice A is correct because it accurately reflects the required step or document needed according to regulatory guidelines. Choice B is incorrect because it confuses state fees with SEC revocation, a common error when escalating consequences incorrectly. To assist candidates, emphasize understanding the distinction between state and federal requirements, the necessity of accurate document submissions, and maintaining timely compliance updates. Practice identifying common regulatory terms and their correct applications.

Question 19

A state IA relocates its principal office; which filing best satisfies post-registration maintenance obligations?

  1. Amend Form ADV to update the principal office address promptly (correct answer)
  2. File Form U5 to terminate all IARs and open a new firm record
  3. File Form 13F to disclose the new office location to regulators
  4. File Form D because moving offices is a private placement event
Explanation: This question tests Series 65 applicants on their ability to apply registration, notice filing, and post-registration maintenance requirements for Investment Advisers. The registration process for IAs involves understanding both federal and state requirements, including documentation, notice filings, and ongoing maintenance obligations. In the scenario, a state IA relocates its principal office, the adviser must report this change. Choice A is correct because it accurately reflects the required step or document needed according to regulatory guidelines. Choice B is incorrect because it confuses termination with simple amendments, a common error when overcomplicating updates. To assist candidates, emphasize understanding the distinction between state and federal requirements, the necessity of accurate document submissions, and maintaining timely compliance updates. Practice identifying common regulatory terms and their correct applications.

Question 20

A state IA prepares for renewal; which of the following is a requirement for an annual compliance update?

  1. File an annual updating amendment to Form ADV within 90 days of fiscal year-end (correct answer)
  2. File Form ADV only every two years unless the administrator requests it
  3. File Form CRS annually with the state even if not required to deliver it
  4. File Form U4 annually for each client to renew the firm's registration
Explanation: This question tests Series 65 applicants on their ability to apply registration, notice filing, and post-registration maintenance requirements for Investment Advisers. The registration process for IAs involves understanding both federal and state requirements, including documentation, notice filings, and ongoing maintenance obligations. In the scenario, a state IA prepares for renewal, the adviser must meet annual filing deadlines. Choice A is correct because it accurately reflects the required step or document needed according to regulatory guidelines. Choice B is incorrect because it confuses biennial with annual requirements, a common error when not recalling update frequencies. To assist candidates, emphasize understanding the distinction between state and federal requirements, the necessity of accurate document submissions, and maintaining timely compliance updates. Practice identifying common regulatory terms and their correct applications.