Series 63 practice questioneasyCompensation and the Definition of Investment Adviser
Which of the following would MOST LIKELY cause an individual offering investment advice to meet the compensation prong of the Investment Adviser definition under the Uniform Securities Act (USA)?
- AReceiving a flat fee from clients specifically for investment recommendations.✓ Correct answer
- BReceiving only commissions from effecting securities transactions as a broker-dealer agent.
- CDistributing publicly available research reports without charging clients.
- DProviding advice incidentally as part of bank trust services.
Explanation
Why A — Receiving a flat fee from clients specifically for investment recommendations.
Option A satisfies the compensation element because the individual receives a fee for specific investment advice (USA §401(c)). Options B, C, and D either receive transaction-based compensation, none at all, or provide advice incidentally, none of which meet the standalone adviser definition.
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