Question

Arthur M. Munger is the sole owner of Munger's Meritorious Planning (MMP). MMP does full service financial planning, including investment securities. Arthur is registered as an agent with Fast Execution Brokers (FEB) and directs all client securities transactions to FEB. Arthur decided it is time to get registered as an investment adviser representative so that he can earn fees for giving advice. Arthur is a good friend of the manager of the local branch of National Investment Advisers, Inc. (NIAI), and decided to speak to his friend about becoming an IAR. Under the provisions of the Uniform Securities Act, Arthur would be told

A) if he wishes to become an investment adviser representative, he must affiliate with a registered investment adviser and terminate his registration as an agent.
B) if he wishes to become an investment adviser representative, he should affiliate with the broker-dealer where he is already an agent.
C) if he wishes to become an investment adviser representative, he must affiliate with a registered investment adviser.
D) he cannot be an agent for one firm and an IAR for another; both registrations must be with the same firm.

Answer 1

Arthur must affiliate with a registered investment adviser to become an IAR but does not have to terminate his agent registration. He can be associated with different firms for his IAR and agent roles, subject to approval.

Step-by-step explanation:

Under the provisions of the Uniform Securities Act, if Arthur wishes to become an investment adviser representative (IAR), he must affiliate with a registered investment adviser. It is not a requirement to terminate his registration as an agent with Fast Execution Brokers (FEB). Therefore, the correct answer to Arthur's query would be that he can still direct client securities transactions to FEB as an agent, but to earn fees for giving advice as an IAR, he must be affiliated with a registered investment adviser. However, this does not preclude him from being an agent and an IAR for different firms, as long as the firms are aware of and approve the dual registration.

When planning to speak with the manager of the local branch of National Investment Advisers, Inc. (NIAI) about becoming an IAR, Arthur should clarify these points and discuss the potential compliance and conflict of interest concerns that might arise with dual registration.

Answer 2

Arthur must affiliate with a registered investment adviser to become an investment adviser representative, and he is not restricted to having both registrations with the same firm, as long as he complies with regulations. The correct answer is option C).

Step-by-step explanation:

Arthur M. Munger is interested in becoming an investment adviser representative (IAR) while currently being registered as an agent with Fast Execution Brokers (FEB) and owning a financial planning service. Under the Uniform Securities Act, Arthur would be advised that to become an IAR, he must affiliate with a registered investment adviser. It is also necessary to clarify that while investment adviser representatives can be registered with a different firm than their broker-dealer, it's important they comply with any state regulations or firm policies that may restrict such affiliations.