I am frequently confusing the differences and rules between the BD and IAR registration. Can someone please explain or provide a breakdown on the differences?
The simple way that I remember it is first by the difference between a BD and an IA. Right off the bat I know that the de minimis rule does not apply to BD and they must register in any state that they have an office and at least 1 retail investor. IAs on the other hand don’t have to register in a state where they do not have a physical place of business and no more than 5 retail investors. Also remember that just because an investor is labeled as “accredited” doesn’t mean that they are not retail clients. Accredited investors are retail clients that meet the financial requirements/qualifications of being accredited.
Both BD and IA have the Vacation Rule where they do not have to register in a state where a client is visiting and where there is no physical place of business (the rule is normally for 30 days).
Another similarity between the two is the Institution Rule: if the BD/IA has no office in a state and ONLY does business with institutional clients then they do not need to register in that state.
Another weird one is the Canadian (limited registration) rule where BD/IA apply for temporary registration (183 days) when they are registered in Canada but has a client in the US. I have not spent a lot of time with the details on this so make sure you read up.
In order to register, both BD and IA apply with Form U4 and both withdrawal with Form U5. IAs register with Form ADV which has parts Form ADV: Part 1, Part 2A, and Part 2B (make sure you know what is on each).
Another difference between the two is what they are required to have on file after granted effective registration. BDs are required to have the last 3 years available with the last 2 readily accessible. IAs are required to have the last 5 years available with the last 2 readily accessible (I remember this because I know IAs have a stronger fiduciary responsibility compared to BDs, therefore you should expect more years of information and records available).
In summary, the main thing I remember is that BDs must register in a state where they have a place of business and at least 1 retail client, and IA are exempt if they have 5 or fewer retail clients and no place of business. For the most part, everything else is the same. I take the 66 on Wednesday so I would love to see if this information is complete and accurate, but it is how I go through those problems in my head. Hopefully that helped a little.
Also be careful because BD and IA are equivalent of agent and IAR. Broker dealer employees are “agents” and IA employees are “Investment advisor representatives.” This may help you see the differences a little better.
A good resource is the 3rd dump sheet page for the Series 66
How did you end up doing? I take mine in 9 days!
I passed today! You got it
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Yay!!! Any tips? Big day is Friday.
I took the full 2 hours and 30 minutes which I didn’t do at all on the Acheivable exams. I would recommend doing all 110 questions and then taking a quick break before reviewing your answers. I felt like the non regulatory/law/registration questions were sooo easy so make sure you are locked on those because that gave me confidence to submit it. I had an exam readiness of 91% and passed 5 of 5 practice tests but that can be different for you dont worry. I havent taken the Series 7 so I can’t compare it to that but I felt way more confident taking the 66 than the SIE. The test is very hard don’t get me wrong but if you have taken your prep seriously then you will be good. Good luck!
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Thank you so much! The 7 was a beast haha but I did pass on my first try! I currently have an exam readiness of 94%, have taken 27 exams, and my last 5 scores were 86%, 85%, 83%, 81%, and 83%. Would you say Achievable prepared you fairly well?