Practical Application

Amy Adams is new to the securities industry and has just passed the required licensing exams. She’s been hired by Wealth Management, Inc., a firm with over 10,000 clients and $250 million under management. Since Amy will be providing advice as part of the business of a larger firm, she does not typically have to register as an investment adviser herself. Rather, she has to register with their state as an investment adviser representative (more on this in the next chapter). In other words, they’re actually a representative of someone else who is registered as an investment adviser.

However, Amy Adams’s firm does have to register as an investment adviser. As part of this process, the firm must first determine whether or not it has to register as an investment adviser with each state it operates in, or just once with the federal government (Securities and Exchange Commission). Because her firm is one of the largest in the region with over 10,000 clients, there’s no doubt that the firm would exceed the $110,000,000 asset limit for state registration, as well as having over five non-institutional clients in more than 15 states.

Because Amy’s firm actually acts as custodia