IA Exclusions from the Definition

⚠️ THIS CHAPTER COVERS EXCLUSIONS (not exemptions)

This chapter is about EXCLUSIONS. An EXCLUDED person is NOT an investment adviser at all — they do not meet the legal definition, so the registration rules never reach them. Contrast with the previous chapter (4.3.3.6 Exemptions): an EXEMPT person IS an investment adviser (they meet the definition) but need not register because the law specifically says so.

• A person who is excluded from the legal definition of an investment adviser isn’t subject to the registration, rules, or regulations that normally apply to advisory firms.

Investment adviser exclusions fall into three categories:

• Federal only exclusions
• State only exclusions
• Federal & state exclusions

🔑 Complete table of exclusions

Definitions

Federal only exclusions

The only exclusion unique to the Investment Advisers Act:

Advisers only providing advice on US Government securities

• Most investment advisers give guidance on many types of securities. However, advisers who only provide services related to US Government securities (for example, Treasury bonds) are excluded from the definition of an investment adviser.
• As a result, if they fall under federal jurisdiction, they don’t have to register as federal-covered advisers.

State only exclusions

There are three exclusions unique to the USA:

Investment adviser representatives (IARs)

• Just as agents are excluded from the definition of a broker-dealer, an IAR is not the investment adviser firm they work for.
• A natural person (a human being) representing a business is not the business itself.

Federal-covered advisers

• If an adviser is registered with the SEC, state law excludes them from the definition of an adviser for state registration purposes.
• ⚠️ Federal-covered advisers can still be subject to certain state requirements, including:
  • Notice filings
  • Investigations related to fraud
• Even so, they generally don’t have to register with the state administrator and largely avoid state-level registration.

Any person designated by the administrator

The USA gives state administrators broad authority when enforcing securities laws. You’ll see language like this in several places:

“Such other persons not within the intent of this subsection as the [Administrator] may by rule or order designate.”

• In practical terms, the administrator can designate additional exclusions by rule or order, even if the person or entity isn’t specifically listed in the USA.
• 📌 The same idea shows up with institutional investors: the administrator may recognize any person as an institution.

Federal & state exclusions

The following exclusions exist at both the federal level (Investment Advisers Act of 1940) and the state level (USA):

• Certain professionals providing incidental advice
• Broker-dealers and agents
• Media programs
• Banks or savings institutions

Certain professionals providing incidental advice (LATE)

A lawyer, accountant, engineer, or teacher whose performance of these services is solely incidental to the practice of his profession [is excluded from the definition of an investment adviser]

🔑 The USA names four professions. Many test takers remember them as the LATE exclusion:

• These professionals can give investment advice and still avoid being treated as an investment adviser, as long as the advice is incidental to their primary professional services.

Example (exclusion applies): A lawyer is hired to file a lawsuit and wins, and the client receives a large sum of money. The lawyer suggests investing the money in a safe, short-term security until the client decides on a long-term use.

• On the surface, the lawyer seems to meet the investment adviser definition: advice about securities and compensation from the client.
• 🔑 The key question is why the client hired the lawyer. If the client is paying for legal services and the securities suggestion is truly “on the side,” the LATE exclusion can apply.

Broker-dealers and agents

A broker-dealer or its agent whose performance of these services is solely incidental to the conduct of its business as a broker-dealer and who receives no special compensation for them [is excluded from the definition of an investment adviser].

• It’s common for advice to come up during a securities transaction. Example: a customer calls a registered agent to buy a security, asks whether it’s appropriate given their financial situation, and the agent recommends the trade. The customer completes the purchase and pays a commission.
• This looks like advice plus compensation, but the type of compensation matters.

Media programs

A publisher of any bona fide newspaper, news column, newsletter, news magazine, or business or financial publication or service, whether communicated in hard copy form, by electronic means, or otherwise, that does not consist of the rendering of advice on the basis of the specific investment situation of each client [is excluded from the definition of an investment adviser]

• Many media programs discuss securities, especially online. This can include newspapers, newsletters, financial blogs, and other digital publications.
• The USA also includes “radio, television programs, or other electronic communications,” which can cover everything from TV and radio shows to YouTube and TikTok channels.
• 🔑 The key requirement is that the advice must be general in nature, meaning it isn’t based on a specific client’s investment situation.

• ⚠️ The more the recommendation is tailored to an individual’s facts, the more likely the media exclusion won’t apply.

Banks and savings institutions

• In general, banks and savings institutions are excluded from many securities laws and regulations.
• ⚠️ The USA makes it clear that the bank must be US-based, so this exclusion does not apply to foreign banks.
• 🔑 Rule of thumb: if it sounds like a US-based bank, it’s probably excluded.
• ⚠️ However, this exclusion does not apply to bank holding companies.

Key points

Federal only investment adviser exclusions

• Only providing advice on US Gov’t securities

State only investment adviser exclusions

• Investment adviser representatives (IARs)
• Federal-covered advisers
• Any person designated by the administrator

Federal & state investment adviser exclusions

• Certain professionals providing incidental advice
  • Lawyers
  • Accountants
  • Teachers
  • Engineers
• Broker-dealers and agents
  • As long as not being paid for advice
• Media programs
  • As long as the advice is general in nature
• Banks or savings institutions

Sources

Primary/official references for the material in this chapter. Every link was fetched and returned HTTP 200 on 2026-08-15.