Series 63 Practice Test

Series 63 Investment Advisers Practice Questions

Investment Advisers makes up 3 of every 60 questions on a Tigertest Series 63 practice test. Here are 10 of the 10 questions on it, each with the answer and the reason.

Updated 2026-11-10 by the Tigertest team. Based on NASAA's Series 63 test specifications. Original questions; 60 per test in the real exam's proportions, 43 of 60 to pass. Not affiliated with NASAA or FINRA.

1. 1. Under the Uniform Securities Act, which of these is excluded from the definition of investment adviser?

   • A.A planner billing hourly for advice
   • B.A widely sold financial magazine
   • C.A newsletter tailored to each subscriber
   • D.A pension consultant paid by plans

   Answer: B. Publishers of bona fide newspapers, magazines and business or financial publications of general, regular and paid circulation are excluded. Advice tailored to each reader is personal advice and falls inside the definition.

2. 2. While preparing a client's tax return, a CPA remarks that the client's bond fund looks costly. She charges nothing extra and does not hold herself out as an adviser. Under the USA she is:

   • A.An investment adviser representative
   • B.A federal covered adviser
   • C.An investment adviser
   • D.Not an investment adviser

   Answer: D. Lawyers, accountants, engineers and teachers are excluded when their advice is solely incidental to their profession. Charging separately for advice or marketing advisory services would end the exclusion.

3. 3. Under NSMIA, a state may still bring an action against a federal covered adviser for:

   • A.Fraud or deceit
   • B.Its SEC registration status
   • C.Its net capital level
   • D.The format of its books

   Answer: A. NSMIA moved registration and oversight of federal covered advisers to the SEC but preserved each state's authority to investigate and bring enforcement actions for fraud or deceit.

4. 4. An adviser manages $120 million of client assets and has its only office in one state. It generally registers with:

   • A.Both the SEC and the state
   • B.FINRA
   • C.The SEC
   • D.The state Administrator

   Answer: C. Under Section 203A of the Investment Advisers Act, an adviser must register with the SEC once its regulatory assets under management reach $110 million (it may from $100 million). Below that, a mid-sized adviser generally registers with its home state.

5. 5. A state-registered adviser has no place of business in State B. It need not register in State B if, over the preceding 12 months, it had there:

   • A.Fifteen or fewer clients
   • B.No more than one client
   • C.Five or fewer clients
   • D.Ten or fewer clients

   Answer: C. NSMIA's national de minimis standard bars a state from requiring registration of an adviser with no place of business there and fewer than six clients resident there during the preceding 12 months.

6. 6. Under NASAA's custody model rule, a state-registered adviser with custody of client funds must generally:

   • A.Use a qualified custodian
   • B.Send statements only on request
   • C.Keep certificates in its office safe
   • D.Hold client cash in its operating account

   Answer: A. The custody rule requires client funds and securities to be held by a qualified custodian such as a bank or broker-dealer, with account statements at least quarterly and, in most cases, a yearly surprise examination by an independent accountant.

7. 7. NASAA's model rule on investment advisory contracts requires the contract to state:

   • A.Disputes go to the Administrator
   • B.A minimum guaranteed annual return
   • C.That prepaid fees are never refunded
   • D.No assignment without client consent

   Answer: D. The contract must describe the services, term, fee and its calculation, how prepaid fees are refunded on termination, whether the adviser has discretion, and that it may not be assigned without the client's consent.

8. 8. Under NASAA's recordkeeping model rule, during the first two years of the retention period a state-registered adviser keeps its records:

   • A.With FINRA's records desk
   • B.In an appropriate office of its own
   • C.With the state Administrator
   • D.At each client's home

   Answer: B. Required books and records are kept for five years from the end of the fiscal year of the last entry, the first two years in an appropriate office of the adviser.

9. 9. NASAA's investment adviser information security and privacy rule requires a state-registered adviser to:

   • A.Store client records only on paper
   • B.Review its security policies yearly
   • C.File its security policies with the SEC
   • D.Buy cyber insurance for every client

   Answer: B. The rule requires written physical security and cybersecurity policies and procedures, reviewed and modified as needed at least annually, plus a privacy policy delivered to clients.

10. 10. Under NASAA's model rule on unethical business practices of advisers, which is unethical for an adviser?

    • A.Using a qualified custodian
    • B.Giving clients its ADV brochure
    • C.Charging a disclosed hourly fee
    • D.Borrowing money from a client

    Answer: D. Borrowing from a client is unethical unless the client is a broker-dealer, an affiliate of the adviser, or a financial institution engaged in lending. Disclosed fees, a qualified custodian and brochure delivery are what the rules require.