Question

Under the Investment Advisors Act of 1940, if a registered investment advisor requires prepayment of $1200 or more of advisory fees, 6 months or more in advance of rendering services, the advisor must

Answer 1

Under the Investment Advisers Act of 1940, if a registered investment advisor requires prepayment of $1200 or more of advisory fees, 6 months or more in advance of rendering services, the advisor must:

A. give discretionary authority to the adviser

B. receive a copy of the adviser's balance sheet

C. be provided with a "Brochure" at least 5 days in advance of signing a contract

D. be reported to the Securities and Exchange Commission

Step-by-step explanation:

The best answer is letter B: the adviser must include a balance sheet in the ADV Form Part 2A that constitutes the "Brochure" that must be given to customers at, or previous to, entering into an advisory contract.

Answer 2

give each new client a copy of his balance sheet

Step-by-step explanation:

Note that an investment advisor manages the money or financial assets of their clients such as stocks, bonds, and mutual funds—and then buy, sell, and monitor them as directed by the clients.

According to the Investment Advisors Act of 1940 a federal law which defines the role and responsibilities of an investment advisor/adviser, in such a scenario the investment advisor would provide each new client a copy of his balance sheet.