NASAA Series 63Regulation of Investment Advisers and IARsHard
A single-family office provides investment advice exclusively to members of one wealthy family, their family trusts, and family-owned entities. The office is wholly owned and controlled by family members, does not hold itself out to the public as an investment adviser, and charges no outside clients. Under the Uniform Securities Act, how is the family office treated?
- AIt must register as a federal covered adviser because its assets under management exceed $100 million
- BIt must register in every state where a family member resides
- CIt qualifies only for the private fund adviser exemption, requiring exempt reporting adviser status
- DIt is excluded from the definition of investment adviser under the family office exclusion
Show answer & explanationAnswer & explanation
Correct answer: D. It is excluded from the definition of investment adviser under the family office exclusion
A single-family office that advises only 'family clients,' is wholly owned and controlled by family members, and does not hold itself out to the public as an investment adviser meets the family office exclusion from the investment adviser definition, regardless of AUM.
Why the other options are wrong
- A. AUM is irrelevant once the family office exclusion criteria are met; no registration is triggered.
- B. Excluded family offices have no registration obligation triggered by family member residency.
- C. The private fund adviser exemption is a separate, narrower provision unrelated to family offices advising only family members.
Family Office Exclusion
A family office that advises only family clients, is wholly owned/controlled by the family, and does not hold itself out publicly as an adviser is excluded from the investment adviser definition.
- No AUM threshold applies
- Must not hold out to the public as an adviser
- Client base limited strictly to family members/trusts/entities
Memory trick: Family business stays out of the business (of registration).