What Is SEC Release IA‑1092? — A concise explainer
What it is
SEC Release IA‑1092 is an interpretive release issued jointly in 1987 by the U.S. Securities and Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA). It clarifies how the federal Investment Advisers Act of 1940 (the Advisers Act) and state adviser laws apply to people and firms who provide investment advice — especially those whose advisory role is one component of broader financial services (for example, financial planners, pension consultants, or agents).
Why it matters
The release helps determine when someone must register as an investment adviser, comply with adviser rules, and follow disclosure and recordkeeping obligations. It was prompted by the growth in financial planning and related professions in the 1980s and sought consistent, practical guidance on who is covered by adviser law and who is not.
Key definitions
– Investment adviser: Under the Advisers Act, any person or firm that, for compensation, engages in the business of advising others about the value of securities or the advisability of buying, selling, or holding securities — or who issues analyses or reports concerning securities. (Source law: 15 U.S.C. § 80b‑2.)
– Interpretive release: A non‑rule guidance document from a regulator that explains how to read or apply statutory or regulatory provisions; not a statute, but influential in enforcement and compliance.
Main points covered by IA‑1092
– Scope: IA‑1092 explains when general financial planning or related professional services cross the line into “investment adviser” activities such that federal or state adviser rules apply.
– Compensation test: Receiving compensation in connection with giving advice about securities is a core trigger for adviser status. “Compensation” can be fees, commissions, or other economic benefit.
– Advice content and format: Written or oral recommendations about securities’ value, selection, or allocation typically fall within adviser activity.
– Exclusions clarified: Certain professionals were specifically noted as outside adviser status if they do not provide investment advice — for example, some sports or entertainment agents who negotiate contracts but do not give securities advice.
– Coordinated federal‑state approach: IA‑1092 was the product of collaboration between the SEC (federal regulator) and NASAA (association of state securities regulators), so it informs both federal and state enforcement perspectives.
Practical checklist — determining whether IA‑1092 implications apply
Use this quick checklist to assess whether your activities likely fall under the Advisers Act as interpreted by IA‑1092:
1. Are you giving advice or recommendations about securities (stocks, bonds, mutual funds, ETFs, etc.)?
2. Is the advice provided to specific clients (not just general educational content)?
3. Do you receive compensation tied to that advice (fee, retainer, commission, or other economic benefit)?
4. Is providing such advice part of a business or repeated activity (not a one‑time gratuitous remark)?
5. Does any applicable statutory exclusion cover your role (for example, licensed broker‑dealer activities where securities recommendations are incidental and the person is appropriately registered)?
If you answered “yes” to 1–4 (and there’s no clear exclusion in 5), IA‑1092 suggests adviser statutes and rules may apply.
Small numeric example
Scenario: Sarah is a financial planner who creates retirement plans for clients. For several clients she provides written investment allocation recommendations that specify mutual fund selections. She charges each client $600 per year for her planning work.
Analysis:
– Is she advising about securities? Yes (mutual funds are securities).
– Is the advice provided to specific clients? Yes (individual plans).
– Does she receive compensation tied to that advice? Yes ($600/year).
– Is it business activity? Yes (multiple clients; recurring fee).
Conclusion: Under the principles in IA‑1092 and the Advisers Act, Sarah’s activities likely meet the definition of an investment adviser and would trigger adviser registration/notice and compliance obligations (state or federal depending on assets/clients). This is an illustrative example, not legal advice.
Assumptions and limits
– IA‑1092 interprets U.S. federal law and coordinates with state approaches; state laws can vary and impose additional requirements.
– The release is interpretive guidance, not a statute; regulators use it in enforcement and compliance contexts but subsequent rules or case law can refine issues.
– Whether registration is required depends on additional factors (assets under management thresholds, number and type of clients, and state vs. federal jurisdiction).
Further reading (selected authoritative sources)
– U.S. Securities and Exchange Commission — Interpretive Release: Applicability of the Investment Advisers Act to Financial Planners, Pension Consultants, and Other Persons Who Provide Investment Advisory Services as a Component of Other Financial Services (IA‑1092)
https://www.sec.gov/rules/interp/ia-1092.htm
– U.S. Code — Title 15, Section 80b‑1: Findings (Investment Advisers Act of 1940 context)
https://www.law.cornell.edu/uscode/text/15/80b-1
– North American Securities Administrators Association (NASAA) — NASAA homepage
https://www.nasaa.org
– Investopedia — Overview of SEC Release IA‑1092 (educational summary)
https://www.investopedia.com/terms/1/1092.asp
Brief educational disclaimer
This article is for educational purposes only and does not constitute legal, tax, or investment advice. Regulatory obligations are fact‑specific; consult a qualified securities attorney or your state regulator for guidance on whether registration or other compliance is required.