Introduction to Investment Adviser Association (IAA)

The Investment Adviser Association (IAA) is a financial industry association that represents the interests of SEC-registered investment advisers. Established in 1937 as the Investment Counsel Association of America (ICAA), it changed its name to IAA in 2005. The association offers multiple services and benefits to its members, including advocacy on behalf of investment advisers in front of Congress, the SEC, state legislatures, and other relevant entities.

Basics

The Investment Adviser Association is a non-profit organization dedicated to serving professionals in the investment advisory field. It represents the interests of its members to regulatory bodies such as the Securities and Exchange Commission (SEC).

The association not only advocates for its members but also sets standards and principles to guide their conduct, particularly regarding fiduciary duty. The ICAA played a significant role in the United States Congress by contributing to the development of the Investment Advisers Act of 1940, a federal law that regulates investment advisors and professionals.

Converting ICAA to IAA

Established in 1937, the Investment Counsel Association of America played a significant role in implementing federal regulations for the investment adviser and investment industry. After 68 years, in 2005, the organization underwent a name change and became the Investment Adviser Association.

Today, the IAA has a membership of over 650 firms, collectively managing an impressive $25 trillion in assets. Their clients encompass a wide range, including individuals, trusts, investment companies, private funds, pension plans, state and local governments, endowments, foundations, and corporations.

Comprised of more than 300 investment advisory firms, the IAA is responsible for managing client assets exceeding $4 trillion. These firms serve a diverse clientele, such as individuals, families, and institutions like public and private pension plans, corporate funds, mutual funds, hedge funds, charitable organizations, and endowments.

As "investment counsel" under section 208(c) of the Advisers Act, all constituent firms within the IAA are limited to offering investment advice and management services. They are prohibited from earning commissions or transaction-based profits. Instead, their compensation is based on negotiated fees for investment services, primarily tied to a percentage of assets under management.

Regulations Related to the IAA

IAA members are bound by specific rules that encompass a fiduciary duty to their clients. The primary objective is to provide suitable recommendations for clients. To ensure compliance, members must adhere to the following regulations:

1. The Investment Advisers Act of 1940
2. All rules and regulations issued by the SEC under the Advisers Act
3. The Securities Act of 1933
4. The Securities Exchange Act of 1934
5. The Commodities Exchange Act (CEA)
6. All rules and bylaws established by the Municipal Securities Rulemaking Board (MSRB)

Failure to comply with these rules and regulations can result in various penalties, including civil fines and criminal charges.

Conclusion

The Investment Adviser Association is a non-profit organization that represents professionals in the investment advisory field. It advocates for members of regulatory bodies such as the SEC, sets conduct standards and principles, and offers numerous services and benefits. The IAA played a key role in the development of the Investment Advisers Act of 1940, which regulates investment advisors. Members must follow specific rules that include a fiduciary duty to their clients, and non-compliance can lead to penalties.