SIE (Securities Industry Essentials) Practice Exam

When reviewing the definitions of broker-dealers and investment advisers, one would find that:

1. Broker-dealers are primarily compensated through commissions, while investment advisers are primarily compensated through fees based on assets under management

2. Broker-dealers execute trades on behalf of their clients, while investment advisers provide advice and manage investments

3. Broker-dealers must register with the SEC if they trade nationally or across state lines, while investment advisers must register depending on the amount of assets they manage

4. All of these

The correct answer is: All of these

Both A and B are partially correct but do not fully encompass the definitions of broker-dealers and investment advisers. While broker-dealers are primarily compensated through commissions, they also must execute trades on behalf of their clients. On the other hand, investment advisers not only provide advice and manage investments, but they may also be compensated through fees based on assets under management. Option C is incorrect because both broker-dealers and investment advisers are required to register with the SEC, regardless of whether they trade nationally or across state lines or depending on the amount of assets they manage. Therefore, option D is the best choice as it includes all the correct statements about these two types of financial professionals.