Investment Adviser Association (IAA): Definition and Operational Insights
The Investment Adviser Association (IAA) is a non-profit organization representing investment advisors before regulatory agencies such as the Securities and Exchange Commission (SEC).
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What Is the Investment Adviser Association (IAA)?
The Investment Adviser Association (IAA), formerly known as the Investment Counsel Association of America (ICAA), is a non-profit entity dedicated to professionals in the investment advisory sector. The organization advocates on behalf of its members to regulatory authorities like the Securities and Exchange Commission (SEC).
It also sets forth ethical standards and principles guiding its members, particularly regarding fiduciary responsibility. The IAA played an instrumental role in shaping the Investment Advisers Act of 1940, a key federal law governing investment advisors and related professionals.
Key Highlights
- The IAA is a prominent financial industry body representing SEC-registered investment advisors.
- It offers its members various services, including advocacy before Congress, the SEC, state legislatures, and other regulatory bodies.
- Founded in 1937 as the Investment Counsel Association of America (ICAA), it adopted the Investment Adviser Association name in 2005.
Deep Dive into the Investment Adviser Association (IAA)
Established in 1937 as the Investment Counsel Association of America, the organization significantly influenced federal legislation regulating investment advisors. In 2005, it rebranded as the Investment Adviser Association (IAA).
Currently, the IAA boasts a membership exceeding 650 firms managing assets totaling approximately $25 trillion. These firms serve a diverse clientele, including individuals, trusts, investment companies, private funds, pension plans, governmental entities, endowments, foundations, and corporations.
The association includes over 300 investment advisory firms managing more than $4 trillion in client assets. Their clientele spans individuals, families, institutional investors such as public and private pension plans, corporate funds, mutual funds, hedge funds, charitable organizations, and endowments.
Members of the IAA are authorized to identify themselves as "investment counsel" under section 208(c) of the Advisers Act. They are limited to providing investment advice and management services without earning commissions or profits from client transactions. Compensation is exclusively fee-based, typically calculated as a percentage of assets under management (AUM).
Quick Fact
After 68 years, in 2005, the Investment Counsel Association of America officially rebranded as the Investment Adviser Association (IAA).
Regulatory Framework Governing the Investment Adviser Association
While the regulations for IAA members are detailed, the core principle is a fiduciary duty to clients, emphasizing suitable investment recommendations. Members must comply with the following key regulations:
- The Investment Advisers Act of 1940
- All SEC rules issued under the Advisers Act
- The Securities Act of 1933
- The Securities Exchange Act of 1934
- The Commodities Exchange Act (CEA)
- Rules and bylaws established by the Municipal Securities Rulemaking Board (MSRB)
Investment advisers who violate these regulations face potential civil penalties and criminal charges.
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