NASAA Coordinated Investment Adviser Exam

Key Takeaways from NASAA’s 2023 Investment Adviser Coordinated Exam

September 15, 2023

Reading time : 6 minutes


The North American Securities Administrators Association (“NASAA”) recently released its 2023 Investment Adviser Coordinated Exam findings. The report provides valuable insights and empirical data with respect to the most common deficiencies found during 683 routine examinations of state-registered investment advisers located throughout the U.S. and conducted from January 1 to July 31, 2023.

Primary Investment Adviser Exam Deficiencies by Category

The following is a summary of the primary deficiencies in each category, offering state-registered investment advisers with actionable insights to enhance their compliance programs.


– Untrue or misleading statements or omissions (e.g., qualifications, services, fees);

– Misuse of “RIA” or “IAR”;

– Insufficient website disclaimer; and

– Testimonials.

Books & Records:

– Client suitability information;

– Form ADV amendments & revisions; and

– Written Client and Business Agreements.


– Investment advisory agreements not in writing or improperly executed;

– Impermissible liability hedge clause; and

– Missing or unclear fee structures and refund policies.


– Improper client invoice (fee, time period, formula, assets in formula); and

– Failed to send the invoice to both client and custodian.

Information Security & Cybersecurity:

– No Information Security Plan;

– No policy on devices;

– Inadequate policies on detecting and protecting against information security risks.

– Weak or infrequently changed passwords;

– Transmitting sensitive date via unsecure means;

– Inadequate protections for storing sensitive data;

– Infrequent back-up of data; and

– No vulnerability testing.

Advisory Fees:

– Fee structures not matching the contract or ADV; and

– Charging miscalculated fees.

Financial Matters:

– Inadequate net worth (if required);

– No audited financials (if required);

– Comminglingly business and personal accounts;

– Poor financial condition; and

– Evidence of lending to customers.


– Failure to deliver initial or annual privacy policy; and

– No privacy policy or inadequate privacy policy.

Registration Violations:

– Inaccuracies in Form ADV, including understated AUM and inaccurate descriptions of services;

– Inconsistencies between Form ADV Part 1 and Part 2; and

– Failure to disclose outside business activities on Form ADV and Form U4.

Supervision and Compliance:

– Lack of written supervisory procedures;

– Failure to conduct periodic testing or review; and

– Inadequate business continuity plans.

Vulnerable Persons:

– No policies or procedures for suspected financial exploitation;

– No training provided regarding suspected financial exploitation of vulnerable persons; and

– Failure to maintain records of training regarding financial exploitation.

For a detailed listing of all the deficiencies in each category, please review NASAA’s full report .


The NASAA’s 2023 Investment Adviser Coordinated Exam report serves as a crucial resource for identifying common compliance deficiencies. By addressing these areas proactively, an investment adviser’s chief compliance officer can significantly improve the firm’s compliance posture and mitigate regulatory risks.

Related Resources

SEC Exam – Best Practice Checklist

SEC Exam – Mock Exam Document Request List

SEC Exam – Log of Requested Docs & Info

SEC Exam – Privilege Log

SEC Exam – Investment Adviser’s Confirmation of New Deadline for Response

 SEC Exam – Response to Deficiency or Findings Letter from Securities Regulator

 SEC Exam – Sample Letters Requesting Confidential Treatment under FOIA

Annual Review – Spreadsheet for Risk Assessment, Supervision Chart and Assessment Log

CCO – Third-Party – Confirming Annual Review Completion

Branch Office Review – IA Checklist

RIA Express – Compliance Review Tool

SEC Provides Investment Advisers with Insights on Examination Process (9/7/2023)

Common Deficiencies of Newly Registered Investment Advisers (4/14/2023)

NASAA Reminds RIAs to Contact Regulators Regarding Recent RIA Cybersecurity Incident (1/8/2021)

New NASAA Report on Diminished Capacity Among Investment Adviser Representatives (8/8/2020)

NASAA Releases 2019 Investment Adviser Coordinate Examinations Report (10/25/2019)

NASAA Investment Adviser Coordinated Examinations Report (1/24/2018)

NASAA Report on Common Investment Adviser Deficiencies (10/2/2015)

Coordinated Examinations Result in the Release of Recommended Best Practices for Investment Advisers (10/19/2011)

NASAA Report on State Investment Advisor Exams (11/12/2005)


This regulatory alert is a brief summary which is general in nature and offered only for educational purposes. It should not be considered as a comprehensive review or analysis of this development. This communication is not intended to constitute compliance consulting advice or apply to any particular investment adviser firm’s specific situation without further analysis. This regulatory alert is not a safe harbor or a legal opinion. The reader should study the actual guidance, rule or enforcement action in detail and consult with his or her compliance professionals.  This information in this regulatory alert may become out of date.


Posted by Bryan Hill
Labels: Annual Review, Examination, Examination Priorities, NASAA
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