Which option is NOT an exclusion from the federal definition of an investment adviser?

• A. A lawyer, accountant, teacher, or engineer whose advice is solely incidental to the practice of his profession
• B. A broker-dealer whose advisory services are solely incidental and receive no special compensation
• C. An author and publisher of a newspaper that is general and impersonal in nature
• D. A specialized investment adviser who provides compensated advisory services to a large number of clients

Answer: (D)

The main idea is identifying who is exempt from being treated as an investment adviser under the federal rules. Exclusions cover activities that aren’t really giving tailored investment advice as a business.

• A professional (lawyer, accountant, teacher, engineer) whose investment advice is only incidental to their practice and for which they don’t charge separately is excluded. So this option fits the exclusion.

• A broker-dealer whose advisory services are solely incidental to its broker-dealer business and for which there’s no special compensation is excluded. This also fits the exclusion.

• An author and publisher of a newspaper whose content is general and impersonal is excluded as long as the publication is broad and not tailored to individuals.

The described scenario—someone who provides compensated advisory services to a large number of clients as a specialized investment adviser—does not fit these exclusions. It indicates the person operates as a paid investment adviser for many clients, which is the kind of activity the federal definition covers and requires registration. So this option is not an exclusion, making it the correct choice.