Investment Advisers Act of 1940

The Investment Advisers Act of 1940 — often simply called the Advisers Act — is the foundational U.S. statute governing anyone who provides investment advice for compensation. It requires firms above certain asset thresholds to register with the Securities and Exchange Commission as a registered investment adviser, and it defines the fiduciary obligations that come with that registration. Firms below those thresholds typically register at the state level instead.

For family offices, two exclusions within the Act matter enormously. The "publisher's exclusion" and, far more relevant today, the exclusion formalized in the SEC Family Office Rule allow qualifying single-family offices to operate their investment programs without registering as advisers. Without these carve-outs, a family office managing assets for family members could inadvertently trigger registration requirements simply by advising relatives.

Understanding the Act at a conceptual level helps families grasp why their legal structure matters from day one. A family that begins informally managing pooled assets — say, a patriarch investing on behalf of his adult children and their trusts — may find itself closer to the definition of an investment adviser than expected. Attorneys and compliance professionals must be consulted before any conclusions are drawn, as the boundaries involve detailed legal analysis.