Lesson 6 of 6
Research, and advice
One describes what a company filed and what a figure implies. The other tells a person what to do with their money, and it is a regulated activity.
By Javier Sanz
Founder of ValueScreener. Built Ninety Nine, a securities services provider, and sold it to a tier-one global bank; ran operations and internationalization at Alpaca, the brokerage API.
Who writes thisEditorial processLinkedIn (opens in a new tab)X (opens in a new tab)
In one minute
- The United States statute defines an investment adviser as a person who, for compensation, engages in the business of advising others about securities.
- The same section lists exclusions, one of which covers the publisher of a bona fide newspaper, news magazine or business or financial publication of general and regular circulation.
- The distinction is not cosmetic: it is the difference between describing a company and telling a particular person what to do with their money.
This lesson is the site's own compliance posture taught as content, because the same distinction decides what every reader may safely say to a friend about a company.
Two activities that look similar from outside
Research
- States what a filing says, with the statement, the fiscal year and the filing date.
- Computes a figure and shows the formula and inputs behind it.
- Says what a price implies arithmetically, and what would have to be true for that to hold.
Advice
- Recommends that a person buy, sell or hold a security.
- Is tailored to that person's circumstances, goals or portfolio.
- Is given for compensation, in the business of doing so.
The second is a regulated activity. The first is the description of a document.
What the statute says
The Investment Advisers Act defines an investment adviser as any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing or selling securities.
The same definition then lists persons excluded from it. Among them, at subparagraph (D), is the publisher of any bona fide newspaper, news magazine or business or financial publication of general and regular circulation.
Why the exclusion is narrower than it sounds
Whether any particular publication falls inside the exclusion has been litigated and is decided on facts. This page states what the statute says and nothing about how it applies to any publication, including this one.
The line in practice
Four sentences on the research side of the line
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This company reported operating cash flow below net income in nine of the last ten fiscal years, and here are both series with their filings.
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At an 8 percent cost of equity, today's price requires residual income to grow at about 5 percent a year forever.
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Among US companies with filed statements, a price to book of 1.5 sits between the 25th percentile and the median, on a cohort of this size built on this date.
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This condition, which the reader wrote, stopped holding in the fiscal year just filed.
Each of those is checkable against a document, and none of them tells anybody what to do. That is the standard every surface of this site is built to, and it is also the standard that makes the work useful: a reader who can check a claim does not have to trust the person making it.
The same line in a conversation
A person who tells a friend that a company's filings show a certain thing is describing a document. A person who tells a friend to put their savings into it has done something different, and the difference matters more when the friend does it.
The practical version of this course's whole subject is that judgement about a person's money belongs to that person, or to somebody they have engaged and who is accountable to them. Everything in this academy is designed to make the first of those possible.
Check yourself
How does the statute define an investment adviser?
- Anybody who writes about companies
- A person who, for compensation, engages in the business of advising others as to the value of securities or the advisability of investing in them
- Anybody who owns more than five percent of a company
Show the answer
Answer: B.
The definition turns on compensation and on being in the business of advising, including through publications and writings.What does subparagraph (D) of the definition exclude?
- All websites
- The publisher of a bona fide newspaper, news magazine or business or financial publication of general and regular circulation
- Anyone who does not charge a fee
Show the answer
Answer: B.
The exclusion is written in those terms, and each of its words does work. Whether it covers a given publication is decided on the facts.Which statement stays on the research side of the line?
- Put your savings into this company at today's price
- At an 8 percent cost of equity, today's price requires residual income to grow at about 5 percent a year forever
- Cut your holding in half this week
Show the answer
Answer: B.
The second states what the price implies arithmetically and can be checked. The other two tell a person what to do.Sources
- Investment Advisers Act of 1940, section 202(a)(11), codified at 15 U.S.C. 80b-2(a)(11), read on 2026-09-13: the definition of an investment adviser and the exclusion at subparagraph (D) for the publisher of a bona fide newspaper, news magazine or business or financial publication of general and regular circulation.
What this leaves out
- This is education about what a statute says. It is not legal advice, and it does not say how the definition or the exclusion applies to any publication or person.
- Courts have interpreted the exclusion, and that case law is not covered here.
- These are United States rules. Other jurisdictions regulate advice differently, and rules change.
- Nothing here is advice about any security.