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What
securities registrations, academic degrees, sales licenses and professional
designations does the adviser have?
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How many years
of experience has the adviser had managing money for similar clients?
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Other than the
adviser, which staff members will provide services to the client? What will
their responsibilities be?
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Will the
prospective client be permitted to speak to some of the adviser’s current
clients to ask about their experiences?
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How will the
adviser be paid? Does he or she charge fees, earn commissions or get
compensated in some other manner?
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Will the
client’s account be subject to any other fees or expenses, such as loads
or liquidation fees?
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Does the
adviser have any conflicts of interest? Do certain investment products pay a
large commission or make the adviser eligible for prizes, trips or bonuses? Does the adviser accept "soft dollar" compensation? (In the
typical soft dollar arrangement, an adviser routes client brokerage orders
to particular brokers and, in exchange, gets free research services.)
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How will the
adviser learn about the client’s financial situation to ensure that
investment recommendations are in line with the client’s needs and
objectives?
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What is the
adviser’s investment philosophy? How does he or she select investments,
time markets and diversify investment portfolios?
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What
historical rate of return has the adviser earned for clients over the last
1, 3, 5 and 10 years? What risk levels were used to achieve those returns? Were performance figures verified by an independent auditor?
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How much risk
will the client be exposed to? What will the adviser do to reduce the level
of risk?
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Will the
investment adviser work closely with the client’s other advisers to
develop the portfolio? Will he or she provide tax information to the CPA and
work with the accountant on yearend tax planning?
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Will the
adviser prepare a written investment policy statement including the client’s
goals, current asset allocation, estimated portfolio rate of return and risk
exposure?
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What criteria
does the adviser use to judge proposed investments? Is this policy in
writing?
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Does the
adviser develop customized portfolios for each investor?
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Will the
adviser ask the client to grant discretionary trading authority?
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What kind of
investment performance reports will the client receive? How frequently? Does
the investment adviser’s performance reporting comply with Association of
Investment Management Research standards? Will the client receive reports
that compare actual performance with his or her goals? With established
benchmarks?
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Who will be
the custodian of investment funds? Will the client’s money be commingled
with funds belonging to others?
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How will
disputes between the client and the adviser be resolved?
