Stockbroker Law - Friday, May 27, 2011
Questions and Checklist Items to Consider Before Entrusting Your Monies to a Registered Investment Advisor

1.  Do they carry liability insurance and fidelity bonding in the event that your account is abused or your funds are embezzled?

2.  What professional certifications does the advisor have?


3.  Does the brokerage firm or clearing firm with whom your advisor domiciles and custodies your account have adequate financial backing in the event your account is mishandled or fraudulently diverted?


4.  Does the advisor act alone or is he or she in a part of an established financial firm with safeguards and procedures designed to assure the prudent management of your account and keep your money safe?


5.  Does the advisor have the latest and procedures designed to assure that you are getting the best executions for purchases and sales of securities?


6.  Who is responsible for preparing your monthly account statements?  This is a very important factor, as you should only entrust your account to a registered investment advisor using the most accurate, latest, easy to read and secure account statements preparation and procedures to assure that you are getting prompt up-to-date statements or also securing the safety of your accounts and assets not only from identity theft but fraudulent diversion by anyone working within your investment advisor’s network.


7.  What is the investment advisor’s complaint history?  Have they fully disclosed any prior customer complaints as required in their annual form ADV filing which investment advisory customers are required to receive every year?


8.  What sources of financial information is your investment advisor relying upon to manage your account?  Is there any other structure or methodology to the manner in which the investment advisor is managing your account or is he or she simply shooting darts at the stock page to pick selections for purchase in your account?


9.  What procedures does your registered investment advisor have in place for you to access cash, including check writing and credit card purposes, when you need it? 


10.  What type of support staff, professional staff and fellow investment advisory professionals are working with your investment advisor?


11.  How has the registered investment advisor fared with recent audits conducted by the Securities and Exchange Commission?  Will they be willing to share the results of their recent audit with you?


In certain circumstances, working with a registered investment advisor can be a better fit for the right customer.  Investment Advisors are paid based upon a percentage of the value of the account which they are managing for you, usually between .5% and 1.5%.  Stockbrokers on the other hand are oftentimes paid on a transactional basis and can also earn fees based upon a number of other factors.


Registered Investment Advisors in many instances are also not under the same pressure as stockbrokers to sell company sponsored products such as variable annuities, proprietary mutual funds and stock shares of companies in which their firms are part of an underwriting and selling syndicate.


We offer a free initial consultation to investors who feel they have been victimized by a dishonest investment advisor.



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