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
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
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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