Academic journal article Journal of Accountancy

Selecting an Investment Adviser

Academic journal article Journal of Accountancy

Selecting an Investment Adviser

Article excerpt

Helping a client select an investment adviser is something CPA/financial planners are frequently called on to do. But what questions should the CPA and the client ask each prospective adviser to establish his or her credentials? Here is a checklist of information that will help in the process of choosing an investment counselor whose investment style and performance best match the client's goals and objectives.

* What securities registrations, academic degrees, sales licenses and professional designations does the adviser have?

* How many years of experience has the adviser had managing money for similar clients?

* Other than the adviser, which staff members will provide services to the client? What will their responsibilities be?

* Will the prospective client be permitted to speak to some of the adviser's current clients to ask about their experiences?

* How will the adviser be paid? Does he or she charge fees, earn commissions or get compensated in some other manner?

* Will the client's account be subject to any other fees or expenses, such as loads or liquidation fees?

* 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.)

* 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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