How to select an investment advisor
Updated: May 25, 2021
You should interview investment advisers to decide which one would best be suited to help you achieve your goals. Asking detailed questions will help you determine your comfort level with the prospective adviser on both a personal and professional level. Some questions you might ask include:
1. Are you a fiduciary, i.e., are you required by law to place my interests ahead of your own at all times? Are you willing to acknowledge your fiduciary duty in writing?
2. How are you paid? Do you make more money if I buy a particular stock, bond, or mutual fund over another investment? If so, would you still recommend this investment and why? Does your firm hold prize contests for sales?
3. What products and services does your firm offer? Are recommendations of products and services limited? If so, why?
4. What are the potential conflicts of interest surrounding the investment advice that you will give me? What policies have you instituted to avoid or at least mitigate any such conflicts?
5. What is your investment philosophy? How does your investment philosophy differ from other investment adviser firms? Is it supported by investment management research?
6. How often will we meet? How often will I receive written reports about my portfolio?
7. What happens when you place an order for my account? Could I get a better price (cost and/or commission) if you sent my orders to a different market or broker to be executed?
8. Describe your typical client. May I contact your long-term clients as references?
9. How long has your firm been in business? What are the qualifications of the investment and professional personnel in the firm?
10. Regarding the person who will manage my account, what experience do you have? Where did you go to school? What training do you have in the investment management field? What is your recent employment history? What other firms have you been registered with and what is the status of those firms today? What licenses do you hold?
11. Where does your firm invest its own money? Is it invested similarly to that of your clients?
12. Have you ever been disciplined by any government regulator for unethical or improper conduct or been sued by a client who was not happy with the work you did?
13. How many lawsuits or arbitration cases have been filed against you and against your firm? What were the outcomes?
14. Can you provide me with a copy of the registration documents that you filed with the SEC? For registered investment advisers, ask for a copy of Parts 1 and 2 of their Form ADV.
Freshfield is a fiduciary and is loyal its clients all of the time with all of their money; we acknowledge our fiduciary duty in writing. Our only payment comes from the fees our customers pay us. We do not make money by recommending particular stocks or funds. We offer financial advice, including financial planning, and investment management. Our advice is not constrained in any way. There are no potential conflicts of interest. Our investment philosophy is to rigorously control risk and costs and is based on Nobel-Prize-winning research and 50 years of evidence; we build and maintain highly diversified portfolios using low-cost index funds. We meet our clients as often as they wish and they receive written reports quarterly. We believe you could not get a better price or lower cost if we sent your order to a different brokerage as we employ the services of one of the lowest-cost brokerages in the U.S. Our typical clients are professionals, salespeople and business people from many industries and retirees. You can contact our long-term clients for references. Our firm has been in business since 2010. The financial advisor and person managing your investment account, Dr. Andy Lawson, has 34 years of experience. He has a BS degree in mathematics and an MS degree in statistics from SMU and a doctorate degree in financial economics from UT. He is a Registered Investment Advisor and holds the Series 7 and 66 licenses. The firm invests its own money in the same way it invests its clients' money. The firm has never been disciplined by any regulator and there have been no cases filed against the firm. We can provide you with our registration documents upon request and we are required by law to provide each new client with these registration documents.
This article was adapted from an article on the Investment Advisor Association website.