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Investment Advisers

A variety of financial professionals provide services to help individuals manage their investments.  Some of these professionals are registered investment advisers.

What is an investment adviser?

Generally, an investment adviser is a firm, or an individual, that:

  • For compensation
  • Engages in the business of
  • Advising others (either directly or through publications or writings)
    • As to the value of securities (e.g., stocks, bonds, mutual funds, exchange-traded funds, etc.), or
    • As to the advisability of investing in, purchasing, or selling securities.

An investment adviser can also be a firm or an individual that:

  • For compensation
  • And as part of a regular business
  • Issues or promulgates analyses or reports concerning securities

Check Out Your Investment Adviser:  What to Look for and Where to Find It

Before selecting an investment adviser, you should know exactly what services you need, what services the adviser can deliver, any limitations on what products the adviser can recommend, what services you're paying for, how much those services cost, and how the adviser gets paid, and what conflicts of interest the adviser may have when giving you investment advice.

When choosing an investment adviser, check out the firm and its employees.  If you have a registered investment adviser, review the firm’s brochure when you first receive it and when it is updated by the firm – there’s a wealth of valuable information in there!  And if you don’t recall receiving the brochure, request it.  You can also find the brochure on the SEC’s Investment Adviser Public Disclosure (IAPD) website.

The brochure contains information about, among other things:

  • Any material changes that the firm has experienced either recently or during the past year;
  • A description of the firm’s advisory business;
  • The firm’s fees and compensation;
  • Any conflicts of interest that the firm has or may have in representing you;
  • The types of clients that the firm has;
  • The firm’s methods of analysis, investment strategies, and risk of loss;
  • Disciplinary information, if any, about the firm and its employees;
  • The firm’s other financial industry activities and affiliations;
  • The firm’s brokerage arrangements;
  • When and how the firm reviews client accounts;
  • Client referrals and other compensation that the firm receives; and
  • Financial information about the firm.

Questions to Ask

Here are some of the questions to ask when evaluating an investment adviser:

  1. Are you registered with the SEC, a state, or the Financial Industry Regulatory Authority (FINRA)?
  2. May I have a copy of your firm’s latest Form ADV, including the brochure and the brochure supplement?
  3. Have you or your firm ever been disciplined by any regulator?  If yes, for what reasons and how was the matter resolved?
  4. Have you ever been sued by a client who was not happy with your work or the services you provided or the products you recommended?
  5. How are you paid for your services? What is your usual hourly rate, flat fee, or commission?
  6. What experience do you have, especially with people in my circumstances?
  7. Where did you go to school? What is your recent employment history?
  8. What products and services do you offer? Are you only supposed to recommend a limited number of products or services to me? If so, why? 

Additional Information

Investor Bulletin: Top Tips for Selecting a Financial Professional
Investor Bulletin: Transition of Mid-Sized Investment Advisers from Federal to State Registration