Help Your Clients Find a Money Manager
Source: AICPA CPA Insider
Excerpts from this article by Cory Chmelka are reprinted with permission from the AICPA.
You are one of your clients' most trusted advisors and, from time to time, they may ask you for an introduction to a money manager. So it's important to know what questions to ask to evaluate money managers.
Background
When evaluating your client's current or potential money manager, research the following:
- Employment history
- Any education or certifications beyond college
- Whether the individual has any regulatory or arbitration history
Firm
Ideally, both the firm and the advisor have been around for a complete market cycle (five years to seven years).
Other aspects of the firm to consider:
- Is it equipped with the appropriate resources and staff to meet your client's needs?
- Where is the money held?
- Does the money manager have fiduciary responsibility or a lower suitability standard to your client?
- Does the money manager have the ability to put money where he or she wants or does the firm impose restrictions?
- Does the firm offer its own mutual funds or other products?
Investment Philosophy
Start by asking if money managers are conservative, moderate or aggressive in the way they manage money. The important part of this question is the explanation of how they achieve that.
Your goal? To match up your client's objectives with the money manager's.
Communication
Ask money managers what their review process is with the client. For example, do they meet quarterly, semi-annually or annually? What you want is a formal process for follow up and review. As with any relationship, having a clearly defined process lessens the likelihood that there will be communication problems.
For the complete article, read “Add More Value Than Just Accounting, As Your Client's Trusted Advisor.”
From AICPA CPA Insider, July 26, 2010, www.CPA2biz.com.