Clients’ Rights and Responsibilities
“Bill of Rights and Responsibilities”
As part of our engagement process
Responsibilities and Expectations for Both Parties–
CLIENTS’ RIGHTS: As someone seeking advice from a financial planning and investment professional, you have the following rights:
1. To know the credentials and relevant experience of your advisor and her team. .
2. To know the compliance and disciplinary history of your advisor and his associates, including relevant problems in their past such as: personal bankruptcy, poor health that may impair their work on your behalf: business history, and financial strength.
3. To know your advisor’s processes and protocols for developing recommendations, and executing their strategies on your behalf. .
4. To understand your advisor’s investment philosophy; and to expect that he can communicate it in a way that you can comprehend and even recite back to them. .
5. To understand all the fees, charges, and expenses charged by your advisor, by the funds used, and the cost of execution.
6. To know whether your advisor uses an independent clearing firm if affiliated with a broker/dealer, or an independent custodian if a registered investment advisor (RIA).
7. To receive printed or electronic confirmations from the independent custodian (of every transaction of money or assets into and out of your account) and to receive statements summarizing activity in your account at least quarterly.
8. To know if your advisor is receiving extra fees or compensation from her custodian including 12b-1 fee rebates, or “soft dollar” payments for doing business with them; or in the case of broker dealer affiliated advisors, to know whether the registered representative (broker) has received a signing or retention bonus to affiliate with a particular firm.
9. To have these terms explained to you in the context of how they could influence the advisor’s work with you as his client. .
10. To receive regular communication from your advisor on the status of your account, status of activities that your advisor is committed to, and other relevant developments.
11. To be provided with the contact information of other clients, as references.
CLIENTS’ RESPONSIBILITIES: The counterpart to having rights is having responsibilities, too.
It is my responsibility as your advisor to be completely transparent about how I do business with you. I will develop and implement recommendations and follow the protocols that we have described to you and will charge appropriately for my services. l am here to guide you based on my professional experience, and education, but ultimately you must be both comfortable and clear about what I am doing on your behalf.
The following is a Statement of Personal Responsibility:
It is your responsibility:
1. To ask for explanations on any recommendations that you do not understand. .
2. To not authorize execution of the recommendation if you do not understand how it works, how it will benefit you, or what the risks are.
3. To look at every “confirmation” statement you receive from the broker-dealer or custodian and to reconcile those statement, with any performance reports that your advisor provides to you independently. You may choose to engage a CPA, bookkeeper, or trusted person separate from your advisor to perform this reconciliation.
4. To understand and agree with your advisor’s investment philosophy or to seek another advisor if you do not agree or understand.
5. To not allow investment of all your assets with a single money manager or fund. To evaluate your advisor not just on performance hut on his ability to listen.
6. To communicate, and respond to your concerns, and to change the relationship if it is no longer acceptable.
7. To understand your tolerance for risk and your own relationship with money.
8. To question why returns are much greater than the market averages as vigorously as you might question why your returns are below a reasonable expectation. .
9. To challenge fees that were not agreed to in advance and to evaluate whether you believe you are receiving value for what you are paying.
10. To not give full discretion for the management of assets, or to give a Power of Attorney over the assets to the same person who is responsible for executing the transactions.
