1. Understand your Advisory Agreement
Be sure your Advisory Agreement describes the services you want, and that your advisor bears fiduciary responsibility to provide them. Don't have an Advisory Agreement? Demand one from your advisor!
2. Insist on a Personalized Investment Policy Statement
A personalized Investment Policy Statement assures that your expectations and the expectations of your manager are in snyc regarding the management of your account.
3. Specify Asset-Based Fees
Your management fee should increase only if the value of your account increases, and should decline if your account declines.
4. Require an Independent Custodian & Accountant
Your advisor should have management discretion, but not custody of your assets or control of your statement preparation.
5. Monitor Manager & Subadvisor Audits
Independently prepared financial statements and regulatory reviews should verify the advisor's and all managers' financial health and regulatory compliance.
6. Have (and use!) 24/7 Online Account Access
"Trust, but verify" that all activities in your account reflect your objectives and Investment Policy Statement.
7. Meet Regularly with Your Advisor
The better you know each other, the better your needs, goals, and expectations will be met.
8. If it sounds too good ...
Stop and think. It's highly likely that the advisor who makes rash promises or claims a record of unusually high or consistent returns will soon have Madoff with your money!
