Investment Adviser Red Flags

Here are just a few red flags that should alert you something is not quite right with the way your investment adviser is handling things:
  • When the investment adviser requests you write checks payable to him or the adviser’s firm. An adviser should not hold custody of your funds or assets. A third party should hold custody and all checks should be made to the third party, typically a clearing house.
  • Your adviser should not have access to your account except to make investments with your funds or deduct the previously agreed upon fees.
  • When the only statements you get come directly from the adviser. Statements should be coming from the third party where your assets are held, the custodian of your account.
  • Adviser should not be guaranteeing returns on your investments.  Bernie Madoff guaranteed 1% per month on accounts and we all know how that ended.  Any promises or guarantees made by the adviser should be a huge red flag.

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