Financial Adviser Interview Checklist

FFICE

THE

TTORNEY

ENERAL

Maryland Division of Securities

200 St. Paul Place

Baltimore, MD 21202

nanc

Adviser

Interview

Checklist

This checklist was developed by the Maryland

Division of Securities to assist investors in

choosing a financial adviser. It may be used

during an interview or sent to an adviser as

part of a preliminary screening.

FFICE

THE

TTORNEY

ENERAL

ECURITIES

IVISION

J. Joseph Curran, Jr.

Attorney General

Carmen M. Shepard

Donna Hill Staton

Deputy Attorneys General

Melanie Senter Lubin

Securities Commissioner

200 St. Paul Place

Baltimore, Maryland 21202

(410) 576-6360

TTY for Deaf: (410)576-6372

D.C. Metro: 565-0451

Fax: (410) 576-6532

Using the Financial Adviser Interview Checklist

We developed the Financial Adviser Interview Checklist to assist you

in choosing a financial adviser. You can use the checklist during a pre-

liminary interview or send it to an adviser as part of an initial screening.

We recommend that you interview several individuals from different

firms in order to choose an adviser whose investment strategy most

closely matches your risk tolerance and financial goals. It is equally

important to review the adviser’s Form ADV, Part II or other disclosure

document – information that the adviser is required by law to provide to

clients.

The person you choose as your financial adviser should respond to

these questions, and should have a number of questions to ask you in

return. The financial adviser should determine your financial circum-

stances, your investment experience, and your investment goals before

recommending any plan. It is important to choose a financial adviser who

is qualified through training and experience, who puts your financial

well-being first, and who conducts business in compliance with appli-

cable laws.

The Financial Adviser Interview Checklist contains five basic sections:

“About the Adviser’s Practice”

will give you information on what kind

of clients the adviser services. Generally, the more experience the adviser

has with people like you, the better. Ask the adviser for permission to

speak with clients, and ask these clients how much better off they are as a

result of the services of the adviser.

“Experience, Licenses and Education”

will give you information about

how long the adviser has been in business, and the adviser’s professional

background. For instance, you may want to check to see if the adviser is

primarily a stockbroker or an insurance agent. Depending on your needs,

you may want to look for broader experience.

“Services and Products”

will tell you how the adviser implements

recommendations. Avoid advisers who try to “sell” a product rather than

provide sound advice appropriate to your financial situation and goals.

“How the Adviser is Paid”

will tell you how the adviser is compensated.

It is important that you understand and agree with the adviser’s method

of compensation, which is generally calculated in one of three ways:

1)A fee-only adviser charges on a hourly or flat-rate basis.

The adviser provides advice but does not sell products.

2)A fee and commission adviser provides advice for a fee,

and earns commissions on particular products sold to a client.

3)A commission-only adviser earns money from the

financia products sold and does not charge a fee for advice.

Under certain circumstances, advisers may charge a “performance

fee,’’ which is a fee that is based on the increase in value of the account.

Maryland law permits an adviser to charge a performance fee only if a

client has at least $500,000 under management of the adviser, or whose

net worth exceeds $1,000,000.

“Regulatory and Compliance”

will give you information on the

adviser’s disciplinary history.

Please call the Division to inquire about the adviser’s

registration and to check on disciplinary history.

The Maryland Securities Division

(410) 576-6360

Call us…we’re here to help!

Adviser Information

Name: ___________________________________________________________________________________________________

Name under which business is conducted, if different:_________________________________________________________

Address: __________________________________________________________________________________________________

City:________________________________________ State: _____ Zip: _______________Phone: ________________________

About the Adviser’s Practice

1. How many clients do you currently serve?

❏ fewer than 25 ❏ 25 - 50 ❏ 51 - 100 ❏ over 100

2. What is your clients’ most common investment objective? Please rank in order, with 1 being most common

and 4 being least common.

1) ____________________________________ 3) ____________________________________

2) ____________________________________ 4) ____________________________________

3. What is your clients’ most common age range? Please rank in order on a scale from 1 to 4,

with 1 being most common and 4 being least common.

___ under 35 ___ 36 - 50 ___ 51 - 65 ___ over 65

4. What is your clients’ most common income range? (Total income per household before taxes.)

Please rank in order on a scale from 1 to 4, with 1 being most common and 4 being least common.

___ $0 - $35,000 yr. ___ $36,000 - $75,000 yr. ___ $76,000 - $150,000 yr. ___ in excess of $150,000 yr.

5. Do you take discretionary authority over client accounts? ❏ yes ❏ no

If yes, is there an independent review of such accounts? ❏ yes ❏ no How often? __________________

6. Will you provide me with references from clients? ❏ yes ❏ no

Name: ______________________________________________________ Phone: ________________________

7. Will you provide me with a sample copy of a plan or a sample list of recommendations? ❏ yes ❏ no

Please provide me with a current copy of your Form ADV, Part II, or disclosure document.

Experience, Licenses and Education

1. How long have you been offering financial planning or investment advisory services? # _____ years

2. How long have you been registered as an investment adviser or investment adviser representative?

# _____ years with the Securities and Exchange Commission # _____ years with the State of Maryland

3. How many firms have you worked for as an adviser or planner? # _____ firms

Please list names and dates:

________________________________________________ _______________________________________________

4. What licenses or professional designations are you eligible to use? Please indicate all that apply.

1)________________________ / Year received: _______ 2)______________________ / Year received: _______

I am required to complete _____ hours of continuing education in order to maintain my professional designation.

Securities Licenses:

❏ Stocks and Bonds / Year received: _______ ❏ Mutual Funds / Year received: _______

❏ Commodities/Futures / Year received: _______

Insurance Licenses:

❏ Life Insurance / Year received: _______ ❏ Health/Disability Insurance / Year received: _______

❏ Property/Casualty Insurance / Year received: _______

5. What educational degrees have you earned?

School__________________________________ Degree ______ Major________________ Year received: ________

Services and Products

1. Which financial services do you provide? Please check all that apply.

❏ Comprehensive Financial Planning ❏ Tax Preparation ❏ Investment and Asset Management

❏ Tax Planning ❏ Brokerage Services ❏ Retirement Planning

❏ Mutual Fund Selection ❏ Estate Planning ❏ Timing Service

❏ Business Planning ❏ Insurance ❏ Educational Funding

❏ Other (specify):_____________________

2. Will you provide a written analysis of my particular financial situation and recommendations?

❏ yes ❏ no

3. Will you offer continuous advice? ❏ yes ❏ no

4. Do you take custody of assets? ❏ yes ❏ no

If yes, are you insured? ❏ yes ❏ no

Will you provide proof of insurance? ❏ yes ❏ no

5. Do you recommend specific investment products? ❏ yes ❏ no

If yes, which products do you offer? Please check all that apply.

❏ Stocks ❏ United States Government Securities ❏ Bonds

❏ Municipal Securities ❏ Mutual Funds ❏ Options

❏ Futures/Commodities ❏ Limited Partnerships ❏ Insurance Products

❏ Certificates of Deposit ❏ Coins or Other Collectibles (specify):__________________________

❏ Other (specify): ____________________________

6. Do you provide assistance with implementation? ❏ yes ❏ no

How the Adviser is Paid

1. How are you compensated? Please check all that apply.

❏ Fee (specify): ❏ initial ❏ hourly ❏ retainer

❏ percentage of assets managed

❏ performance fee

❏ Commissions and loads for financial products purchased or sold

❏ On-going fees for financial products purchased

❏ Fee offset (You charge a flat fee that is offset by commissions earned.)

❏ Salary Other (specify): ______________________

2. How is your compensation calculated? Please indicate all that apply.

Based on an hourly rate of $________

Fee range of $________

Minimum fee of $________

Percentage (_____%) of $________ Other (specify): ______________________

3. Are your fees negotiable? ❏ yes ❏ no

4. Will you inform clients in advance of:

the amount of commissions or loads they will pay on the purchase or sale of any product?

❏ yes ❏ no

any discounted sales charge related to a quantity purchase of any product? ❏ yes ❏ no

any special or enhanced compensation you receive on the sale of any product? ❏ yes ❏ no

5. Do you or any related party receive compensation from any persons or firms to whom

I may be referred? ❏ yes ❏ no

Regulatory and Compliance

If your answer to any of the following is “yes”, please complete the section describing the event or proceeding.

(Attach a separate explanation if necessary.)

1. Has any court ever entered a judgment against you in connection with any investment-related activity?

❏ yes ❏ no

2. Have you ever been involved in an arbitration proceeding that was settled or decided against you?

❏ yes ❏ no

3. Have you ever been the subject of an order issued by a:

Federal regulatory agency? ❏ yes ❏ no

State regulatory agency? ❏ yes ❏ no

Self-regulatory organization? ❏ yes ❏ no

4. Have you been discharged or permitted to resign because you were accused of violating industry standards

or investment-related statutes? ❏ yes ❏ no

5. Are you currently involved, directly or indirectly, in any regulatory investigation or action, customer

complaint, civil litigation or criminal proceeding? ❏ yes ❏ no

Description of event or proceeding:_________________________________________________________________

__________________________________________________________________________________________________

1/97