With the growth of not for profit investment advisory services, more investors are seeking reviews and investigating complaints to assess the credibility of these advisory firms. However, not all reviews or complaints provide an accurate picture. When evaluating not for profit investment advisory services, investors should focus on comprehensive due diligence, not just reviews and complaints. There are several key factors to analyze including the advisor’s credentials, fee structure, disciplinary history, investment philosophy and performance track record. Investors should also understand exactly what advisory services they need to match with the right provider. This thoughtful process helps investors make wise choices in selecting quality not for profit investment advisory services.
Validate advisor credentials and experience
One of the first steps is to validate that the advisor has the appropriate licenses to provide investment advice. At minimum, the advisor should be a Registered Investment Advisor (RIA) with the SEC or state regulatory bodies. Additional credentials like the CFA charter or CFP designation indicate deeper training and qualifications.Beyond licenses, it’s important to review the advisor’s experience. How long have they been in practice? What types of clients and portfolios have they managed? Specific experience that matches your needs is a plus. An advisor’s credentials and experience tells you whether they are qualified to manage your investments.
Understand the fee structure and incentives
Fee-only advisors who charge a flat fee or percentage of assets under management avoid conflicts of interest that commission-based advisors may have. With fees aligning the advisor’s interests with the client’s, fee-only advisors are incentivized to grow client assets. In contrast, commission-based advisors can be incentivized to make trades for commissions rather than client needs.Fee-only not for profit investment advisory services have a clear fee schedule disclosed upfront. Investors should understand how they pay for advisory services and how costs affect long-term returns.
Research the disciplinary history
Not for profit investment advisory services should have a clean disciplinary history without major infractions. Researching for disclosures on Form ADV, brokercheck.finra.org or advisorinfo.sec.gov can uncover past client disputes, regulatory actions, or other red flags. A long history of ethics and putting clients first is a good sign. If an advisor has past issues, it’s wise to understand if the problems have been resolved.
Evaluate the investment philosophy and performance
Understanding an advisor’s investment philosophy and approach to portfolio management is key to determining fit. Review sample client portfolio allocations to ensure the advisor constructs portfolios in line with your risk tolerance and return objectives.It’s also important to evaluate investment performance. Not for profit investment advisory services should provide GIPS-compliant composites to demonstrate results. Comparing performance to appropriate benchmarks indicates advisors who add value over the long-term.
While reviews and complaints provide useful perspective, comprehensive due diligence gives a fuller view of not for profit investment advisory services. By focusing on advisor qualifications, fee structure, disciplinary history and investment philosophy, investors make wise choices in a complex landscape.