An investment adviser has a fiduciary duty to act in the best interests of its clients and must hold the client’s interest above the investment adviser’s own interest in all matters. Additionally, the U.S. Securities and Exchange Commission (“SEC”) has stated that “several obligations flow from an adviser’s fiduciary duties” including “… a duty to provide only suitable investment advice. This duty generally requires an [investment] adviser to make a reasonable inquiry into the client’s financial situation, investment experience and investment objectives, and to make a reasonable determination that the advice is suitable in light of the client’s situation, experience and objectives.” For the purposes of ensuring consistency and maintaining appropriate back-up documentation, an investment adviser should establish a standard method for gathering and documenting the minimum information that the investment adviser will require to be gathered from each client in order for the investment adviser to provide suitable investment advice.
In efforts to help registered investment advisers further adhere to their duties as a fiduciary, RIA Compliance Consultants has created a sample Risk Assessment Questionnaire for Clients that may be used to assist investment advisers in documenting the information gathered from clients to determine each client’s investment risk tolerance. This sample Risk Assessment Questionnaire for Clients may be customized and used by an investment adviser to help determine the appropriate recommendations for each client based on a variety of factors, including but not limited to, age, employment status, financial situation, investing experience, and investment objectives. This Risk Assessment Questionnaire for Clients may be used as part of an investment adviser’s ongoing compliance program and kept as part of an investment adviser’s books and records. For more information or to purchase a copy of RIA Compliance Consultant’s Risk Assessment Questionnaire for Clients, click here. Available to Annual Compliance Program Package clients through the Knowledge Base, here.
To speak with one of our Senior Compliance Consultants regarding how we can assist your registered investment adviser with its ongoing compliance requirements, click here.
Posted by Bryan Hill
Labels: Compliance Program, Risk Tolerance
