Advisor makes referrals based on business relationships, rather than the qualifications of providers.
Manager gives preferential treatment to certain clients.
Questions Wealth Owners Should Ask to Surface Conflicts
Do you accept any type of compensation from any sources other than client fees?
What percentage of your new business do you receive from investment managers that you recommend to clients?
How many managers are you actively screening and how many managers are your current clients using?
What percentage of your clients’ money is held with each of these managers?
Do you offer fund-of-fund structures to your clients and do you charge a management fee for overseeing these funds?
Do you participate in wrap fee programs? If so, what fee arrangements do you offer to the wrap program manager? How many assets come to you through such arrangements?