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When you partner with somebody to manage your investments, they will hold your assets on your behalf. In the investment world, this is known as custody. You want to ensure that your assets are protected and custodied with a company that has a history of strong stability. Also, you want secure, electronic custody, as this reduces the number of fees you will pay when your assets are transferred.
At Caldwell Trust, client assets are custodied at the Depository Trust Corporation, which is an electronic form of custody. The DTC is one of the largest depositories in the world and has a long history of financial stability and success for clients.
Investment advisors need a level of accountability to ensure they are taking good care of your assets. Advisors can be fiduciaries or non-fiduciaries. Non-fiduciary advisors need to offer profitable investment options, but they are not required to work in your best interests. They can offer investments based entirely on how much commission they stand to receive from them.
Instead, look for an advisor that is a fiduciary. A fiduciary advisor is legally obligated to understand your needs and make financial recommendations that provide the most benefit. Fiduciaries are also registered with the Securities and Exchange Commission (SEC), which holds them to a higher standard. This is the level of accountability you need and want.
Even if they are working in your best interests as fiduciaries, investment advisors will get paid for their work, and you need to understand how they are paid. Commission-based advisors are paid when they sell specific types of investments, which can lead to a potential conflict of interests. Fee-based advisors are paid a flat rate per hour or per service, which does not change based on the type of investment they recommend. Most fiduciary advisors use the fee-based structure, which means that you will get the best advice based on your needs, not the advisor’s commissions.
When partnering with an investment advisor, it’s important to ensure the company that is caring for your assets is financially strong and stable. That’s where auditing comes in. Audits should be performed by an independent agency and should emphasize detail and accuracy.
At Caldwell Trust, we believe in the importance of audits and we’re audited annually by one of the largest, independent firms in Southwest Florida. In addition, individual client accounts are examined by another independent auditor, and both audits are reported to the Board of Directors. This level of accountability helps protect your investments.
Choosing the right investment advisor can have a major impact on your investing success. Review this list as you weigh your options, then consider learning more about Caldwell Trust’s investment process and management services to see how we might be a good fit.