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What steps should be taken to monitor a client account and what do I need to document?

Monitor Performance and Compliance with Client Goals and Objectives

The financial advisor should monitor the performance of the selected investments to ensure that they continue to satisfy the client’s goals, objectives, and expectations. Under the fiduciary standard, it generally is not enough to merely recommend the investment and leave future monitoring to the client based on statements received (see related questions below for a more detailed discussion of monitoring obligations). If investments are not meeting expectations, it is the financial advisor’s responsibility to consider switching to a more appropriate investment. No matter which type of investments are purchased, the financial advisor should be mindful that they may not continue to meet the client’s goals and objectives and risk/return needs or that the client’s goals and objectives may change. In that case, the financial advisor should consider selling the investment and replacing it with something more appropriate. Both client expectation and market changes may be reason for changes.

Review Results with Clients

As part of the monitoring function, it is important to meet periodically with clients to review the performance of the investments purchased. Investments that are no longer prudent, do not meet risk/return standards, require further diversification, or do not meet financial performance standards should be replaced with more suitable products. Once again, replacements should be made after review by the client and the financial advisor.

Download the Client Account Monitoring Checklist >