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For new clients, what process should I follow to open a new account?

There are 9 steps to follow:

Step 1 – Gather Financial Information

The financial advisor should obtain and document sufficient quantitative information before he/she makes or implements any recommendation, including client assets, liabilities, liquidity needs, time horizon and other information pertinent to the risk/return analysis and diversification.

Step 2 – Identify Client Goals and Objectives

The financial advisor and the client should mutually define the client’s personal and financial goals, needs and priorities that are relevant to the engagement before the advisor makes or implements any recommendation.

Step 3 – Establish Risk Parameters

The financial advisor should establish and document the client’s risk parameters (by developing an Investment Policy Statement or IPS) prior to making any product solution or investment recommendations.

Step 4 – Analyze Prudent Product Solutions and Investments

The financial advisor should exercise care, skill and caution in analyzing sufficient and relevant alternatives to the client’s current investment platform in an effort to reasonably meet the client’s goals, objectives, and risk parameters, and develop an overall investment strategy with risk/return objectives and diversification reasonably suited to the account.

Step 5 – Communicate Recommendations

The financial advisor should develop and communicate recommendations to the client in a manner and to the extent reasonably necessary to enable the client to make an informed decision.

Step 6 – Disclose Fees

The financial advisor should discuss all fees associated with recommended product solutions and investments.

Step 7 – Agree on and Document Relationship

The financial advisor and client should agree on the nature of the relationship to be established between the financial advisor and the client, including the fees and monitoring responsibilities. This agreement should be made in writing.

Step 8 – Implement Agreed-Upon Recommendations

Once the client relationship has been written and the previous steps have been taken, the financial advisor should implement the agreed-upon recommendations.

Step 9 – Monitor

The financial advisor should carry out and follow any monitoring responsibilities that may be applicable under the governing agreement. To the extent applicable, the financial advisor should meet periodically with the client to review performance. Investments that are not meeting client or risk objectives should be replaced with more suitable products following the investment considerations and the steps set forth herein.

Download a new account opening checklist >

 

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