Certified Advisory Corp Review

SEC ADV Part 1 | Item 11.E.4

What does this mean? Firm or one of its employees previously has been subject to a suspension or expulsion or other restriction of activities by a Self-Regulating Organization or commodities exchange.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.F

What does this mean? Firm or an advisory affiliate has previously had their authorization to act as an attorney, accountant, or federal contractor revoked or suspended.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.E.3

What does this mean? A Self-Regulatory Organization has previously found the firm or an advisory affiliate responsible for having an investment-related business have its authorization to do business denied, suspended, or revoked.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.C.3

What does this mean? The SEC or CFTC has previously found the firm or an advisory affiliate responsible for having an investment-related business have its authorization to do business denied, suspended, or revoked.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.D.3

What does this mean? A regulatory agency other than the SEC or CFTC has previously found the firm or an advisory affiliate responsible for having an investment-related business have its authorization to do business denied, suspended, or revoked.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.H.1.C

What does this mean? Firm or an advisory affiliate has previously had an investment-related civil action dismissed against them following a cash settlement in court.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.H.1.A

What does this mean? In the past 10 years, a domestic or foreign court has issued an injunction against the firm or an advisory affiliate in connection with an investment-related activity.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.E.1

What does this mean? Firm or an advisory affiliate was previously found to have made false statements or omissions by a self-regulatory organization.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.C.1

What does this mean? Firm or an advisory affiliate was previously found to have made false statements or omissions by the SEC or CFTC.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.D.1

What does this mean? Firm or an advisory affiliate was previously found to have made false statements, omissions, or being dishonest and unfair by a regulatory agency other than the SEC or CFTC.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.A.1

What does this mean? In the past ten years, firm or an advisory affiliate has been convicted of or pled guilty or nolo contendere ("no contest") in a domestic, foreign, or military court to a felony.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.B.1

What does this mean? In the past ten years, firm or an advisory affiliate has been convicted of or pled guilty or nolo contendere ("no contest") in a domestic, foreign, or military court to a misdemeanor involving: investments or an investment-related business, or any fraud, false statements, or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.C.5

What does this mean? Firm or an advisory affiliate has previously been fined or ordered to cease and desist activity by the SEC or CFTC.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.C.4

What does this mean? The SEC or CFTC has previously entered an order against this firm or an advisory affiliate in connection with an investment-related activity.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.D.4

What does this mean? In the past ten years, a regulatory agency other than the SEC or CFTC has previously entered an order against this firm or an advisory affiliate in connection with an investment-related activity.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.E.2

What does this mean? A self-regulatory organization or commodities exchange has found firm or an advisory affiliate to have been involved in a violation of its rules.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.C.2

What does this mean? The SEC or CFTC has found firm or an advisory affiliate to have been involved in a violation of its rules.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.D.2

What does this mean? A federal regulatory agency, a state regulatory agency, or a foreign financial regulatory authority other than the SEC or CFTC has found firm or an advisory affiliate to have been involved in a violation of investment-related statutes or regulations.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.H.1.B

What does this mean? A domestic or foreign court has previously found firm or an advisory affiliate was involved in a violation of investment-related statutes or regulations.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 1 | Item 11.D.5

What does this mean? A regulatory agency has previously denied, suspended, or revoked the firm’s or an advisory affiliate’s registration or license or otherwise restricted their activities.

Questions to ask What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

SEC ADV Part 2

What does this mean and why is this important? Firm offers mutual funds that carry 12b-1 fees, which increases the total annual cost of owning the fund (with no guarantee of higher returns). Some firms receive these fees as payments, which creates an incentive to promote them.

Questions to ask Does your firm offer mutual funds that have 12b-1 fees?

SEC ADV Part 1 | Items 6.A.13, 7.A.11

What does this mean and why is this important? Firm or an affiliate actively engages in business as a law firm or lawyer. When operating in this dual capacity, advisors may be incentivized to implement plans as an attorney that could drive higher revenue for themselves as investment advisors.

Questions to ask Does your firm, or anyone associated with the firm, practice as a law firm? Is your firm affiliated with a law firm in any capacity?

SEC ADV Part 1 | Items 6.A.1, 7.A.1

What does this mean and why is this important? Firm is a broker-dealer, or is affiliated with one, and may be subject to compensation-related conflicts of interest. When firms are dual-registered as broker-dealers, they may be subject to compensation-related conflicts of interest, including revenue sharing from mutual funds and the sale of proprietary investment products. These conflicts can negatively impact clients via hidden fees and overall higher costs.

Questions to ask Is your firm a broker-dealer or are you affiliated with one? What conflicts arise from this relationship? How does your firm mitigate them?

SEC ADV Part 2

What does this mean and why is it important? Firm offers products that have performance-based fees; the managers of those products may be incentivized to take inappropriate risks to beat their performance benchmark.

When performance-based fees are charged, the financial advisor is paid for outperforming a benchmark, typically an index. While this may seem like an attractive compensation structure to ensure your advisor is making your money work for you, often, the managers of those products are incentivized to take inappropriate risks to beat their performance benchmark. For instance, research has shown that mutual funds that use incentive fees take on more risk than funds that do not, and tend to double down and increase their risk following a poor performance. This could be detrimental to a client during down markets.

Questions to ask Does the firm offer products that have performance-based fees, or does it accept performance-based fees? Will any of my assets be invested in those products?

SEC ADV Part 1 | Item 5.E.5

What does this mean and why is it important? Firm can legally elect to accept commissions for their investment advisory services. These commissions may be earned from the sale of investment or insurance products and are paid by the companies providing the products being sold. While this allows for a broader range of investment options and management styles to be offered by a firm, it can create an incentive for the firm to put their financial interests ahead of your own.

Questions to ask What percentage of income does your firm receive from fees versus commissions? Why does your firm believe in offering commission-based services to clients?

SEC ADV Part 1 | Item 7.A.12

What does this mean and why is it important? Firm is affiliated with an insurance company or agent who may be motivated to insure clients with products that generate high sales commissions when lower cost alternatives may exist. This arrangement creates a conflict where the firm and its representatives may be motivated to insure clients with products, including annuities and life insurance, that generate high sales commissions when lower-cost alternatives may exist.

Questions to ask How does your firm approach insurance sales? What conflicts do I need to be made aware of?

SEC ADV Part 1 | Item 6.A.6

What does this mean and why is it important? Firm actively engages as insurance brokers or agents, or they are affiliated with an insurance company or agency. This arrangement creates a conflict where the firm and its representatives may be incentivized to insure clients with products, including annuities and life insurance, that generate high sales commissions when lower-cost alternatives may exist.

Questions to ask How does your firm approach insurance sales? What conflicts do I need to be made aware of?

Investor.com Proprietary Verification

What does this mean and why is it important? The firm's website is not secure by modern internet standards. Unlike HTTPS connections, HTTP connections are not encrypted. Sensitive information sent over an HTTP connection can easily be eavesdropped on by third-parties.

Questions to ask Why doesn’t your firm use a secure website?

SEC ADV Part 1 | Item 8.B.2

What does this mean and why is it important? Firm or a related person recommends the purchase of securities where the firm or a related person serves as an underwriter or general or managing partner.

This relationship may introduce bias where a firm or related person recommends certain securities with which they are affiliated, rather than others that may have higher returns.

Questions to ask Does your firm recommend securities that it or its affiliates underwrite, or in which it serves as general or managing partner? Will any of my assets be invested in those products?

SEC ADV Part 1 | Item 8.A.3

What does this mean and why is it important? Firm recommends securities or other investment products to advisory clients in which the firm or a related person has some other proprietary (ownership) interest that isn’t related to trading or holding the security or securities themselves personally.

This situation may lead the firm or a related person to recommend proprietary investments and products that could generate larger commissions than other similar non-proprietary products. This could also limit the number and diversity of investment options available and may impact their transferability.

Questions to ask Regulatory disclosures state that firm sells proprietary investments and products. Please provide me a list of the products and a summary of how much your firm earns from them.

SEC ADV Part 2

What does this mean and why is it important? Firm performs side-by-side management with accounts that have differing fee structures. Side-by-side management can create an incentive for the advisor to favor the larger funds, potentially leading to unequal trading costs and unfavorable trade executions for their clients. This typically occurs when firms manage mutual funds or hedge funds alongside smaller retail accounts.

Questions to ask Does your firm perform side-by-side management? How does your firm mitigate conflicts that arise from managing accounts with differing fee structures?

SEC ADV Part 1 | Item 8.G.1

What does this mean and why is it important? Firm or related person receives soft-dollar benefits in connection with client securities transactions.

Firms that receive soft-dollar benefits could be incentivized to push trades through broker-dealers that provide advantages to the firm instead of through broker-dealers that could provide the best execution for their clients.

Questions to ask Does your fim accept soft-dollar benefits? How do these benefits affect the firm’s selection of a broker-dealer partner?

SEC ADV Part 1 | Item 8.A.2

What does this mean and why is it important? Firm or a related person trades securities for themselves that they also recommend to their clients.

While this can be seen as "eating your own cooking," there are conflicts that may arise. For example, front-running is when a financial professional buys or sell securities ahead of their client. Financial professionals should disclose all positions they hold (or have sold short) that they will also be recommending to their clients.

Questions to ask Which securities does your firm trade for itself that it will also be recommending to me?