SIT Investment Associates Review

Disciplinary Questions

After checking the disciplinary records of SIT Investment Associates, our system found no disciplinary questions to ask. Checks take place monthly.

Conflict Questions

After checking the regulatory records of SIT Investment Associates, our system has identified the following question(s) to ask. Learn more.

announcement Is your firm also a Broker-Dealer or are they affiliated with one? What conflicts arise from this relationship? How do you mitigate them?

Why ask? Currently this firm is also a Broker-Dealer or is affiliated with one. When firms are dual-registered as broker-dealers, they may be subject to compensation-related conflicts of interest, including revenue sharing from mutual funds, cross-selling of commissioned insurance products, and the sale of proprietary investment products. All of these conflicts can negatively impact clients via hidden fees and overall higher costs.

announcement Do you offer mutual funds that have 12b-1 fees?

Why ask? 12b-1 fees increase the total annual cost of owning a mutual fund with no guarantee of higher returns. Some firms receive these fees as payments, which creates an incentive to promote them.

announcement Regulatory disclosures state that your firm sells proprietary investments and products. Please provide me a list of the products and a summary of how much you earn from them.

Why ask? This firm recommends 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 to you and may impact their transferability. Do not be afraid to ask how much they will earn from the product or what other non-proprietary options are available.

announcement Do you offer products that have performance-based fees, or do you accept performance-based fees? Will any of my assets be invested in those products?

Why ask? 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 that 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.

announcement Do you perform side-by-side management? How do you mitigate conflicts that arise from managing accounts with differing fee structures?

Why ask? This typically occurs when firms manage mutual funds or hedge funds alongside smaller retail accounts. 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 retail clients.

announcement Do you accept soft-dollar benefits? How did these benefits affect your firm’s selection of a broker-dealer partner?

Why ask? This firm receives soft-dollar benefits that could incentivize them to push trades through broker-dealers that provide advantages to the firm instead of through broker-dealers that could provide the best trade execution for their clients.

announcement Which securities do you trade for yourself that you will also be recommending to me?

Why ask? This firm has marked in their disclosures that they trade recommended securities. While this often can be seen as "eating your own cooking," there are several inherent conflicts that can arise. For example, front running is when a financial professional buys or sell securities ahead of their client. In short, any financial professional should disclose all positions they hold (or have sold short) that they will also be recommending to you.

Our system found no other conflict questions to ask. Checks take place monthly.