Due Diligence
Financial advisors are responsible for the advice they give you, and cannot delegate this responsibility to a third party.
Due diligence involves performing a service with a certain standard of care and ethics. It commonly applies to a voluntary process, but it can also be a legal obligation. To perform due diligence, your financial advisor must:
- thoroughly investigate your needs
- carefully research and recommend suitable financial products for you to consider
- regularly review your needs and your investments to make sure they remain compatible
Financial advisors must conduct the Know Your Client (KYC) process meticulously, by interviewing clients to get to know them and their needs, and introducing them to the concepts involved in the investment process. They must make sure they have a sound knowledge of the products or services they recommend, carefully matching specific stocks, bonds, mutual funds or insurance investments to their clients’ needs. And they must fulfill a review guarantee, by keeping in touch with their clients through regular reviews, interviews and discussions to ensure their needs continue to be met.
As their clients' financial circumstances change according to their stage in life, the financial advisor must keep current with these circumstances and review all of the clients' investments. Likewise, if the market suddenly falls and a client panics about losing money, the financial advisor must keep in touch to create a sound financial strategy that addresses the client’s concerns.
Financial advisors who promote investments that make money for them, in the form of fees or other benefits, but do not perform in the best interest of the client, are not maintaining due diligence and may be subject to legal action.
If your financial advisor has in any way failed to provide due diligence, contact us to see if we can help you.