SETTING YOUR PATH TOWARDS FINANCIAL SECURITY
How Clients Benefit from Their Advisor's CEFEX Certification
The CEFEX certification ensures the advisor has prudent fiduciary practices in place and a culture of excellence, supported by documented and structured processes.
Documented and structured processes are more likely to result in investment portfolios that:
- Are better designed and have lower costs. Structured due diligence processes force rational investment and service selection, thereby ensuring the best value for the portfolio.
- Can deal with a wider range of investment conditions. The investment process is not hostage to market swings. The process anticipates all types of conditions and can rationally account for investment.
Make fewer strategic mistakes
A well-structured process virtually eliminates deficiencies in portfolio management. The decision rules would not allow it. You can:
- Better manage client expectations through education, reporting and disclosure. Disclosure alone is often insufficient to help investors. The fiduciary process leads to a more educated client who can better understand the components of their portfolios. The process should enable greater personalization, based on risk preferences and financial needs.
Benefits to clients:
- Higher probability of enhanced portfolio outcomes. Documented, repeatable processes are more likely to generate higher returns over time, because they are not dependent on timing, luck, “in-fashion” or unsubstantiated decisions.
Far too many advisors operate like black boxes. They cannot (or will not) describe their process there by avoiding accountability to the investor. The prudent process has nothing to hide.
Independent fiduciary assessments supplement the advisor’s internal compliance practices and their mandatory statutory regulatory compliance. The rules associated with statutory compliance are designed to constrain bad conduct, but it is impossible to set rules for every situation. Independent fiduciary assessments focus oversight on process, so virtually all situations are covered.
The CEFEX-certified advisor is earning your business on fiduciary principles. The firmis striving to be the best fiduciary in a crowded market.
The CEFEX Fiduciary Assessment:
- Validates practices and processes. Includes review of file administration, information gathering, custody, brokerage, and best execution, using a consistent evidence-based methodology.
- Assesses structure, systems, support and reporting. Analyzes the Investment Policy Statement and the due diligence process, comparing the advisor’s investment line-up to a standard set of fiduciary screens. The assessment also reviews how conflicts of interest, if any, are managed and disclosed.
Reviews risk assessment
Reviews how asset allocation is based on capital market inputs and risk assumptions used by the advisor. How does the advisor manage risk and return characteristics of the portfolio?
Samples client files
Verifies that client files contain the Service Agreement deliverables, records, and outputs of the investment management process for the specific client.
Is complementary to regulatory exams
The CEFEX process-based assessment takes a different approach from the regulator’s rules- based approach. A background check including regulatory, legal and bankruptcy history isalso conducted.
Investors of all types should mandate the CEFEX certification of their advisors.
© Copyright 2019 CEFEX