We manage our clients’ portfolios on a discretionary basis but we do not custody (possess) our clients’ assets.
This means we make all trading decisions to coincide with the investment objectives of our clients but the actual investments are held with a third party custodian.
We screen our custodians on a variety of attributes but our initial criteria must include both low cost and best price execution. Other attributes include technology and performance reporting.
A custodian protects investors from fraud in four major ways:
Withdrawals must go to another account of yours or be sent by check to your address of record. Withdrawals that are to go elsewhere require your signature before approval is granted.
In addition, most of our custodians provide additional coverage beyond SIPC limits via Lloyd’s of London and can provide protection up to an aggregate limit of $150 million.
As with all securities firms, this coverage provides protection against the insolvency of a custodian, and not against market loss.
Your adviser also might send you performance reports or account statements that they generate. This duplicate reporting system makes fraud easier to spot.
With such technologies, if an investment adviser, their staff or anyone else attempts to forge your signature, it is likely to be detected immediately.