Cory Chmelka
Cory Chmelka

Add More Value Than Just Accounting, As Your Client’s Trusted Advisor

Here’s how.

July 26, 2010
by Cory Chmelka, CFP

Most, if not all, of your clients have or at some point will need a money manager. You are one of your client’s most trusted advisors and, from time to time, they may ask you for an introduction to a money manager. Therefore, it is important to know what questions to ask to evaluate money managers. This article will address four areas that should be reviewed with a client’s existing and/or potential money manager.


To begin, you must first explore your client’s money manager’s background. It is very important to have a clear and verified understanding of whom you are dealing with. Contact the person who introduced you to the money manager and ask how they met. Ask the introducer about the money manager’s employment history and what’s been their overall experience. Next, follow up with the money manager. You are looking for discrepancies in the answers you receive from the introducer and the money manager. You should inquire as to how long they have been with their current firm and where they were previously employed. Ask if the money manager has any advanced education beyond college. For example, the money manager could be a Personal Financial Specialist (PFS), Certified Financial Planner (CFP), Chartered Financial Analyst (CFA) or a Certified Investment Management Analyst (CIMA). However, don’t just take the money manager’s word for it. To confirm their certification and any possible complaints, go to:

Next, investigate if there has been any regulatory or arbitration history. This can be checked with FINRA or if the money manager is a registered investment advisor (RIA) you can check the U.S. Securities and Exchange Commission’s (SEC) website. It may also be prudent to hire an investigative firm to conduct the background check for you. You can ask the money manager to reimburse you for the cost of the background check.


Once you have an understanding of the money manager’s background, you must understand his or her firm. For example, has the firm been in business for two years or for 20 years? You want a firm and an advisor who have been around for a complete market cycle (five years to seven years). How many people are on the money manager’s team? Ask what each person does as part of the team. Will your client be working with an associate or a partner in the firm? Your goal in asking the last three questions is to see whether the money manager can service your client’s needs. There is a distinct difference between the advisor who has a two-person team and 300 clients vs. a six-person team and 150 clients.

Ask the money manger where the money is held. This is referred to as the custodian in the money-management business. It is a red flag if the manager holds the money. You are looking for checks and balances. Ask how much Securities Investor Protection Corporation (SIPC) insurance the firm has to protect your client’s money against theft. (Note: This will not protect your client against market losses). Ask the money manager who owns the firm. Does the money manager have fiduciary responsibility or a lower suitability standard to you client? Fiduciary responsibility is better for your client because the money manager must put your client’s interests ahead of their interest. What is the money manager’s fee schedule? Are there any conflicts of interest? For example, the money manager may be compensated less for allocating to a more conservative position like bonds or cash as compared to being invested in the stock market. You would prefer one fee schedule for all investments. Does the money manager have the ability to put money where they want or are they restricted by the firm they work for? Your preference should be that the advisor be able to invest in whatever strategy they deem appropriate, given your client’s risk profile. Some firms limit the advisors investment choices. Does the firm manufacture its own products? For example, does the firm have its own mutual funds? Again, it is preferable that a firm that does not have its own products.

Investment Philosophy

Once you are comfortable with the advisor’s background and their firm, you can move on to their investment philosophy. You can start by asking if they are a conservative, moderate or aggressive in the way they manage money. There is not a judgmental question. The important part of this question is the money manager’s explanation of HOW they achieve that. This will also test their communication skills. If what they tell you is illogical or inconsistent, then you have raised a red flag. You want to match up your client’s objectives with the money manager’s. For example, if your client is conservative, you don’t want a manger who is aggressive. Does the money manager manage the money internally, externally by subcontracting to other firms or both? Either management style can work, although history has shown that most firms are not experts in every asset class so you might need to dig deep if a firm manages every aspect of a portfolio internally. Most clients are concerned about taxes, so ask how they are able to help lower the client’s tax bill from a management perspective. What type of returns can your client expect? How has the money manager performed in the last three years to five years?


The final area to understand is the money manager’s communication. Ask the money manager what their review process is with the client. For example do they meet quarterly, semi-annually or annually? Each client is different, but what you want is a formal process for follow up and review. As with any relationship, having a clearly defined process lessens the likelihood that there will be communication problems. Ask for a copy of the most recent quarterly report. In addition to reviews, ask how often the money manager contacts the client and for what reasons. If you help your clients with tax planning, it may be helpful to see a sample of unrealized gain/loss report. Some firms do not provide this, which might make your job more difficult each year.


Money management is an important part of your client’s financial life. If you want to be one of your client’s most trusted advisors, you need to add value in ways other than just accounting. If you play a key role in this introduction, the tools with which you use in selecting a money manager should be taken very seriously.

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Cory Chmelka, CFP, is managing partner and a founding partner of Capstone Wealth Management, LLC and heads the firm’s Risk Management and Financial Alliance Groups that services accountants, attorneys, trust officers & financial advisors.

The AICPA’s Personal Financial Planning Section is the premier provider of information, tools, advocacy and guidance for CPAs who specialize in providing estate, tax, retirement, risk management and investment planning advice to individuals and closely held entities. The Personal Financial Planning Section is open to all Regular Members, Associate Members and Non-CPA Section Associate Members of the AICPA. If you are a CPA who wants to demonstrate your expertise in this subject matter, become a Personal Financial Specialist Credential holder. Visit www.aicpa.org/PFP to learn more.