Financial Advisor Considering Joining Club
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Financial Advisor Considering Joining Club My personal financial advisor indicated that he was interested in joining our club. He checked with his company's compliance officer and got the information on what he can or cannot do. Are there any rules/regulations that our club need to be aware of if he decides to join? Thanks, Beny Levin Hello Beny, This subject comes up a lot. And it always reminds me of the Sniff Test. Investment clubs typically draw beginners or people who are not as confident investing on their own. The education component is what draws and keeps them in the club. A financial advisor doesn't require our kind of education or "safety in numbers" investing. Few join clubs due to ethical reasons. Many of those who do are simply cultivating new clients.
A second problem is that weaker members tend to rely too heavily on professionals in the club. It can also cause members to be intimidated by their level of experience and be less inclined to participate for fear of not living up to expectations.
Every situation is different, of course. Yours may work out just fine. I used to do club visits for my local NAIC chapter and I ran into a few professionals in clubs. They seemed bored to me. I could never figure out what they were doing there. They do this all day.
In the Crow River club, we had a couple of low level marketing secretaries from Amex join. When the company found out, we were expected to give them full access to our broker and banks accounts to monitor, at will, or the girls would have to quit or be fired. Amex also gave the club a choice of 3 brokers we could use, none of which included our current broker. So we reluctantly voted them out of the club and included the following in our partnership agreement:
18. Additional
Partners. Additional partners may be admitted at any time upon the majority
consent of the partners, and upon completing a predefined list of criteria as
determined by the partners. A new partner, who works for any branch of the
government, a brokerage, or any other business than would create a conflict, or
whose spouse or other family members work for an entity that would create a
conflict, is responsible for clearing their pending partner status prior to a
vote of their acceptance into the partnership. The partnership will not be
bound by, abide by, nor will it's normal operations be influenced by, rules or
regulations bestowed upon a single member. We also had a couple of Top 3 accounting firm auditors join our club. We even had an employee of the local federal reserve (until they found out and made him quit). In both cases, we weren't allowed to invest in companies they were assigned to. It really didn't create too much trouble as there were plenty of companies to invest in. I'd just make sure you understand why he/she wants to join.
I'm sure you'll get lots of opinions on this subject. This is just mine. Good luck to you, Lynn Ostrem, President
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