Make enquiries about your adviser
- Ask for references
- Don’t allow yourself to be taken in by sample deposits
- Request a copy of the extract from the Commercial Register and ask the auditor about the existence of SFBC authorisation and solvency / organisational arrangements in accordance with the law (take notes).
Provide your adviser with information about
- Your goals
- Your experience or lack of experience in investment matters
- The scope of your assets and/or whether your investment resources are externally financed
The adviser can only recommend suitable investments for you on the basis of this knowledge.
The adviser must take account of the most important principles of investment:
- Principal’s level of experience
- Creation of an investment concept
- Safety (appropriate distribution of risk ([diversification with regard to portfolio items, by investment type and geographical region] and maintenance of asset value)
- Profitability (no excessive high risk yields, but also no mere diversion to a current account [obligation of investment])
- Liquidity (acquisition of easily negotiable assets)
- Duty of disclosure in the case of assets acquired on credit / careful liquidation
Reduce the risks associated with trust:
- Transfer the money to a bank of your choice and open the account in your name [in this way you remain the bank’s correspondent / the funds continue to be within your legal jurisdiction].
- Assign only “limited management authority” on the deposit [the agent may only buy and sell securities but may not withdraw funds].
- Make sure there is a “fast exit option” [damage limitation in case of a requirement for cash, dispute with investment adviser etc.].
All documents (accounting records [deposit extracts/performance reports]) must be presented to the customer:
- In a timely manner
These documents also serve to check for compliance with the agreed investment policy.
- If you fail to contest a transaction made contrary to instruction within 4 weeks, such transaction is normally deemed to be tacitly approved.
- Correspondence stored by the bank also tacitly authorises access and deemed clearance.
- Decide on the stock exchange to be used and especially when working with buying and selling transactions, if possible use limit orders and limited straddle orders for follow-up transactions; in this way you will create a better profit margin and reduce risk.