What to Expect When Sitting Down with Your Financial Advisor And What Questions to Ask

Let’s step back and go over the two ways you can invest reserves.  The first is having your treasurer and finance committee invest each rung of the ladder in Certificates of Deposit (CD) that you decide on.   Nice and simple, NOT!  It means every time a board member leaves, someone has to go to the bank, get new signature cards back and have them signed.  It also means each CD will have its own statement and 1099. When the CD rolls over, someone will have to go and open a new one, with new signature cards.

The other way is to work with a financial advisor who will open a master account for you.  As the CD is in a master account, there is only one signature card, one 1099 and one statement.  When a board member leaves, all it takes is a call, and a single form will be faxed over to be signed.


Now to the main questions, you should ask, do you work on a fee basis or transaction?  If you are paying them a fee, remember that comes out of your earnings.   Transactional sounds more expensive but may not be as the banks pay the advisor for placing the funds with them.  In other words, almost, no cost to you.

You should expect the advisor to tell you their background, how long they have worked with associations and how many associations they manage.   Are they members of CAI, and are they an Educated Business Partner?

You should expect them to ask to see a copy of your bylaws and covenants, your reserve study and your current investments.  The bylaws and covenants will tell them what they can invest in.   Most association documents will be pretty plain vanilla, FDIC insured or backed by the full faith and credit of the United States government.  BUT you would rather know ahead of time then have a surprise!  You should expect an advisor to notify you when CD’s mature and advise where to place in the ladder and move onward.

The reserve study will tell the advisor when you are going to need the funds.  This is very important in that if you need funds in six months, you do not want to invest in a three-year investment!!  But if you are not going to need the funds for three years, you can invest longer to get a better return.

REMEMBER, reserve funds are not to help lower your yearly fees; they should be laddered, so they are matched to reserve expenditures in the future.  

The above “expectations” may be more useful as a checklist to consider for services you receive from an advisor rather than what you can expect from every advisor.  Seek an advisor with experience in the association world, one who considers your association documents when developing an investment strategy, and who will provide you with ongoing service/advice is key to the association’s reserve management.


RBC Wealth Management does not provide tax or legal advice. All decisions regarding the tax or legal implications of your investments should be made in connection with your independent tax or legal advisor. RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC.

Non-deposit investment products offered through RBC Wealth Management are not FDIC insured, are not a deposit or other obligation of, or guaranteed by, a bank, and are subject to investment risks, including possible loss of the principal amount invested.


By Stuart T. Eisen, AWM, CFP

Stuart has been with RBC Wealth Management for 12 years and is a holder of the Certified Financial Planner (CFP)® certification.   He has been a member of CAI for over 15 years and is one of the Educated Business Partners.  Stuart is also a holder of the Accredited Investment Fiduciary (AIF) ® designation.


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