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1. Understand the background, licence status, experience and track record of the discretionary account manager

  1. Find out if the discretionary account manager has an appropriate licence or registration (SFC’s Public register of licensed persons & registered institutions and HKMA’s Register of Securities Staff of AIs), professional qualifications and experience to provide discretionary account management services. 
  2. Check the credentials of the discretionary account manager and look out for any breaches or disciplinary actions by the SFC (SFC’s Public register of licensed persons & registered institutions and HKMA’s Register of Securities Staff of AIs). 
  3. Consider the investment performance track record, investment skills and risk levels of the discretionary account manager.

2. Fees and potential conflict of interests

Compare the fees charged by different discretionary account managers and consider whether the fee structure is reasonable. Take note of whether the fee model could lead to potential conflicts of interest, and also pay attention to the commission/benefit disclosures.

3. Formulate an investment strategy, or choose a predefined model investment portfolio in line with your investment objective and risk profile

Take note of whether the discretionary account manager is willing to communicate and fully understands your financial situation, risk appetite, investment objectives, etc., so as to help you formulate an investment strategy or select a predefined model investment portfolio best suited to your needs.

4. Continuous monitoring

Take note of whether the discretionary account manager is managing the account and conducting transactions consistent with your investment objectives and strategies. The discretionary account manager should have adequate internal control procedures for proper supervision of the accounts. These procedures include a proper order audit trail, timely transaction reports and regular performance reviews.

 

 

14 November 2018