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Form ADV Part 1A Item 5G(7) · Answer type: yn · Item 5G - Advisory Services
Item 5G(7) asks whether the firm provides selection of other advisers as part of its advisory services. This covers arrangements where the firm helps clients choose, recommend, or oversee other investment advisers rather than managing portfolios directly themselves.
Selection of other advisers typically involves "manager-of-managers" models, wrap fee programs with third-party investment managers, separately managed account platforms, or advisory services focused on identifying and recommending specialist advisers for specific investment needs or asset classes.
In manager-of-managers arrangements, the firm acts as the primary adviser to the client while selecting and overseeing multiple sub-advisers or third-party managers who handle day-to-day portfolio management. The firm typically maintains overall asset allocation decisions, manager selection, and ongoing oversight while delegating specific investment management to specialists.
5G(7) differs from direct portfolio management under 5G(2) individuals or other management categories where the firm manages investments directly. It represents a consulting or oversight role where the firm's primary value lies in adviser selection and monitoring rather than security selection and trading.
Some firms use this model to access specialized expertise in areas like international investing, alternative strategies, or sector-specific management while maintaining the primary client relationship. Others focus entirely on adviser selection and monitoring as their core business proposition.
The service can involve initial due diligence on potential advisers, ongoing performance monitoring, periodic manager searches and replacements, and coordination between multiple managers to achieve overall portfolio objectives. Some firms also provide adviser selection for specific situations like 401(k) plan lineups or institutional manager searches.
Wrap fee programs often involve selection of other advisers, where the wrap sponsor provides a platform of pre-screened managers and helps clients choose among them based on investment objectives, risk tolerance, and performance preferences.
5G(7) - Selection of other advisers (Yes / No).
This is one checkbox in Item 5G, "Advisory Services." Firms mark this when their advisory services include helping clients select, recommend, or oversee other investment advisers.
If you want help choosing among different investment managers or prefer a manager-of-managers approach rather than direct portfolio management, look for Yes on 5G(7). This indicates the firm offers adviser selection and oversight services.
If you prefer direct portfolio management where your adviser makes investment decisions without involving third-party managers, focus on firms with traditional portfolio management services marked under other 5G categories.
A Yes does not tell you how many third-party advisers the firm works with, their selection criteria, oversight processes, or fee arrangements when multiple advisers are involved. These details vary significantly among firms offering adviser selection services.
The service does not guarantee better investment outcomes than direct management. Some clients benefit from accessing specialized managers through adviser selection services, while others prefer the simplicity and potentially lower costs of direct portfolio management.
When multiple advisers are involved, fee structures can become more complex, with the selecting firm charging its fee on top of the underlying managers' fees. This can result in higher total costs than direct portfolio management arrangements.
The selecting firm's role also raises questions about decision-making authority, client communication, and accountability when performance issues arise with underlying managers.
Yes
The firm reports providing selection of other advisers. On Best Investors, find Item 5G on the firm's ADV panel and confirm 5G(7) is Yes. Also check Item 5I wrap fee program participation and Item 8 referral compensation for related arrangements.
Review the firm's total regulatory AUM which may include assets managed by third-party advisers under their oversight, and compensation structure to understand how fees work in manager-of-managers arrangements.
Ask the firm about their adviser selection process, the number of third-party managers they work with, how they monitor ongoing performance, typical fee structures when multiple advisers are involved, and how they coordinate between different managers for overall portfolio objectives.
No
The firm does not report selection of other advisers on 5G(7). Look at other marked 5G boxes to understand what advisory services they do provide - likely direct portfolio management, financial planning, or other services not involving third-party adviser selection.
The absence of 5G(7) does not limit the firm's ability to provide excellent direct investment management or other advisory services. Many successful advisers focus on direct portfolio management without involving third-party managers.
If you specifically want access to multiple specialized managers, ask whether the firm can accommodate manager-of-managers arrangements on a custom basis or can refer you to firms that specialize in adviser selection services.