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Form ADV Part 1A Item 8C(1) · Answer type: yn · Item 8 - Brokerage Practices
Item 8C(1) asks whether the firm has discretionary authority to decide which securities to buy or sell for a client's account: meaning the adviser can make specific investment selections and execute trades without getting pre-approval from the client for each individual security decision.
Discretionary authority over security selection means the adviser can choose to buy Apple stock instead of Microsoft, select specific bonds or mutual funds, or decide to sell certain positions and purchase others, all without calling the client first. This is different from non-discretionary arrangements where clients must approve each specific investment before trades can be executed.
Most full-service investment management involves discretionary security selection because it allows advisers to respond quickly to market opportunities, rebalance portfolios efficiently, and manage multiple accounts without constant client communication about individual trades. However, it requires significant trust and clear investment guidelines.
An adviser who manages portfolios by selecting individual stocks, bonds, and funds based on their investment strategy would mark Yes. An adviser who only provides investment recommendations that clients must separately approve and execute would mark No.
Yes
The adviser has discretionary authority to select which securities to buy and sell for client accounts. This enables active portfolio management but requires clear investment policies, risk guidelines, and regular communication about overall portfolio strategy and performance.
No
The adviser does not have discretionary authority over security selection. Client trades either require specific pre-approval for each transaction, or the adviser provides only recommendations that clients implement separately through their own brokerage arrangements.
8C(1) - Securities to be bought or sold for a client's account (Yes / No).
This checkbox is part of Item 8C, which covers different aspects of discretionary authority that advisers may have over client brokerage activities and trading decisions.
Discretionary security selection authority gives advisers significant control over your investment outcomes and requires strong trust in their judgment and processes. A Yes answer means you should understand their investment decision-making process and oversight controls.
When advisers have discretionary authority, they can respond quickly to market changes, implement complex strategies efficiently, and manage portfolios without delays. However, it also means they can make investment decisions you might disagree with, potentially incur tax consequences without advance discussion, or trade more frequently than you prefer.
A Yes does not tell you what investment criteria they use, how they select among potential securities, what risk controls guide their decisions, how frequently they trade, or whether their discretionary authority has specific limitations or requires client consultation for major changes.
Read the advisory agreement for the scope of security-selection authority, any client restrictions, and the decisions that still require client approval. Compare those terms with the 8C(1) answer.
Yes
The adviser reports discretionary authority over security selection. On the firm's Best Investors ADV panel, review 8C(2) through 8C(4) to see what other discretionary powers they have (trade size, broker selection, commission rates), and examine 5F to understand the scale of assets they manage discretionarily.
Also check their 5G services to understand their investment management approach, and review any 8A participation flags for potential conflicts in their security selection decisions.
No
The adviser does not report discretionary security selection authority. This suggests either a recommendation-only advisory model or limited discretionary powers. Review 8C(2) through 8C(4) to see what specific authorities they do have, and check 5G services to understand their advisory approach.
Look at 5F(2)(a) versus 5F(2)(b) to see their discretionary versus non-discretionary asset breakdown, which provides context for their business model.