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Form ADV Part 1A Item 8E · Answer type: yn · Item 8 - Brokerage Practices
Item 8E asks whether the adviser or any related person recommends brokers or dealers to clients: meaning they suggest specific brokerage firms, trading platforms, or execution venues for clients to use, typically for accounts the client maintains directly rather than through discretionary management.
Broker recommendations occur when advisers suggest where clients should custody their assets, which brokerage platform to use for trading, or which brokers offer the best services for the client's needs. This is different from 8C(3) discretionary broker selection where the adviser chooses brokers directly: here the adviser makes suggestions but clients make the final decision.
These recommendations can create conflicts because advisers might have business relationships, referral arrangements, or soft dollar benefits with recommended brokers that influence their suggestions. They might recommend brokers that provide technology platforms, research, or other services that benefit the adviser's business rather than focusing solely on what's best for clients.
A financial planner who recommends that clients open accounts at specific brokerage firms would mark Yes. An adviser who only manages discretionary accounts without making broker recommendations would mark No.
Yes
The adviser or related persons recommend specific brokers or dealers to clients. This requires disclosure of any conflicts, referral arrangements, or benefits the adviser receives from recommended brokers.
No
The adviser does not recommend brokers or dealers to clients. They may execute trades discretionarily through brokers they select, or clients may choose their own brokerage arrangements without adviser input.
8E - Do you or any related person recommend brokers or dealers to clients (Yes / No).
This checkbox is part of Item 8, which covers brokerage practices and potential conflicts in how client trades are handled and brokers are selected.
Broker recommendations can influence where clients custody assets and execute trades, potentially steering business to firms that benefit the adviser rather than optimizing client outcomes. A Yes answer means you should understand their recommendation criteria and potential conflicts.
When advisers recommend brokers, they might favor firms that provide referral payments, technology platforms, research, or other business benefits. Even when recommendations are genuinely in client interests, the appearance or reality of conflicts can affect the objectivity of the advice.
A Yes does not tell you which brokers they recommend, what their criteria are for recommendations, whether they receive compensation from recommended brokers, how they evaluate broker quality, or whether they have policies to ensure recommendations serve client rather than adviser interests.
Check 8F for a reported related-person broker. Request the recommended broker's fee schedule, the adviser's selection criteria, and any payment or service the adviser receives from that broker.
Yes
The adviser reports recommending brokers to clients. On the firm's Best Investors ADV panel, immediately check 8F to see if recommended brokers are related persons, and review 8G(1) to see if they receive soft dollar benefits from brokers. Also examine 8H and 8I for any referral compensation arrangements.
Identify each recommended broker, its fee schedule, any relationship with the adviser, and any payment or service the adviser receives. Compare these facts with 8F and the client agreement.
No
The adviser does not recommend brokers to clients. However, they may still select brokers discretionarily (8C(3)) or have other business relationships that affect brokerage arrangements. Review their complete Item 8 disclosures to understand their brokerage practices.
Check their custody arrangements in Item 9 to understand how client assets are typically held when they don't make broker recommendations.