Best Investors
Sign in
Best Investors
Sign in
Form ADV Part 1A Item 8I · Answer type: yn · Item 8 - Client Referrals
Item 8I asks whether the adviser or a related person directly or indirectly receives compensation from any person for client referrals.
Referral compensation received can include payments from insurance companies for referring clients to insurance products, fees from other investment advisers for client referrals, commissions from broker-dealers for directed brokerage, or payments from any service providers when the adviser refers clients to their services.
The compensation is relevant when assessing a referral, but the checkbox does not show whether payment changed a recommendation or client cost.
An adviser who receives payments from insurance companies, other advisers, or service providers when they refer clients would mark Yes. An adviser who only makes referrals based on client needs without receiving compensation would mark No.
Yes
The adviser receives compensation when referring clients to other service providers, creating potential conflicts where referral income might influence their recommendations. SEC rules require disclosure of these arrangements to affected clients.
No
The firm reports No and does not report receiving compensation for client referrals under 8I. This does not establish why it makes referrals or the quality or fit of any referral.
8I - Do you or any related person, directly or indirectly, receive compensation from any person for client referrals (Yes / No).
This checkbox is part of Item 8, which covers various aspects of client transactions and business relationships that could create conflicts of interest.
A Yes identifies compensation connected with client referrals. Review the payer, amount or method, referred service, and client cost before drawing a conclusion about the referral.
A Yes does not tell you what types of referrals generate income, how much compensation they receive, which service providers pay referral fees, whether referral income affects the quality or objectivity of recommendations, or how they manage conflicts between referral income and client interests.
If 8I is Yes, ask which persons pay compensation, which referrals produce it, and whether the payment changes the client's cost. Compare the answer with 8H, Item 6A, and Item 7A on the same profile.
Yes
Check 8H for payments made for referrals and Items 6A and 7A for related businesses. Request the payer, amount or formula, referred service, client cost, and referral disclosure for each arrangement.
No
The firm reports No under 8I. It can still report payments to others under 8H or business relationships under Items 6A and 7A.
Review their 6A other business activities and 7A affiliations to understand potential sources of conflicts in their recommendations even without direct referral income.