Who’s On First? In the world of finance, that can be confusing for a public entity. Whether it is in the raising or the investing of money for operating and/or capital purposes, knowing who can best help and serve the interests of public institutions can be very perplexing.
I have five simple rules of how to determine who should do what:
1.) Transparency of roles and fees. It needs to be straightforward and easy to see on paper and to repeat in front of the entity’s board.
2.) Separation of who does what. If one firm provides multiple services to your entity, i.e., banking, brokerage, RIA, consulting, etc., you should require a written agreement of confidentiality between the firms’ different department silos.
3.) Keep fee structures simple. You should “quadruple check” all fees. Closely examine how firms charge for the services they provide. If they serve more than one role, separate out “all” fees and negotiate them (especially if multiple fees apply).
4.) One firm should not necessarily be all things to all entities. By separating functions, you may find choosing multiple firms—based on each one’s specialty—will give you the best results.
5.) Most important of all: Make sure the services provided to your entity are tailored to your specific institution. Never accept cookie-cutter approaches or solutions.
At three+one we only perform cash flow and liquidity analyses. We are not a bank, a Financial Advisor,(FA), or Register Investment Advisor (RIA). Our analysis and data are agnostic, pure, and independent.
The national marketplace offers wonderful banks, financial consultants, and RIAs. You may require one or more firms to best serve your needs. Determining who does what requires homework that will raise questions that must be asked. You need answers that are direct, easy to explain to others within your organization, and fees that are transparent and appropriate.
If you apply these five simple tips, you’ll know who can best serve your needs.