Key Due Diligence Questions for Financial Advisors
Rare U.S. coin investments have been promoted widely since the late 1970�s in the United States.
Many investors profited handsomely from these ventures. Many suffered great losses. Critical to
the issue of losses or gains was the firm selected as supplier. Current economic situations in
Canada and the U.S. are signaling what many believe to be a return to inflation. As a result, rare
coin investments are being promoted in various forms to both investors and planners. Some programs
offer direct investments, some are multi-level marketing plans. There are several important questions
that the Canadian planner should ask of his potential rare coin supplier.
- Has the rare coin firm been reviewed by the planner's broker/dealer to insure that due diligence requirements have been met?
- Has the rare coin program been reviewed by the provincial securities commission to assure the planner will not violate the fulltime requirement of his licence?
- If the rare coin firm has head office in the U.S., has the firm made proper inquiries and arrangements with Canada Customs and Revenue Agency with regard to GST or HST and any customs duties? Are correspondance documents with Canada Customs and Revenue Agency on file?
- How long has the firm been in continual business? What experience does the firm have in dealing with Canadian investors?
- How long has the firm been conducting business in Canada?
- How familiar is the coin firm with Canadian securities regulations, investment products and Canadian tax and pension laws?
- Does the firm have materials and services that have been developed for use in Canada?
- What is the written disclosure that is provided to the client and to the financial planners by the coin firm? What are the commissions and are they disclosed?
- What training is provided to Canadian representatives? Is the training accepted for continuing education credits for CFPs or RFPs?
- What is the financial strength of the rare coin firm. Is it independently audited by a major accounting firm? Are the financial records available for inspection?
These are the preliminary questions that must be answered. There are other issues that must be
addressed concerning the area of U.S. rare coins themselves, such as portfolio selection and makeup,
pricing, markups, liquidation services and delivery options. This should be helpful as a starting
point in your investigation.
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