Relationships are tough enough without throwing money into the equation.

That’s why associations should consider thinking of their financial or investment advisors as their employees, said Doug Black, Aronson SpringReef LLC, which helps nonprofits evaluate and select financial advisors.

For the amount of money an association is paying both for the investment solution and the advisor’s fee, associations “deserve a lot of time and attention,” Black said.

Still, determining whether your investment advisor is giving you adequate amounts of time and attention can be difficult, especially for association executives or board members who might be experts in their industries, but not as savvy when it comes to financial services. After completing a reference check on prospective investment advisors, here are six questions to ask that can help you select an investment advisor or gauge how well the relationship with your current advisor is going.

How many of your clients look just like us? Black said that you want your investment advisor to have experience managing associations with similar assets. “You don’t want to be somebody’s biggest client, and you don’t want to be unlike their other clients,” he said.

What does the investment process look like? Associations should ask investment advisors what their investment process entails. Is it thoughtful and comprehensive? Black recommends posing questions like this: Is there thoughtful due diligence around the investment solutions? Are there conflicts-of-interest around these solutions?

Is your reporting transparent? According to Black, investment advisors should report back to the association at least quarterly about how the fund is performing relative to the benchmark, which should be laid out in the investment policy. If the fund didn’t meet the benchmark, the association can then ask questions like: What caused the underperformance? Was it investment selection or asset allocation? Was there a tactical change that wasn’t successful or a failed investment?

What are your fees in plain English? Associations need to ask advisors about their fees, any third-party fees, and the fees related to the investment solution right at the get go. “You want to ask for it in percentage terms and dollar terms,” Black said. He said that in charging fees, the finance industry often refers to “basis points,” with each basis point being 0.01 percent. So, say your investment advisor charges you a fee of one percent—or 100 basis points—of your $1 million assets. That’s $10,000 a year. “That seems really small, but when you put it in dollars and cents, especially for an association, it starts to look like real money,” Black said.

Do they do what they say they will do? Trust is the foundation of any relationship, and especially one that entails money. Black recommends that associations evaluate their advisor relationship by asking questions like these: “Do they execute against what they tell you they’re going to do? Do they follow-up? When they make commitments in meetings, do they follow-up? When they tell you they’re going to come back with you with some more information, do they do that?”

Is the advisor working on your behalf? This is the most important question, but likely one of the hardest to discern. “Unfortunately, in the financial services industry, there are advisors that wake up every day trying to make client money their money,” Black said. “And, fortunately, there are advisors that wake up every day trying to do the best thing they possible can for clients.” An association needs to know where its investment firm and advisor land on that continuum.

“Great advisors are transparent around their entire business,” said Black. “And that usually leads to a much better relationship and can lead to a much better financial outcome.”

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