What is a key compliance aspect for Miller when referring Joe to an investment adviser?

When referring Joe to an investment adviser, a key compliance aspect is the disclosure of the commission structure. This is critical because transparency regarding how an investment adviser is compensated is essential for ethical practices in the financial industry. When clients understand how their advisers are compensated, they can more effectively evaluate potential conflicts of interest, which can influence the advice they receive. Proper disclosure helps ensure that the relationship is built on trust and that clients can make informed decisions about their investments without any hidden agendas.

In professional standards, especially for CPAs, the obligation to maintain transparency about any commissions or fees associated with the adviser’s services is paramount. This aligns with general principles of honesty and integrity within financial advising, as outlined in various ethical guidelines and regulations. Understanding the commission structure enables Joe to assess whether the adviser’s recommendations are truly in his best interest or influenced by potential financial incentives.

Other compliance aspects, while important, do not carry the same critical weight in this context. Verification of the adviser’s license contributes to ensuring they are qualified, but it does not address the relationship's financial transparency. Documentation of Joe's investment history is relevant for understanding his needs and goals but does not directly relate to compliance in the referral process itself. Lastly, submission of a written report to a governing