4) Describe your service model in terms of deliverables and the mechanism for delivery?

As a fiduciary will want to know what to expect from your consultant, in terms of level and detail of reporting. Who will attend meetings to present reports and discuss results. You will want to ensure that the service model aligns with your requirements (i.e. is it designed to encourage long-term relationships?, is it project orient?, is designed to maximize their profit and promote short term thinking?) and that the process the consultant uses to make recommendations is transparent.

3) How is your firm compensated by your clients (all sources monetary or otherwise)?

There are various ways a consulting firm can get paid (i.e. hourly fee, retainer, on a project basis, commissioned selling or directed trading commissions).

You will also want to be able to monitor the total fees generated and ensure that they are appropriate based on the value added provided by the consultant and compared to industry norms.

Be aware of fee arrangements that may not be in your best interest. An example of this would be an arrangement that motivates an unscrupulous consultant to generate extra revenue by replacing a manager that is currently out of favour, for temporary reasons, to generate extra revenue. In a retail investment environment, this practice is known as ‘churning’.