Tips for Selecting a Value Investing Advisor

Introduction

You need an advisor who thinks like a value investor, shows a repeatable investment process, and is openly transparent about fees and their fiscal‑year 2025 results; that's the quick takeaway and the simplest filter to avoid mismatches. This matters because alignment on time horizon (you want multi‑year compounding), risk tolerance (downside control), and fees (they eat returns) directly drives long‑term outcomes-if you want 5-10 year value investing but the advisor trades monthly, outcomes and taxes will diverge. What follows in the checklist: demand a written process, clear credentials (CFA, CAIA, CFP), an exact fee schedule (typical market range 0.25%-1.50% of AUM), disclosure of 2025 audited gross and net returns and AUM as of 12/31/2025, documented conflicts and custodian‑verified performance, and a practical pilot (start with a small live sleeve, e.g., $50,000-$100,000, for 90 days) to verify execution-next step: you request those 2025 figures, fee table, and custodian statements; Owner: you.

Key Takeaways

• Insist on a value‑investing mindset with a documented, repeatable process, low turnover, and multi‑year time horizon.
• Require audited, custodian‑verified fiscal‑year 2025 gross/net returns and AUM (12/31/2025) plus Form ADV disclosures before engaging.
• Get a clear fee table (aim <1.0% AUM; typical 0.25%-1.50%), and full disclosure of performance fees, commissions, and conflicts.
• Verify credentials and registrations (CFA/CFP/CAIA, RIA/state registration) and check BrokerCheck/SEC IAPD for disciplinary history.
• Validate via a small live pilot ($50,000-$200,000 for 90 days-6-12 months), tracking KPIs (net return, max drawdown, turnover); request ADV, audited 2025 performance, and an IPS within 7 days.

Tips for Selecting a Value Investing Advisor - defining fit with the value approach

Takeaway: hire an advisor who clearly uses intrinsic-value thinking, targets a measurable margin of safety, and will back concentrated positions with repeatable rules; require three 2025 fiscal-year case studies that show purchase price, estimated intrinsic value, and outcomes.

Ask if they use intrinsic value, margin of safety, and concentrated positions

Start by asking them to describe, in plain language, the valuation method they use (discounted cash flow, owner earnings, or conservative multiples), the inputs they stress-test, and the discount rates they apply. Demand a short written explanation you can vet.

Practical checks:

• Request the valuation model template and a sensitivity table.
• Ask what margin of safety they target (reccomend at least 20-40% discount to their intrinsic value).
• Clarify position-sizing rules: maximum single-stock weight, typical number of holdings, and rebalancing triggers.

One-liner: if they can't show a model and a numeric margin-of-safety target, they aren't a value investor in practice.

Request three 2025 fiscal-year case studies showing purchase price, estimated intrinsic value, and outcomes

Ask for three real, time-stamped case studies from fiscal year 2025. Each case study should include purchase date and price, shares bought, the advisor's estimated intrinsic value at purchase, key assumptions, any catalysts, and the current outcome (realized or mark-to-market), all net of fees.

Exactly what to ask for and how to verify:

• Provide a one-page case brief: purchase date, price, thesis, intrinsic-value model snapshot (PDF), and update history.
• Require custodial trade confirmations or account statements (e.g., Schwab, Fidelity) showing the 2025 trades and timestamps.
• Ask for realized returns net of fees and the mark-to-market return if the position is still open; require audit or custodian evidence for realized P&L.
• Check whether they updated intrinsic value over time and why - look for honest post-mortems on misses.

What this shows (quick math): if they bought at $50 and estimated intrinsic value $80, that's a 60% upside at purchase; verify the model assumptions that created that number. What this estimate hides: optimistic growth or low discount rates - probe both.

One-liner: real proof is a 2025 trade with documents and a dated model - no documents, no trust.

Look for low turnover, long holding periods, and examples where patience paid off

Value investing earns its edge through patience. Ask for their portfolio turnover and average holding period; expect turnover under 30% annually for a genuine value strategy and average holdings generally above three years. If turnover is higher, ask why - active trading can indicate style drift.

Steps to validate:

• Request 2025 portfolio holdings history and a table of names held ≥3 years with entry price and current return.
• Calculate implied holding period from turnover: Turnover 25% => avg holding ~4 years (here's the quick math: 1 / 0.25 = 4).
• Ask for two examples from 2025 where they held through volatility and explain the decision process and outcome.

What to watch for: frequent trading, high turnover, or many short-term positions often mask market timing rather than value selection. If onboarding takes 14+ days to produce docs, defintely flag it.

One-liner: low turnover plus documented patience beats shiny short-term returns.

You: request the three 2025 case studies, custodial trade confirmations, and the valuation models within 7 days - you own the ask.

Credentials and regulatory checks

Verify professional registrations and firm registration

You're hiring an advisor and need to know they're credentialed and under regulator oversight before you hand over capital. Quick takeaway: confirm they hold a recognized designation (CFA or CFP) and that the firm is registered as an investment adviser with the right regulator.

Step 1 - check individual credentials: search the CFA Institute registry for charterholders and the CFP Board registry for CERTIFIED FINANCIAL PLANNER practitioners. Ask the advisor for credential ID numbers and certificate dates; verify those IDs match the registries.

Step 2 - confirm firm registration: advisers with assets under management at or above $110,000,000 generally must be registered with the SEC as a Registered Investment Adviser (RIA). Smaller advisers usually register with their state securities regulator. Ask whether the firm is SEC-registered or state-registered and get the registration letter or CRD number to verify.

One-liner: credentials show training; registration proves legal oversight - both matter.

Pull Form ADV Part 1 & 2 filed in 2025 and confirm assets under management (AUM)

You must see the adviser's Form ADV filings for 2025; that's the firm's legally required disclosure. Go to the SEC IAPD (Investment Adviser Public Disclosure) and download Form ADV Part 1 and Part 2 brochures filed or amended in 2025.

What to check in Part 1: Item that reports assets under management (AUM), number of clients, custody status, and regulatory history. Make sure the AUM number matches what the adviser verbally states. If the adviser markets $500 million but ADV shows $120 million, ask for an explanation and supporting custodian statements.

What to check in Part 2: look for fee schedules, investment strategy descriptions, performance-fee arrangements, affiliated broker-dealers, soft-dollar practices, and conflicts of interest. Verify the ADV brochure was updated in 2025 and review the amendment history for recent material changes.

Practical checks: request the specific 2025 ADV files, compare AUM year-over-year (flag >20% unexplained swings), and reconcile ADV AUM with custodial statements or audited reports. One quick math example: if ADV AUM fell from $200 million to $120 million, that's a 40% decline - ask whether redemptions, market losses, or client transfers caused it and get proof.

One-liner: treat the 2025 ADV as your starting truth; verify it against independent custody and audited numbers.

Run FINRA BrokerCheck and SEC IAPD and review disciplinary history

You need to know if the firm or key people have enforcement issues or client complaints. Run FINRA BrokerCheck for any associated broker-dealer representatives and use SEC IAPD for the firm and adviser personnel records.

Specific steps: search BrokerCheck by individual name and CRD number to pull Form U4/U5 disclosures (customer complaints, arbitrations, regulatory actions). Use IAPD to view the firm's ADV disclosures, enforcement actions, and any criminal or civil judgments listed in 2025. Also scan SEC and FINRA enforcement release archives for 2025 actions against the firm or principals.

Red flags to escalate: multiple client complaints within 24 months, suspensions or bars, undisclosed outside business activities, failure-to-supervise findings, or material inaccuracies on filings. For any disclosure, ask the advisor for a written incident timeline, remediation steps, and third-party proof (settlement docs, compliance reports).

One-liner: one small disclosure isn't fatal; repeated or unexplained violations are.

Action for you: request the adviser's 2025 Form ADV Part 1 & 2, CFA/CFP IDs, and BrokerCheck/IAPD screenshots within 7 days - you own the ask. (And defintely keep copies of custodian statements to reconcile AUM.)

Performance, fees, and reporting

You're vetting an advisor who claims to be a value investor, so start by demanding audited, net-of-fees 2025 results, a clear fee schedule, and turnover data - those three items tell you whether performance is real, repeatable, and affordable. Here's the quick takeaway: if returns aren't audited and net-of-fees for fiscal year 2025, don't proceed until you see them.

Request audited, net-of-fees returns and benchmark comparisons

Ask the advisor for audited performance statements for fiscal year 2025 and trailing 1-, 3-, and 5-year periods, all presented net of fees and tied to a defined benchmark. Require a third-party audit (audit firm named) or a GIPS (Global Investment Performance Standards) composite report where applicable, and insist the numbers reconcile to custodial account statements (Schwab, Fidelity, Pershing, etc.).

Practical steps:

• Request a PDF of the audited report for fiscal year 2025 and trailing periods.
• Ask for the exact benchmark (for example, Russell 1000 Value or S&P 500) and why it's appropriate.
• Demand custodian statements that match the composite/audit for at least two representative accounts in 2025.
• Get trade-level records for one representative account in 2025 to check realized vs. unrealized gains.

Here's the quick math: if they show a 2025 gross return of 18% and claim a 1.0% AUM fee, net return should be shown as ~16.9-17.0% depending on fee treatment - ask them to show the calculation. What this estimate hides: performance fee structures, high realized gains late in the year, or cherry-picked best accounts - verify across the composite, not a single winning account.

One-liner: no audited, net-of-fees 2025 numbers - no go.

Get a written fee schedule and aim for reasonable economics

Insist on a written, signed fee schedule that lists management fees, performance fees, custody/administrative fees, trading commissions, and any platform or reporting charges. Aim for total advisory fees at or below 1.0% AUM for a pure value equity mandate, unless there's a clear, documented reason for higher fees (e.g., concentrated activist work or direct private deals).

Practical steps and checks:

• Obtain a single-page fee schedule showing fee tiers, performance fee terms, and all ancillary charges.
• Ask for examples: show net-of-fees returns for a $100,000 and $1,000,000 account at stated fees.
• Clarify performance fee math: hurdle, high-water mark, catch-up, and how returns are measured (net or gross).
• Request fee breakpoints or institutional pricing for larger accounts and whether fees are negotiable.
• Confirm there are no commissions or soft-dollar arrangements that could bias trading.

Quick example: 1.0% AUM on $1,000,000 = $10,000/yr; a 20% performance fee on excess return above hurdle materially changes investor net returns - ask for sample scenarios. If fees aren't fully itemized in writing, walk away or insist on a 7‑day written delivery. defintely question opaque fee language.

One-liner: get fees in writing and model their drag on your net returns.

Ask for portfolio turnover and expect low trading for true value strategies

Value investing implies patience. Ask for documented portfolio turnover for fiscal year 2025 and rolling annual turnover figures; for a classic value approach expect turnover under 30% annually. Turnover above that suggests a trading-oriented strategy, not long-duration value investing.

Steps to verify turnover and implications:

• Request the advisor's annualized turnover rate for 2025 and the methodology used (turnover = min(purchases, sales)/average AUM).
• Ask for average holding period and examples of positions held >3 years with entry price and current valuation.
• Obtain trade blotters or custodial activity for one 2025 account to confirm turnover math.
• Model transaction costs: higher turnover increases implicit market impact and taxable realized gains; ask for an estimated cost drag (bps) at the stated turnover.

Example calculation: $100m AUM, $40m purchases and $30m sales in 2025 → turnover = min(40,30)/100 = 30%. That implies average holding roughly 3+ years; if turnover reported is 100%, average holding is ~1 year - that conflicts with a value mandate.

One-liner: turnover > 30% annually = ask why and verify the process and tax impact.

Incentives, conflicts, and alignment

You're choosing a value-investing advisor and need to be sure their pay and side activities don't pull them away from buying cheap, holding long, and tolerating short-term drawdowns. Ask for explicit 2025 documentation on how they get paid, any related-party or brokerage ties, and proof they put their own money where yours will be invested.

Direct takeaway: get the 2025 fee split, ADV disclosures, and a signed attestation of personal investing - then walk if answers are fuzzy.

Confirm whether they earn AUM fees, performance fees, commissions, or receive soft dollars

Start by requesting a written fee schedule for fiscal year 2025 that breaks down revenue sources: AUM fees, performance fees, transaction commissions, and any soft-dollar credits. Ask for the firm-level revenue split for 2025 in percentages and dollars so you can see whether compensation is mostly asset-based or transaction-based.

One-liner: prefer clear AUM-first economics and no hidden transaction incentives.

• Request: written fee schedule for 2025
• Request: revenue breakdown by source for 2025
• Ask: exact terms for any performance fee, including hurdle and high-water mark
• Ask: soft-dollar programs used in 2025 and dollar credits received

Benchmarks to use: aim for advisory fees under 1.0% AUM on standard value mandates; if there is a performance fee, insist on a clearly documented high-water mark and a cap (common cap: 20% of outperformance). Flag revenue where commissions or referral payments account for more than 10% of firm revenue in 2025 - that creates incentive to trade.

Here's the quick math: on a $1,000,000 account, a 1.0% AUM fee costs $10,000/year; a 20% performance fee on a 5% excess return equals another $10,000; fees can halve after-tax alpha if not structured properly. What this estimate hides: fee timing, catch-up provisions, and whether performance is net-of-fees.

Action: email them a checklist - written fee schedule, 2025 revenue split, and performance-fee contract - and set a 7-day deadline. If they stall, defintely escalate to walkaway.

Inspect ADV 2025 disclosures for related-party trades, brokerage ties, or outside business activities

Pull the adviser's Form ADV Part 1 and Part 2 as filed in 2025 from the SEC IAPD site and read the brochure sections on fees, brokerage selection, outside business activities, and conflicts of interest. Those documents legally disclose related-party transactions, principal trades, and revenue-sharing or referral arrangements.

One-liner: read the 2025 ADV line-by-line; look for money flow, not marketing language.

• Download: ADV Part 1 and Part 2 (brochure) filed in 2025
• Inspect: disclosures on related parties and principal trades
• Inspect: brokerage selection and directed-brokerage language
• Inspect: outside business activities and revenue-sharing statements
• Request: copies of any 2025 contracts referenced in ADV

Red flags in the 2025 ADV: use of an affiliated broker-dealer for most trades, large related-party revenue without explanation, directed brokerage mandates that force clients to pay higher spreads, or many outside-business activities that consume partner time. Ask them to itemize any related-party trades executed in 2025 with counterparty names and dollar amounts; require documentation, not just verbal assurances.

Action: verify ADV statements against third-party sources (FINRA BrokerCheck, SEC IAPD) and ask the adviser to confirm in writing any 2025 related-party revenue and contracts within 7 days; assign this to your compliance or legal reviewer.

Ask if advisors personally invest alongside client accounts (side-by-side holdings)

Alignment shows up when advisors have skin in the game. Ask whether portfolio managers and principals hold the same securities and strategies as clients in 2025, and by how much of their personal net worth or liquid capital. Request a Code of Ethics and an attestation or portfolio snapshot for 2025 showing side-by-side holdings or material personal investments.

One-liner: if they won't invest alongside you, ask why and treat that as a warning sign.

• Request: Code of Ethics filed in 2025
• Request: attestation of personal holdings in firm strategies for 2025
• Ask: percent of PMs' personal investable assets in firm strategies
• Ask: block trade allocation and pro-rata allocation policy for 2025

Practical thresholds: strong alignment is managers owning at least 1-5% of strategy AUM personally or meaningful personal capital at stake. Also verify trade allocation rules so managers do not take preferential fills. If managers trade in client accounts after personal trades or consistently get better fills, that's a conflict.

Action: require a signed attestation and the 2025 Code of Ethics within 7 days; put verification on your custodian or external auditor to spot-check a 2025 trade blotter sample.

Due diligence checklist and pilot

Verify references and custodial statements

You want independent proof, not talk. Ask the adviser for at least three client references that match your mandate and custodial statements that show account snapshots from 2025 with trade-level detail.

Steps to take:

• Request redacted custodial statements dated in 2025 from Schwab, Fidelity, Pershing, or the custodian named.
• Ask references for the client profile, mandate start date, and a custodial statement showing performance through 2025.
• Call the custodian's client service to confirm the account exists and that the adviser has trading authorization (do not ask custodians for client personal data).
• Match holdings and realized/unrealized P&L on the statements to the adviser's reported performance for 2025.
• Flag round-number returns, missing monthly statements in 2025, or refusal to provide third-party statements as red flags.

One-liner: if they won't show third-party 2025 statements, don't move forward.

Start with a pilot mandate

Begin small and measurable: offer a pilot of $50,000-$200,000 or a time-boxed trial of 6-12 months to validate process, communications, and behavior under stress.

How to structure the pilot:

• Draft a short Investment Policy Statement (IPS) that defines goals, risk limits, benchmark, and allowable concentration limits.
• Agree on fees, custody, and reporting before funding; insist the account be held at an independent custodian (Schwab, Fidelity, Pershing).
• Set explicit exit conditions: underperformance vs benchmark for X months, failure to produce agreed reports, or breach of IPS.
• Use a phased funding plan (e.g., fund $50,000 then add to reach $200,000 only after checkpoints).

Here's the quick math: on a $100,000 pilot, a 1.0% AUM fee costs you $1,000 annually; every +1% net outperformance equals $1,000 more to you. What this estimate hides: short-term swings will dominate a 6-12 month window.

One-liner: test with skin in the game, not a handshake.

Track KPIs and reporting cadence

Decide which metrics matter and how you'll receive them. Track performance net of fees, drawdown, active share, turnover, and a simple reporting rhythm through 2025 and forward.

Minimum KPIs and how to measure:

• Annualized net return: time-weighted return, net of all fees, reported monthly and quarterly.
• Max drawdown: largest peak-to-trough loss during the pilot period (report from start date through 2025 end).
• Active share: percent difference vs benchmark holdings - for concentrated value expect high active share.
• Turnover: annualized; for classic value strategies expect 30% annually or lower - question higher rates.
• Supporting stats: monthly performance attribution, trade list for 2025, and cash drag reporting.

Reporting cadence and delivery:

• Require monthly account statements from the custodian and a quarterly written manager report tying decisions to outcomes in 2025.
• Ask for trade confirmations and a reconciled performance ledger for 2025 within 30 days of quarter close.
• Schedule a formal review at month 3 and month 6 of the pilot to decide on scaling or exit.

One-liner: measure what you pay for, monthly and quarterly.

Immediate next step: ask the adviser for their Form ADV, audited 2025 performance, and a written IPS within 7 days; you own the ask.

Conclusion

One-liner takeaway

You should pick the advisor who can prove a repeatable value process, open up verifiable 2025 results, and charge transparent fees aligned with long-term clients.

One clean line: choose the advisor who proves process, transparency, and verifiable 2025 performance.

Why that matters: value investing depends on time, patience, and predictable decision rules (intrinsic value, margin of safety, concentration). If the advisor cannot show a documented process and audited 2025 net-of-fees returns, you're taking behavioural and fee risk they can't quantify - and that risk compounds over a decade.

Immediate next step you must own

Ask for three documents within 7 days and make this your ownership item: Form ADV Part 1 & 2 (filed in 2025), audited net-of-fees performance for fiscal year 2025, and a written Investment Policy Statement (IPS) or written investment process.

• Request ADV Part 2: confirm AUM and disclosures
• Request audited performance: fiscal year 2025, trailing 1/3/5 years, net of fees
• Request written IPS: limits, turnover targets, concentration rules, and margin-of-safety definition
• Ask for custodial statements (Schwab, Fidelity) for 2025 snapshots
• Get fee schedule in writing; aim for less than 1.0% AUM or clear flat-fee scope

If any item is delayed or opaque, press until you get PDFs; if still dodged, walk away - defintely do not start with blind trust.

Practical execution, timing, and pilot ownership

Run this checklist and own the timeline: you request docs (Day 0), verify ADV and BrokerCheck/SEC IAPD (Days 1-3), review audited returns and custodial proof (Days 3-5), and decide on a pilot (Days 6-7). Your ask: secure those items within 7 days.

• Start a pilot mandate: $50,000-$200,000 or a 6-12 month engagement
• Agree KPIs: annualized net return, max drawdown, active share, reporting cadence
• Set turnover expectation: value strategy turnover 30% annually (question higher)
• Define stoppoints: exit if reporting misses or undisclosed conflicts appear
• Owner: you - schedule a follow-up review at 3 and 12 months

Action now: you ask for ADV, audited 2025 performance, and a written IPS within 7 days; you own the follow-ups and pilot decision.