Standard V(B) cases: services, costs and process changes

In short

• This lesson covers the first two V(B) duties: nature of services and costs, and the investment process with prompt notice of material changes.
• Cost disclosure is what the client pays, including affiliates' and third parties' charges; exact amounts and the firm's own costs are not required, and client sophistication is no excuse.
• Disclosure is ongoing: when services, costs or the fee method change, tell affected clients, even when the change lowers fees.
• Materiality test: would a client who chose you for a specific style, role, constraint or team see the change as altering what they bought? If so, tell existing clients, not only prospects.
• Best practice is to set terms out in writing at the outset; if firm-issued disclosures fall short, supplement them, raise it, and dissociate if it cannot be fixed.