What is required for prepayment of fees exceeding $1,200 in six months or more?

For prepayment of fees exceeding $1,200 for services to be provided in six months or more, it is mandated that clients receive audited balance sheets. This requirement serves to ensure transparency and protect clients by providing them with a clear and verified picture of the adviser’s financial position and stability. Audited balance sheets give clients confidence that their prepayments are being managed responsibly, which is crucial considering the length of time between payment and service delivery.

Receiving this financial information enables clients to make informed decisions about engaging with the adviser, as it showcases the adviser's financial health and assures them that their funds are not at risk of being mismanaged or lost. Thus, this requirement plays a significant role in fostering trust and accountability in the investment advisory relationship.