What protects KFAC’s clients from KFAC personnel running off with clients’ money?
A. We have all read horror stories of advisers running off with their clients’ money. To protect our clients, KFAC has put several security measures in place: First, when advisers abscond with clients’ money, generally the adviser has taken a full power of attorney over their clients’ assets. In such cases, clients usually make their investment checks payable to the adviser (or an entity controlled by the adviser) who can then distribute the funds as they deem appropriate. The adviser is free to move the client’s money around between various accounts at different financial institutions. KFAC takes only a limited power of attorney over clients’ accounts. This gives us the ability to make trades within clients’ accounts, but it does not give us access to their money. Clients’ investment checks are made payable to the custodian, not to KFAC. This way, clients’ investment money never passes through KFAC’s hands. Second, because clients’ assets are custodied at a national brokerage firm, cl
