Updated August 2026 · 8 min read
Key takeaways
- Write the firm's position down once and apply it consistently — inconsistent treatment across clients is the recurring finding, not the metals themselves.
- Discretion and custody are the two lines that determine almost everything else; in a client-directed structure the client directs every transaction and the advisor does not hold the asset.
- Decide whether a client-directed metals position is an advisory asset, a held-away asset, or excluded — and align billing, reporting, and Reg AUM treatment with that decision.
- Any referral, solicitation, or compensation arrangement with a dealer must be documented in writing and reviewed by counsel before it exists; undisclosed compensation is the classic conflict finding.
- Valuation source, documentation retention, and who reviews client statements should be named in the firm's procedures.
- Advertising and testimonial rules apply to how the firm talks about metals publicly, including on its website and in client materials.
1. Establish the discretion line
Start by documenting whether the firm ever directs metals transactions. In a client-directed structure the answer is no: the client retains discretion over all purchase, sale, storage, delivery, and liquidation decisions, and the dealer works directly with the client. The advisor remains the advisory relationship without directing the asset.
That single fact drives the treatment of billing, reporting, supervision, and the advisory agreement. Write it into the firm's procedures explicitly rather than leaving it as an understanding, and make sure client-facing staff describe it the same way.
2. Confirm the firm does not have custody
Custody is a defined concept with real consequences, including surprise examination and reporting obligations. Advisory firms should confirm that nothing in the metals arrangement creates custody: the firm should not hold client metal, hold title, have authority to withdraw or direct the asset, or serve in a capacity that would attribute possession to it.
In a properly structured arrangement the depository holds the metal, it is titled to the client or the client's trust or entity, and the advisory firm has, at most, read access to documentation the client shares. Have counsel confirm that conclusion for the firm's specific facts rather than assuming it.
3. Decide the billing treatment
Pick one treatment and apply it across the book: non-billable held-away asset, billable only under a separately documented agreement, or excluded entirely. Most firms treat a non-discretionary, client-directed holding as non-billable unless it is deliberately brought under the advisory agreement with the client's written consent and a stated valuation method.
Whatever the firm chooses, the fee schedule, the advisory agreement, and the billing system should agree. Billing on an asset the firm neither directs nor values independently, without disclosure, is a straightforward problem.
- Document the chosen treatment in the compliance manual, not just in practice.
- Ensure the advisory agreement language matches the billing system's configuration.
- If billable, state the valuation source and frequency in writing.
- Apply the same treatment to every client with a comparable position.
4. Define reporting and valuation
If a client-held metals position appears in performance reports, net worth statements, or planning software, the firm needs a defensible, repeatable valuation source and should label the position as held-away and client-directed where applicable.
The practical approach is to record the specific products, quantities, and weights from the depository statement and value them against a stated reference price on the valuation date, noting that premium-driven products may not track spot. Whatever the method, it should be written down and used consistently — an ad hoc valuation is worse than clearly labeling the asset as unvalued.
5. Review disclosures and Form ADV
Consider whether the firm's Form ADV Part 2A and its client-facing disclosures accurately describe what happens when a client is introduced to a metals dealer: the nature of the relationship, whether the firm receives anything of value, any conflicts, and the fact that the asset is client-directed and outside the firm's discretion.
This is a review with counsel, not a template exercise. The question is whether a client reading the firm's disclosures would understand the arrangement as it actually operates.
6. Paper any referral arrangement — or confirm none exists
Undisclosed compensation between an advisor and a product provider is one of the oldest problems in the business. Metals Edge Wealth does not maintain solicitor, referral, endorsement, or compensation arrangements with advisors unless separately documented in writing and reviewed by the advisor's compliance counsel.
If a firm wants a documented arrangement, treat it like any other: written agreement, disclosure, and review under the applicable marketing and solicitation rules. If there is no arrangement, record that fact too — being able to point to a written confirmation that no compensation flows is useful during an examination.
7. Set recordkeeping and file standards
Decide what goes in the client file and who puts it there. A workable standard includes the client's account opening confirmation, transaction confirmations, periodic depository storage statements, the storage agreement, and a note of the conversation in which the client directed the decision.
Retention should follow the firm's existing books-and-records policy. The goal is that a reviewer three years from now can reconstruct what the client did, when, and on whose direction.
8. Address advertising and public communications
The marketing rule governs how the firm talks about metals on its website, in newsletters, and in client materials — including performance claims, hypotheticals, endorsements, and testimonials. Statements about metals as protection against inflation or currency debasement are the kind of forward-looking claims that require care and balance.
The simplest safe posture for most firms is educational and neutral: explain the structure, the costs, and the risks, and leave allocation opinions to documented advice given in the context of a specific client's plan.
9. Train staff and assign supervision
Name the person responsible for reviewing metals-related client documentation and for approving any exception to the firm's standard treatment. Brief client-facing staff on the approved description of the arrangement so that four advisors do not give four different answers.
Add a periodic check to the firm's compliance calendar: confirm treatment consistency across clients holding metals, confirm no undocumented compensation arrangements have arisen, and confirm files contain the expected documentation.
- Assign a named reviewer for metals documentation.
- Standardize the language advisors use to describe the arrangement.
- Add a periodic consistency review to the compliance calendar.
- Document any exception and the reason for it.
Where to go next
For the underlying structure this checklist assumes, see precious metals for RIAs. For retirement accounts, see the self-directed precious metals IRA guide. For evaluating the custody arrangement itself, see allocated versus unallocated storage. To discuss how a specific client situation would be structured and documented, speak with an advisor directly.
Important disclosures
This checklist is general information for discussion with an advisory firm's own compliance, legal, and tax counsel. It is not legal or compliance advice, is not tailored to any firm's registration status, business model, or jurisdiction, and does not create any duty on the part of Metals Edge Wealth. Metals Edge Wealth is a precious metals dealer. It is not a registered investment adviser, broker-dealer, bank, trust company, law firm, or tax adviser, and it does not provide investment, legal, or tax advice. Precious metals are not FDIC or SIPC insured, do not produce income, and can lose value. Advisors should confirm any structure described here with their own firm's compliance, legal, and tax counsel before recommending or discussing it with clients.
Frequently asked questions
- Does a client-directed metals position create custody for an advisory firm?
- In a properly structured arrangement the depository holds the metal, it is titled to the client or the client's trust or entity, and the advisory firm neither holds the asset nor has authority to direct it. Firms should confirm that conclusion with their own counsel based on their specific facts, since custody is a defined concept with reporting consequences.
- Should an advisory firm bill on client-held precious metals?
- Most firms treat a non-discretionary, client-directed holding as non-billable unless it is deliberately brought under the advisory agreement with written client consent and a stated valuation method. The key point is choosing one treatment and applying it consistently across every comparable client.
- Does Form ADV need to mention a metals dealer relationship?
- Whether disclosure is required depends on the firm's facts, including whether it receives anything of value and how it describes the introduction. Review Part 2A and client-facing disclosures with counsel so that they describe the arrangement as it actually operates.
- Are referral fees paid to advisors for metals introductions?
- No. Metals Edge Wealth does not maintain solicitor, referral, endorsement, or compensation arrangements with advisors unless separately documented in writing and reviewed by the advisor's compliance counsel.
- What documentation should be kept in the client file?
- Account opening confirmation, transaction confirmations, periodic depository storage statements, the storage agreement, and a record of the client's direction — retained under the firm's existing books-and-records policy.
- How should a firm value a client-held metals position for reporting?
- Record the specific products, quantities, and weights from the depository statement and value them against a stated reference price on the valuation date, noting that premium-driven products may not track spot. Write the method down and use it consistently, or label the position as unvalued.