When we were forming EB-5 Analytics in 2010, our founder, John Roth, faced the choice of becoming an investment advisor representative (“IAR”), or becoming a registered representative of a broker-dealer firm (“RR”). The main difference between the two roles is that an RR can accept fees from securities issuers (regional centers, in the case of EB-5), whereas an IAR may not. The IAR charges only the client, so there is less opportunity for a conflict of interest, which, of course, is a good thing. But our research at the time indicated that EB-5 investors would be reluctant to pay substantial fees in advance to a previously unknown U.S. advisor (this is especially true of Chinese investors). So, we understood that, if we wanted to do the type of probing, in-depth research that the EB-5 projects requires, we needed to combine the best attributes from the IAR and the RR business models.
Our solution was to accept fees, but strip out any and all potential conflicts of interest with the client. Here’s how we do it –
- We set our fee low enough so that every project sponsor is willing to pay it, and we don’t accept any amount higher. All regional centers and project sponsors pay us the same fee, under the same terms.
- Our agreements with project sponsors are as “finders,” not “placement agents.” We have no obligation to promote any project or regional center.
- We refuse to accept any payments from regional centers or project sponsors except the finder fee. We do not write reports for project sponsors or accept any consulting work from them.
- Our financial and jobs creation analyses are performed by independent contract analysts who get paid the same fee regardless of the outcome of their analyses.
- We do not recommend projects. We provide our research results to clients, and let the client decide which project is best for him or her.
- We are willing to look at projects suggested by the client that are not on our list. If the project is competitive with one of our top projects, we will provide the investor with a full due diligence report.
You may have noticed, also, that this business design gives our firm a powerful incentive to find the very best EB-5 projects for our clients, because if a client finds a project he or she likes better, we get paid nothing.
Plus, we don’t charge for our services, but instead rely on the prospect of a finder fee should the client pick one of our projects. Clients may try our services with no obligation and decide for themselves how capable and impartial we are.
*We reserve the right to charge a fee to certain clients who have unusual fact situations. All such fees will be disclosed and agreed to in advance by the client.