Qualified Intermediary Interview Questions

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Use these questions when interviewing potential qualified intermediaries. A reputable QI will answer all of them without hesitation.

Fund Security (Most Important)

1. How are exchange funds held - segregated per client or pooled?

   • Best answer: Segregated, qualified escrow or trust account at an FDIC-insured bank
   • Red flag: Pooled in the company's general operating account

2. At which bank(s) are funds held?

   • Best answer: Major FDIC-insured institution (look for FDIC coverage on your balance)
   • Red flag: Unwillingness to disclose

3. Is the client named as the beneficial owner on the account?

   • Best answer: Yes - this protects your funds in the event of QI bankruptcy
   • Red flag: No beneficial ownership designation

4. What is your fidelity bond coverage?

   • Strong protection: Coverage of $5M+ from a rated surety company (this is a best-practice preference, not an industry-mandated minimum)
   • Red flag: No fidelity bond

5. What is your errors & omissions (E&O) insurance coverage?

   • Strong protection: $5M+ with a reputable carrier (again, a best-practice preference - higher coverage provides more protection but there is no universal legal minimum)
   • Red flag: No E&O insurance

6. What happens to my funds if your company goes bankrupt or is acquired?

   • Best answer: Funds in segregated trust accounts are protected from creditors; successor trustee provisions exist
   • Red flag: Vague or evasive answer

Experience and Track Record

1. How many exchanges has your company facilitated? In the last 12 months?

   • Best answer: Thousands total, hundreds annually
   • Red flag: Very low volume or unwillingness to share

2. How long has your company been in business?

   • Best answer: 10+ years with stable ownership
   • Red flag: Brand new or frequent ownership changes

3. Have you ever had a client's exchange disqualified due to an error on your part?

   • Best answer: No - or honest explanation of what happened and how it was resolved
   • Red flag: Evasion or defensiveness

4. Can you provide references from attorneys or CPAs who work with you regularly?

   • Best answer: Yes, with names and contact information
   • Red flag: No references available

Service and Responsiveness

1. Who will be my primary contact? What are their response time commitments?

   • Best answer: Named individual with same-day response commitment
   • Red flag: Call center with no dedicated contact

2. What are your hours of operation? Can I reach you on Day 45 if it falls on a weekend or holiday?

   • Best answer: Deadline-day coverage regardless of day of week
   • Red flag: "We're closed weekends and holidays"

Fees and Terms

1. What is your fee structure? Are there additional charges for multiple properties, amendments, or wires?

   • Best answer: Clear, written fee schedule with all charges listed
   • Red flag: Vague pricing or hidden fees discovered later

2. Do you earn interest on held exchange funds? What portion, if any, is passed to the client?

   • Best answer: Interest earned is passed to the client or applied against fees
   • Red flag: Company keeps all interest with no disclosure

3. Are you a member of the Federation of Exchange Accommodators (FEA)?

   • Best answer: Yes - FEA members adhere to a code of ethics
   • Red flag: Not a member and unaware of FEA

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Scoring guide: Any QI you're considering should score "best answer" on questions 1-6 (fund security) and at least 4 of 5 on questions 7-11 (experience and service). Fee questions (12-15) help you compare value but shouldn't be the primary selection criteria.