Investment Advisory Agreement Sample: What to Look For
Investing your money can be a daunting task, especially if you are not familiar with the intricacies of the financial market. That`s where investment advisors come in – they are professionals who provide expert advice on investing your money and help you make informed decisions. However, before hiring an investment advisory firm or a financial advisor, it`s crucial to have a proper agreement in place that outlines the terms and conditions of your engagement.
In this article, we will discuss what to look for in an investment advisory agreement sample.
1. Scope of Services
The first thing you need to look for in an investment advisory agreement is the scope of services offered by the advisor. This section should outline the services that the advisor will provide to you, including the types of investments that are suitable for your financial goals and risk tolerance.
2. Compensation
The next thing you need to look for is the compensation structure for the advisor. The standard fee structure for investment advisors is a percentage of assets under management (AUM). However, some advisors may charge a flat fee or an hourly rate. It`s crucial to understand how you will be charged and any additional fees you may incur.
3. Duties and Responsibilities
The agreement should also specify the duties and responsibilities of the advisor. This includes monitoring your portfolio, making investment decisions on your behalf, and reviewing your financial goals periodically.
4. Disclosure
The agreement should also include a disclosure section that outlines any conflicts of interest the advisor may have and any affiliations they may have with financial institutions.
5. Termination
Lastly, the agreement should outline the termination process, including the notice period and any fees that may be charged if you decide to terminate the agreement.
In conclusion, before hiring an investment advisor, it`s crucial to have a clear understanding of the terms and conditions of your engagement. Look for an investment advisory agreement sample that outlines the scope of services, compensation, duties and responsibilities, disclosure, and termination process. By doing so, you can ensure that you are making an informed decision when it comes to investing your hard-earned money.