Ima Investment Management Agreement

Investment management agreements generally provide that the advisor is not held liable to the client if he has no intentional misconduct, bad faith, simple or serious negligence and/or breach of the duty of loyalty. Some agreements may also provide that the client compensates the advisor for third-party claims. While you should try to reduce these types of rules, advisors tend to resist significant changes. In addition, consultants are not allowed to limit debts they would otherwise have under securities legislation. The contract should provide that you can terminate it at any time or relatively quickly (z.B 30 days) without penalty. If you are dissatisfied with the counsellor, you should be able to terminate the relationship without incurring additional costs. The agreement should stipulate that the advisor provides his services in accordance with all laws and regulations. The agreement may also specify specific requirements, such as the registration of the advisor under the Federal Investment Advisors Act 1940 or under state law. Agreements between an investment advisor and his client will be translated into an investment management agreement. While the advisor usually announces his or her own form of agreement, the client must make certain decisions, can negotiate certain points and must in any case understand the fundamental terms of the agreement. If you are the customer, some of the basic conditions you want to keep in mind: the fees to be paid to the advisor must be indicated in the agreement or annex. As a general rule, fees are shown as a percentage of the account`s assets (for example. B 1% per year) and are due quarterly in advance or late.

Although consultants have standard pricing plans, fees can be negotiated. For example, the advisor should be willing to charge a lower fee for a larger account and for easier-to-manage parts of the account (for example. B, bonds and cash). In addition to the advisor`s fee, you are responsible for brokerage commissions and fees and expenses of the custodian and other service providers (unless it is a “Wrap” account). The agreement should specify the nature and frequency of written and oral reports. Reports are generally quarterly and should include general market conditions, all account activity, outstanding account assets and account performance from relevant repositories. The agreement should also provide for additional reports on appropriate request. The agreement should designate the custodian who holds the assets in the account. The custodian should be a serious financial organization, for example.

B a large bank or brokerage company, and be independent of the advisor (again to avoid the madoff situation). If the advisor recommends a particular director, he or she must explain the basis of his or her recommendation (for example. B lower costs, better services or the advisor`s familiarity with the trustee`s staff and systems). The advisor should also be willing to work with the administrator you are currently using or prefer in another way. The agreement should consist of whether you or the advisor is competent for non-voting rights regarding the securities on the account. Some councillors do not like to elect substitutes because of the administrative burden. However, proxies can be important (for example. B a vote on an upcoming acquisition) and the advisor is often in a better position to assess the issues and ensure that your vote is recorded on time. For similar reasons, you may also require the advisor to bring a class action on your behalf. The agreement gives the advisor discretionary or non-discretionary powers. With discretion, the advisor can create your account without consulting you beforehand.

In the case of non-discretionary authority, the advisor must obtain your prior approval for each transaction.