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. For both types of powers, the agreement should clearly state which assets should be managed. This is usually done by reference to a particular account or an account held in your name with a particular custodian. Allens is pleased to have been involved in updating the Financial Services Council`s Investment Management Bid Agreement. The provision of FSC members and other industrial materials with good practice materials ensures that the sector meets high standards. Each investment manager has been appointed under an investment management agreement with the management company and the company, which can be modified from time to time to ensure the day-to-day management of the company`s investments, subject to overall supervision and responsibility of the management company. 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. 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 consider are: the agreement or an annex to the agreement should set out the investment guidelines according to which the account is managed. These guidelines should not only define the account`s investment objective (for example. B the valuation of capital), but also all investment allocations (. B for example, a target of 60% equity and 40% debt) and investment restrictions (for example, no more. B of 20% in foreign securities, only investment degree debts, no derivatives).