8 Issues to Address in Your Advisory Contracts

Chris Stanley | Think Advisor, September 2015

Summary: Investment advisory contracts (and most contracts, in general) are typically long, laborious and full of legalese. Paid-by-the-word attorneys have to pay for their silk ties somehow, right? If drafted properly, however, such contracts can also be immensely helpful in clarifying roles and responsibilities between the advisor and the client, and will hopefully decrease the likelihood of future disputes due to misinterpretations.

Naturally, a prudent investment advisory contract would include more than mere boilerplate and should describe the services to be provided, responsibilities assumed, fees to be paid, risks of investing, limitations of liability, authorizations granted, and an acknowledgement of receipt of applicable disclosure documents (like the ADV, e.g.). And don’t forget about Section 205 - or for state registered advisors - your particular state’s specific regulations."