If you`re looking for professional financial advice to help you manage your investments and reach your financial goals, you might consider hiring an investment advisor. But before you begin working with an advisor, it`s important to understand the details of the investment advisor service agreement.
The investment advisor service agreement is a legal document that defines the relationship between you and your advisor. It outlines the specific services the advisor will provide, as well as their compensation and any potential conflicts of interest. Here are some key elements to look for when reviewing an investment advisor service agreement:
Scope of services: The agreement should clearly outline the services the advisor will provide, such as investment management, financial planning, or retirement planning. It should also specify any limitations or restrictions on the advisor`s services.
Compensation: The agreement should explain how the advisor will be compensated, whether through a percentage of assets under management, a flat fee, or some other arrangement. It should also disclose any additional fees or costs, such as trading fees, custodian fees, or account maintenance fees.
Fiduciary duty: A fiduciary duty means that the advisor is legally obligated to act in your best interests. Look for language in the agreement that confirms the advisor`s fiduciary duty to you.
Conflicts of interest: The agreement should disclose any potential conflicts of interest the advisor may have, such as receiving commissions from third-party products or services. It should also outline how the advisor plans to address and manage any conflicts of interest.
Termination: The agreement should specify how either party can terminate the relationship, as well as any fees or penalties associated with early termination.
Regulatory disclosures: Advisors are required to disclose certain information to clients, such as their registration status, disciplinary history, and other relevant information. Look for these disclosures in the agreement.
Before signing an investment advisor service agreement, it`s important to review it carefully and ask questions about anything you don`t understand. By taking the time to understand the agreement and the services being provided, you can feel confident that you`re making informed decisions about your investments and financial future.