Financial Management Agreement Template for Australia

A Financial Management Agreement is a legally binding contract that establishes the professional relationship between a licensed financial manager and their client in Australia. This document outlines the terms under which financial management services will be provided, including investment management, portfolio oversight, and advisory services. Under Australian law, this agreement serves as crucial protection for both parties while ensuring compliance with stringent regulatory requirements.

When do you need this document?

You need a Financial Management Agreement when engaging a professional to manage your investments, superannuation funds, or broader financial portfolio. This includes situations where you're appointing an investment manager for your self-managed super fund, engaging a financial advisor for ongoing portfolio management, or establishing a relationship with an asset management company. The agreement is also required when trustees need professional financial management services, or when corporate entities engage external financial managers for company investments. Any ongoing financial management relationship that involves discretionary investment powers or regular advisory services requires this formal agreement.

Key legal considerations

The agreement must clearly define the scope of authority granted to the financial manager, including whether they have discretionary investment powers or require client approval for transactions. Fee structures, including management fees, performance fees, and transaction costs, must be transparently disclosed. The document should specify reporting obligations, including frequency and detail of performance reports and portfolio updates. Termination clauses are crucial, outlining how either party can end the relationship and the process for transferring assets. Liability limitations and indemnity provisions protect both parties, while dispute resolution mechanisms provide clear pathways for addressing conflicts. The agreement must also address conflicts of interest and how they will be managed or disclosed.

Legal requirements in Australia

Under the Corporations Act 2001, financial service providers must hold an Australian Financial Services Licence and comply with Chapter 7 requirements. The agreement must include mandatory disclosures about the financial manager's qualifications, licensing details, and any relevant conflicts of interest. Consumer protection provisions under the Australian Securities and Investments Commission Act 2001 must be incorporated, including cooling-off periods where applicable. The Privacy Act 1988 requires specific clauses addressing how personal and financial information will be collected, used, and stored. Anti-money laundering obligations under the AML/CTF Act 2006 must be addressed, particularly regarding client identification and ongoing monitoring requirements. The agreement must also comply with best interests duty requirements, ensuring the financial manager acts in the client's best interests when providing personal advice.