Financial Management Agreement Template for the United States

A Financial Management Agreement is a comprehensive legal contract that establishes the terms and conditions for professional investment management services in the United States. This document creates a formal relationship between you as the client and your chosen financial manager or investment advisor, outlining the scope of services, investment authority, fees, and regulatory compliance requirements under federal securities laws.

When do you need this document?

You need a Financial Management Agreement when engaging a professional investment advisor to manage your portfolio, whether for individual wealth management, retirement planning, or institutional investment services. This agreement is essential when delegating investment decision-making authority to a registered investment advisor, when establishing discretionary trading accounts, or when working with fee-based financial planning services. Investment advisors managing assets exceeding $100 million typically require SEC registration and must use compliant agreements. The document is also necessary when engaging sub-advisors or when custody arrangements involve third-party custodians for your investment assets.

Key legal considerations

The agreement must clearly define the scope of the manager's authority, including whether they have discretionary power to make investment decisions without prior approval. Fee structures require transparent disclosure, including management fees, performance fees, and any potential conflicts of interest. Fiduciary duty clauses are critical, as investment advisors must act in your best interest under federal law. The document should include comprehensive risk disclosures, outlining potential investment losses and market volatility. Termination provisions must specify notice requirements and procedures for asset transfer. Privacy and confidentiality clauses protect your financial information, while reporting requirements establish regular communication schedules and performance updates.

Legal requirements in United States

Financial Management Agreements must comply with the Investment Advisers Act of 1940, which requires registered investment advisors to maintain fiduciary relationships with clients and provide specific disclosures through Form ADV. The Securities Exchange Act of 1934 governs trading activities and market conduct, while the Investment Company Act of 1940 applies when mutual funds or other investment companies are involved. The Dodd-Frank Act introduced additional regulatory requirements for larger advisors and enhanced consumer protections. State securities laws may impose additional licensing and disclosure requirements depending on your jurisdiction. The Bank Secrecy Act requires compliance with anti-money laundering provisions and customer identification procedures. All agreements must include mandatory arbitration clauses where permitted and comply with state contract law governing enforceability and dispute resolution.