Money Management Contract Template for the United States

A Money Management Contract is a legally binding agreement that governs the relationship between an investment manager and client under United States securities law. This document establishes the terms under which a professional investment adviser manages client assets, defining responsibilities, compensation, and regulatory compliance requirements mandated by federal law.

When do you need this document?

You need a Money Management Contract whenever you engage a professional investment adviser to manage your assets with discretionary authority. This includes situations where you hire a registered investment adviser for wealth management, delegate investment decisions for retirement accounts, or establish institutional investment management relationships. The contract is legally required when the manager will have authority to buy and sell securities on your behalf without obtaining prior approval for each transaction. Financial advisors managing over $100 million in assets must register with the SEC and use formal investment management agreements with all clients.

Key legal considerations

The contract must clearly define the investment manager's fiduciary duties, which under federal law require them to act in your best interest at all times. Fee structures must be transparent and reasonable, with detailed disclosure of all compensation methods including management fees, performance fees, and any third-party payments. The agreement should specify investment objectives, risk tolerance, and any restrictions on investment types or strategies. Termination provisions must outline how either party can end the relationship and the process for transferring assets. The contract must include proper disclosure of conflicts of interest and detail how the manager will handle trading errors or disputes.

Legal requirements in United States

Under the Investment Advisers Act of 1940, registered investment advisers must provide clients with Form ADV Part 2, which serves as the disclosure document accompanying the management contract. The agreement must comply with the Securities Exchange Act of 1934 regarding custody of client assets and reporting requirements. If the manager will have custody of your assets, additional safeguards under the Bank Secrecy Act and Anti-Money Laundering regulations apply, including enhanced identity verification and suspicious activity monitoring. The Dodd-Frank Act imposes additional fiduciary standards and reporting requirements for managers of certain asset thresholds. State securities laws may also apply, particularly for smaller investment advisers who register at the state level rather than with the SEC.