Sub Advisor Agreement Template for Switzerland

A Sub Advisor Agreement is a specialized contract that allows primary investment advisors to delegate specific advisory functions to qualified sub-advisors while maintaining compliance with Swiss financial regulations. Under Swiss law, this delegation must be carefully structured to meet the requirements of the Financial Services Act (FinSA) and Financial Institutions Act (FinIA), ensuring that both parties maintain their regulatory obligations and client protection standards.

When do you need this document?

You need a Sub Advisor Agreement when your investment advisory firm requires specialized expertise that isn't available in-house, such as emerging market strategies, alternative investments, or sector-specific knowledge. This agreement is essential when expanding your service offerings without hiring additional full-time specialists, or when managing client portfolios that require expertise across multiple asset classes or geographic regions. Swiss-based asset management companies frequently use these agreements when collaborating with international sub-advisors, while foreign firms operating in Switzerland need them to delegate functions to local specialists who understand Swiss market conditions and regulatory requirements. The document is also crucial when restructuring advisory operations or entering joint venture arrangements where investment responsibilities are shared between multiple professional entities.

Key legal considerations

The agreement must clearly define the scope of delegated authority, ensuring the primary advisor retains ultimate responsibility for client relationships and regulatory compliance. Risk management provisions are critical, including detailed procedures for monitoring the sub-advisor's performance, regular reporting requirements, and mechanisms for terminating the relationship if performance standards aren't met. Confidentiality clauses must address the handling of sensitive client information and investment strategies, while indemnification provisions should protect both parties from potential liabilities arising from the other's actions. The contract should specify fee arrangements, including how management fees are split and who bears responsibility for operational costs. Additionally, the agreement must address succession planning, ensuring continuity of services if either party becomes unable to fulfill their obligations, and include clear termination procedures that protect client interests during any transition period.

Legal requirements in Switzerland

Under Swiss law, sub-advisor arrangements must comply with strict licensing requirements outlined in the Financial Institutions Act (FinIA), ensuring that sub-advisors hold appropriate authorizations from FINMA or equivalent foreign regulators. The Financial Services Act (FinSA) mandates specific disclosure obligations, requiring primary advisors to inform clients about the use of sub-advisors and any potential conflicts of interest. Data protection compliance under the Swiss Federal Data Protection Act (FDPA) is essential, particularly when sharing client information across borders, requiring appropriate data transfer agreements and security measures. Anti-money laundering obligations under the Swiss AML Act must be clearly allocated between parties, with procedures for customer due diligence and suspicious activity reporting. The Swiss Code of Obligations governs the contractual framework, requiring clear terms for performance, liability, and dispute resolution. Cross-border arrangements may trigger additional requirements under international tax treaties and regulatory cooperation agreements, making it essential to address withholding tax obligations and regulatory reporting in multiple jurisdictions.