Discretionary Investment Management Agreement Template for England and Wales

A Discretionary Investment Management Agreement is a crucial legal document that formalises the relationship between you and your investment manager, granting them authority to make investment decisions on your behalf without seeking prior approval for each transaction. Under England and Wales law, this agreement must comply with strict regulatory requirements to ensure both parties are protected and regulatory standards are met.

When do you need this document?

You need this agreement when engaging a professional investment manager to handle your portfolio with discretionary authority. This is essential for high-net-worth individuals seeking professional portfolio management, trustees managing trust investments, pension scheme trustees appointing fund managers, or corporate treasurers delegating investment decisions. The document is also required when transferring from advisory to discretionary management services, or when establishing new investment relationships where you want the manager to act independently within agreed parameters.

Key legal considerations

The agreement must clearly define the scope of discretionary authority, including permitted asset classes, investment restrictions, and risk parameters. Key provisions include investment objectives and constraints, fee structures and calculation methods, reporting and communication requirements, and termination procedures. You should ensure the document addresses liability limitations, regulatory compliance obligations, and conflict of interest management. The agreement must specify custodial arrangements, whether assets are held by the investment manager or a separate custodian, and include provisions for client money protection under FCA rules.

Legal requirements in England and Wales

Under the Financial Services and Markets Act 2000 and FCA regulations, investment managers must be properly authorised and comply with Conduct of Business Sourcebook (COBS) rules. The agreement must include mandatory disclosures about the firm's regulatory status, compensation schemes, and complaints procedures. MiFID II implementation requires detailed client classification, appropriateness assessments, and enhanced reporting obligations. The document must comply with SYSC requirements for systems and controls, including governance arrangements and risk management procedures. Client money rules under CASS require specific provisions for asset protection, while PRIN principles ensure the agreement reflects fair treatment of clients and appropriate standards of market conduct.