Non Discretionary Investment Advisory Agreement Template for England and Wales

A Non Discretionary Investment Advisory Agreement is a crucial legal document that governs the relationship between an investment advisor and client in England and Wales. Unlike discretionary management where advisors make investment decisions on behalf of clients, this agreement establishes that you retain full control over all investment decisions while receiving professional advice and recommendations from your advisor.

When do you need this document?

You need this agreement when engaging an FCA-authorized investment advisor who will provide investment recommendations without making decisions on your behalf. This is essential for independent financial advisors, wealth management firms, and investment consultancies offering advisory services to individual investors, pension schemes, or corporate clients. The document is particularly important for high-net-worth individuals seeking professional investment guidance while maintaining control over their portfolio decisions, and for institutional investors requiring specialized market analysis and investment recommendations.

Key legal considerations

The agreement must clearly define the scope of advisory services and establish that investment decisions remain solely with you as the client. Key clauses should address client classification under FCA rules, which determines the level of regulatory protection you receive. Fee structures must be transparent and comply with FCA disclosure requirements, including any conflicts of interest or third-party payments. Risk warnings are mandatory, explaining that investment values can fall as well as rise and that past performance doesn't guarantee future returns. The agreement should specify communication methods, reporting frequencies, and procedures for handling complaints. Liability limitations must be carefully drafted to protect the advisor while ensuring fair treatment of clients.

Legal requirements in England and Wales

Under the Financial Services and Markets Act 2000 and FCA regulations, investment advisors must be properly authorized and comply with the Conduct of Business Sourcebook (COBS). The agreement must classify you as either a retail client, professional client, or eligible counterparty, with different protections applying to each category. Advisors must conduct suitability assessments and provide appropriate advice based on your knowledge, experience, and financial situation. The document must include required regulatory disclosures about the advisor's authorization status, complaints procedures, and access to the Financial Services Compensation Scheme. All fees and charges must be clearly disclosed in advance, and ongoing service agreements require annual suitability reviews for retail clients.