Financial Advisor Agreement Template for Hong Kong

A Financial Advisor Agreement is a legally binding contract that establishes the professional relationship between a licensed financial advisor and their client in Hong Kong. This document is essential for ensuring regulatory compliance while protecting both parties' interests throughout the advisory engagement.

When do you need this document?

You need this agreement whenever you engage a financial advisor for regulated activities under Hong Kong law. This includes situations where you're seeking investment advice, portfolio management services, or financial planning guidance. The agreement is mandatory when the advisor provides services that fall under the Securities and Futures Ordinance, such as advising on securities, futures contracts, or corporate finance. Whether you're an individual investor, corporate entity, or professional investor, this document ensures your advisory relationship meets Hong Kong's strict regulatory standards. It's also required when establishing ongoing advisory relationships that involve discretionary investment management or regular financial consultation services.

Key legal considerations

Several critical elements must be addressed in your Financial Advisor Agreement to ensure legal validity and regulatory compliance. The scope of services clause must clearly define what advisory services will be provided and any limitations or exclusions. Fee structures and payment terms need explicit documentation, including management fees, performance fees, and any additional charges. Risk disclosure provisions are mandatory, ensuring you understand the potential risks associated with recommended investments or strategies. The agreement must establish clear communication protocols, reporting requirements, and procedures for handling conflicts of interest. Client classification is crucial, as different obligations apply depending on whether you qualify as a Professional Investor under Hong Kong regulations. Additionally, the agreement should address termination procedures, including notice periods and settlement of outstanding obligations.

Legal requirements in Hong Kong

Under Hong Kong's Securities and Futures Ordinance, financial advisors must be properly licensed by the Securities and Futures Commission before providing regulated advisory services. Your agreement must include the advisor's license number and details of their authorized activities. The Code of Conduct for licensed persons requires specific disclosures about the advisor's business, potential conflicts of interest, and complaint handling procedures. Personal Data Privacy Ordinance compliance is essential, with clear provisions for collecting, using, and protecting your personal information. If insurance-related advisory services are involved, additional requirements under the Insurance Ordinance may apply. The agreement must also comply with SFC guidelines on client agreements, including mandatory risk warnings, cooling-off periods where applicable, and specific protections for retail investors. Professional Investor clients may have different disclosure requirements, but the fundamental regulatory framework still applies to ensure market integrity and client protection.