Investment Advisor Contract Template for the United States

An Investment Advisor Contract is a legally binding agreement that establishes the professional relationship between an investment advisor and client under United States securities law. This comprehensive document outlines the terms of advisory services, establishes fiduciary obligations, and ensures compliance with federal regulations including the Investment Advisers Act of 1940 and SEC requirements.

When do you need this document?

You need an Investment Advisor Contract whenever you're engaging professional investment advisory services or providing such services as a registered investment advisor. This includes situations where you're seeking portfolio management, financial planning, or investment consultation services. The contract is mandatory for registered investment advisors under SEC regulations and provides legal protection for both parties. You'll also need this agreement when transferring advisory relationships, establishing discretionary trading authority, or when regulatory compliance requires formal documentation of the advisory relationship.

Key legal considerations

The most critical aspect of any Investment Advisor Contract is the fiduciary duty clause, which legally requires the advisor to act in your best interests at all times. Fee disclosure provisions must clearly outline all compensation arrangements, including management fees, performance fees, and any third-party payments the advisor receives. The contract must include detailed risk disclosures, investment strategy limitations, and termination procedures. Liability and indemnification clauses protect both parties from potential losses, while confidentiality provisions safeguard your financial information. The agreement should also address trading authority, custodial arrangements, and regulatory compliance responsibilities to ensure proper oversight of your investments.

Legal requirements in United States

Under federal law, Investment Advisor Contracts must comply with the Investment Advisers Act of 1940, which mandates specific disclosure requirements and prohibits certain contract provisions. The agreement cannot include performance fee arrangements unless you qualify as a qualified client under SEC rules, typically requiring over $1 million in assets under management. State regulations may impose additional requirements depending on the advisor's registration status and your state of residence. The contract must include SEC-required disclosures about the advisor's business practices, conflicts of interest, and disciplinary history. Additionally, the Dodd-Frank Act requires enhanced compliance procedures for advisors managing over $100 million in assets, which must be reflected in contract terms and ongoing obligations.