Non Discretionary Investment Advisory Agreement Template for South Africa

A Non Discretionary Investment Advisory Agreement is essential when you need to establish a formal investment advisory relationship in South Africa while maintaining complete control over your investment decisions. This legally binding document ensures that your financial advisor provides guidance and recommendations without having the authority to execute transactions on your behalf, giving you the final say in all investment choices.

When do you need this document?

You'll require this agreement when engaging with licensed financial service providers who offer investment advice but will not manage your portfolio directly. It's particularly important when working with independent financial advisors, wealth management firms, or investment consultants who provide strategic guidance while you retain decision-making control. The agreement is also necessary when transitioning from a discretionary to non-discretionary advisory relationship, or when establishing advisory services for corporate entities, pension funds, or institutional clients who prefer to maintain investment authority internally.

Key legal considerations

The agreement must clearly define the scope of advisory services and explicitly state that the advisor cannot execute transactions without your written approval. Fee structures should be transparent and comply with FAIS Act requirements, including detailed disclosure of all costs, commission arrangements, and potential conflicts of interest. Risk disclosure provisions are mandatory, ensuring you understand the nature of investment risks and the advisor's liability limitations. The document should include termination clauses, confidentiality provisions, and dispute resolution mechanisms. Additionally, the agreement must address record-keeping requirements, reporting obligations, and the advisor's duty to act in your best interests while acknowledging that final investment decisions remain your responsibility.

Legal requirements in South Africa

Under the FAIS Act, investment advisors must be licensed by the Financial Sector Conduct Authority (FSCA) and comply with specific codes of conduct. The agreement must include the advisor's FSP license number and demonstrate compliance with fit and proper requirements. FICA compliance is mandatory, requiring detailed client identification procedures, verification processes, and ongoing monitoring obligations. The Protection of Personal Information Act (POPIA) governs how your personal and financial data is collected, processed, and stored within the advisory relationship. The agreement must include specific data protection clauses and consent mechanisms. Financial Sector Regulation Act requirements may apply depending on the nature of your advisory relationship, particularly for institutional clients. The document should also address tax implications and ensure compliance with relevant exchange control regulations when international investments are involved.