Financial Advisory Services Agreement Template for the United States

A Financial Advisory Services Agreement is a legally binding contract that establishes the professional relationship between a financial advisor and client in the United States. This comprehensive document outlines the terms under which financial advisory services will be provided, ensuring compliance with federal securities laws and protecting both parties' interests. The agreement serves as your roadmap for a successful advisory relationship while meeting strict regulatory requirements.

When do you need this document?

You need this agreement whenever establishing a formal financial advisory relationship. This includes situations where you're hiring a registered investment advisor for portfolio management, seeking comprehensive financial planning services, or engaging an advisor for ongoing investment guidance. The document is essential for fee-only advisors, commission-based advisors, and hybrid advisory models. You'll also need this agreement when transitioning from a brokerage relationship to an advisory relationship, or when expanding existing services to include discretionary investment management. Institutional clients, high-net-worth individuals, and retail investors all require this foundational document before advisory services can legally commence.

Key legal considerations

Your agreement must clearly define the scope of advisory services, whether discretionary or non-discretionary, and specify any limitations on the advisor's authority. Fee structures require detailed disclosure, including management fees, performance fees, and any potential conflicts of interest. The document should address the advisor's fiduciary duty, requiring them to act in your best interest at all times. Risk disclosure provisions are critical, outlining potential investment risks and the advisor's limitations in guaranteeing returns. Confidentiality clauses protect your financial information, while termination provisions specify how either party can end the relationship. The agreement should also address custody arrangements, reporting requirements, and procedures for handling complaints or disputes.

Legal requirements in United States

Under the Investment Advisers Act of 1940, registered investment advisors must provide clients with Form ADV Part 2, which serves as a disclosure brochure detailing the advisor's business practices, fees, and potential conflicts. The agreement must comply with state securities laws if the advisor operates under state registration rather than federal registration. Dodd-Frank Act provisions require enhanced disclosure and record-keeping obligations for larger advisory firms. The Bank Secrecy Act and USA PATRIOT Act mandate customer identification procedures and anti-money laundering compliance measures. Your agreement should reference these regulatory requirements and confirm the advisor's compliance obligations. Additionally, FINRA rules may apply if your advisor is also a registered broker-dealer, requiring specific disclosures about dual registration and potential conflicts between advisory and brokerage services.