casemark/investment-advisory-agreement

Investment Advisory Agreement

Produces a compliant IAA covering fiduciary duties, authority scope, fee structures, Form ADV delivery, custody, proxy voting, and assignment restrictions under IAA § 205(a)(2).

Prerequisites

1. Adviser details — legal entity name, registration status (SEC or state), CRD number, principal office
2. Client details — full legal name(s), account type (individual, joint, trust, entity), investment objectives, risk tolerance, time horizon
3. Form ADV Part 2A & 2B — current brochure and brochure supplements
4. Fee schedule — AUM percentages, tier breakpoints, billing frequency, minimum fees
5. Custodian — qualified custodian identity or selection process
6. Service scope — discretionary vs. non-discretionary; ancillary services if any
7. Proxy voting policy — adviser's written policy if accepting proxy authority

Search uploaded documents for existing Form ADV, prior IAA, fee schedules, and client data before drafting. If any prerequisite is missing, pause and ask — do not assume or fill gaps.

Core Workflow

1. Cover Page

Agreement title, party legal names, effective date, and table of contents if >5 pages.

2. Services

| Element | Content | |---|---| | Authority type | State discretionary or non-discretionary with practical implications | | Portfolio management | Methodology, asset allocation, rebalancing frequency, review cadence | | Ancillary services | Financial planning, retirement, estate coordination — only if in scope | | Out-of-scope | Tax prep, legal drafting, accounting excluded; referrals to qualified professionals |

3. Fees & Billing

| Element | Content | |---|---| | Advisory fee | Annual % of AUM; tiered schedule with breakpoints and worked dollar examples | | Calculation basis | Specify: beginning / ending / average daily balance | | Billing frequency | Quarterly in advance, in arrears, monthly, or annual | | Payment method | Direct debit (written authorization required) or invoice | | Pro-ration | Mid-period opens/closes, significant deposits/withdrawals | | Third-party costs | Custodial fees, commissions, fund expense ratios — distinguish from advisory fee | | Minimums | Minimum account size and/or minimum annual fee if applicable |

4. Custody & Brokerage

• Identify qualified custodian per SEC Rule 206(4)-2 [VERIFY current rule number]
• Adviser holds no physical custody; assets in client's name at custodial institution
• Disclose soft dollar arrangements, resulting conflicts, and best execution approach
• Disclose referral fees or revenue-sharing with custodians or service providers
• Client receives account statements directly from custodian at least quarterly

5. Risk Disclosures

Include with client acknowledgement, selecting those applicable to the strategy:

• [ ] Market risk
• [ ] Interest rate risk
• [ ] Credit / default risk
• [ ] Liquidity risk
• [ ] Concentration risk
• [ ] International / currency risk
• [ ] Alternative asset risk
• [ ] No guarantee of performance or return of principal; past performance ≠ future results

6. Regulatory Disclosures

| Requirement | Provision | |---|---| | Form ADV delivery | Part 2A and 2B received ≥48 hours before execution (Rule 204-3) | | Free-look right | Terminate without penalty within 5 business days if ADV not timely delivered | | Annual update | Updated ADV within 120 days of adviser's fiscal year-end | | E-signatures | Valid under ESIGN Act / UETA; client consent to electronic business |

7. Proxy Voting

Option A — Adviser votes:

• Reference written proxy voting policies; describe methodology and conflict-of-interest handling
• Describe how client obtains voting records

Option B — Client retains authority:

• Adviser has no obligation to vote, recommend, or act on corporate actions
• Client receives proxy materials from custodian or transfer agent

Address class actions, tender offers, and rights offerings — state responsibility explicitly.

8. Term, Termination & Amendment

| Provision | Language | |---|---| | Term | Effective on execution; continues until terminated | | Termination | Written notice; specify notice period (typically 30 days) | | Fees on termination | Pro-rate and refund prepaid unearned fees promptly | | Amendment | Material changes require mutual written consent; fee increases require affirmative client consent | | Assignment | Client consent required per IAA § 205(a)(2); define to include transfer of controlling interest |

9. General Provisions

• Governing law (specify state)
• Severability
• Entire agreement / integration clause
• Confidentiality and client privacy (Regulation S-P [VERIFY])
• Limitation of liability to extent permitted by law
• Dispute resolution / mandatory arbitration if firm policy

10. Signature Block

| Signatory Type | Requirements | |---|---| | Individual | Full legal name as on account registration + date | | Joint account | All holders sign; each confirms receipt of disclosures | | Entity | Authorized representative + title + representation of binding authority |

Include dated acknowledgement that client received, read, and understands the IAA and all Form ADV disclosures.

Pitfalls & Checks

• Fiduciary standard — every provision must reflect duty to act in client's best interest; disclose and manage all conflicts
• No guarantee language — exclude anything that could be construed as guaranteeing returns, promising outcomes, or limiting fiduciary duties
• Solicitor disclosures — if solicitor arrangements exist, include cash solicitation disclosures per Rule 206(4)-3 [VERIFY]
• State registration — for state-registered advisers, verify state-specific contract and disclosure requirements beyond SEC rules
• Anti-hallucination — do not rely on parametric memory for regulatory citations; verify current rule numbers and statutory text
• Length target — 8–15 pages; use numbered sections and TOC for longer agreements
• Annual maintenance — flag for re-execution or client acknowledgement when material terms change or Form ADV is materially amended
• Attorney review required before execution — this is a securities regulatory document