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Investment Advisory Agreement for Securities and Commodity Advisors

Securities, Commodity Contracts, and Other Financial Investments and Related Activities · NAICS 523 · Investment Advisory Agreement

An Investment Advisory Agreement is the foundational contract between an investment adviser and a client. In the securities and commodity industry, this agreement must comply with the Investment Advisers Act of 1940, state securities laws, and CFTC regulations if you advise on commodity interests. It defines the scope of advisory services, fee structure, fiduciary duties, and the terms under which the adviser manages client assets. A well-drafted agreement protects both parties, clarifies expectations, and helps ensure regulatory compliance. Use this template to create a tailored agreement that reflects your specific business model and regulatory status.

When you need this document

When onboarding a new client for discretionary portfolio management
When offering financial planning or consulting services on a fee basis
When acting as a commodity trading advisor (CTA) for a client's futures or swaps portfolio
When updating an existing agreement to reflect changes in services or fees
When transitioning from a state-registered to SEC-registered adviser

What the generated draft includes

Parties and regulatory status of the adviser
Detailed description of advisory services and any limitations
Fee schedule and billing methodology
Fiduciary duty and standard of care clause
Custody and third-party safekeeping provisions
Proxy voting and client reporting rights
Termination and dispute resolution terms

Frequently asked questions

What is the difference between an RIA and a CTA?

An RIA provides investment advice about securities and is regulated by the SEC or state securities authorities. A CTA advises on commodity interests like futures, options, and swaps and is regulated by the CFTC. Many advisers are both and must comply with both sets of regulations.

Can I include a performance-based fee in my advisory agreement?

Performance-based fees are only permitted with 'qualified clients' as defined under Rule 205-3 of the Investment Advisers Act. The agreement must clearly state that the fee arrangement is only available to such clients and include the required disclosures.

What happens if I terminate the agreement early?

Most agreements allow either party to terminate with written notice, typically 30 to 60 days. Any prepaid, unearned fees must be refunded on a pro-rata basis. The agreement should specify the notice period and how fees are prorated.

Self-help document generator: you get a structured draft based on the facts you provide. It is not legal, tax, or financial advice; verify jurisdiction-specific rules before sending.