Suggestions for Using a Financial Advising Contract with Clients

Whether you are newly licensed, or you are a long-term provider of financial advice, you already know the benefits of having a contract in place with clients. These contracts not only help define your role, but they also provide clear guidance on what your expectation is with your client.

• Basics of Financial Advising Contracts
• Additional Considerations for Financial Advisor Contracts
• Helpful Resources

Taking on the responsibility of someone else’s finances is one which must be done with the client’s best interests in mind. However, this does not mean you should not take every necessary step to protect yourself legally.

A well thought out financial advising contract can make a difference should a dispute arise later between you and a client. When customizing a financial advising contract template, you should ensure every contingency is planned for. The basic parts of these contracts include:

• Services to be provided
• Term of services to be performed
• Compensation to be provided
• Contingencies (if any)
• Payment of fees
• Retainer to be paid (when applicable)
• Payment of Advisor expenses
• Dispute resolution
• How legal notices are to be provided to each party
• Return of records
• Contractual rights waiver
• Status of advisor (typically independent contractor)
• Licensing if applicable
• Taxes/Compensation of employees (responsible party is Advisor)
• Indemnification clauses
• Confidential information and approved uses
• Assignment or delegation of rights or obligations
• Governing law (state in which contract is enforceable)
• Severability of sections of contract
• Additional Terms (use addendum if needed)

Make sure you have clearly defined all terms which will apply to your client. Verify the validity of the terms of the contract with your state’s licensing division. If your client lives in a different state, make sure you have verified their requirements as well before putting the final touches on your financial advising contract template.

There are other aspects of advising someone about financial matters which may need to be included in your financial advisor contract. These can easily be added to a financial advisor contract template either as part of the overall contract or as an addendum to the contract. Be certain if the addendum follows the signature page of the contract that each addendum is initialed by you and by your client.

Some of the things you may need to include in financial advisor agreements include:

• Disclosure of 12(b)1 fees when applicable
• Conflicts of interest
• Revenue-sharing arrangements when applicable
• Whether the advice provided to client means you are a fiduciary advisor

These additional disclosures may or may not apply to your specific situation but if they do, you could run afoul of state or federal regulations should you fail to provide the information in your contract.

• Regulation of Investment Advisers
• Everything You Need to Know About the DOL Fiduciary Rule
• Financial Advisors Rules & Regulations
• What Licenses Do Financial Advisors Need to Have?
• Disclosure of Certain Financial Conflicts Related to Investment Adviser Compensation
• What is a Fiduciary Financial Advisor?

Once you and your client have come to a mutual agreement on the terms of your contract, you will be ready for signatures. Fortunately, you will be able to secure the signatures you need using an E-Signature option which is secure, immediate, and will not require another face-t0-face meeting. Once you have completed the customization of your financial advising contract template, try Nitro Sign to finalize your agreement.