As a registered consultant, you must create and keep certain books and records of your investment advisory business (according to the book and record rule – rule 204-2). The books and records you need to create and keep are very specific and are described in part below: As a general rule, this is a written document that you need to date and sign for it to take effect. The complexity of an investment advisory agreement and what it contains may vary from consulting firm to consulting firm. As provided in paragraphs 2 and 3 of subsection (a) of this section, the «investment advisory contract» refers to any contract or agreement in which a person is required to act as an investment advisor to another person other than an investment company listed in sub-chapter I of this chapter, or to manage it. Newsletter and other personal advisory services. The first authorized scenario for the cash payment of legal fees is a scenario in which a lawyer solicits clients only for the provision of impersonal advice services by the consultant. Impersonal advisory services are «investment advisory services provided exclusively by written documents or oral statements that do not purport to meet the specific client`s objectives or needs; (ii) statistical information that does not include expressions of opinion on the investment benefits of certain securities, or (iii) a combination of the above services.» An investment advisory agreement defines the conditions under which you order the services of a financial advisor. This agreement is supposed to be some kind of plan for you as a client because it clarifies both what the financial advisor will do for you, such as general advice or recommendation of specific investment movements for your portfolio, as well as your responsibility. Registered investment advisors may be required to disclose certain financial and disciplinary information (in accordance with Rule 206, paragraph 4) -4 under the Consultants Act). These requirements are described below. You should also try to get the best price and execution when you close transactions for customers on a «principle» or «cross-agency» basis. If you acted as an investor for your own account by purchasing securities from a client or selling securities to a client, you must disclose (in writing) the agreement and conflicts of interest in this practice and also obtain the client`s agreement for each transaction before the transaction is settled.
There are also explicit conditions under which you can cross-reference the transactions of your securities advisory clients with transactions of other securities on an agency basis (according to Rule 206 (3)-2). You have to, for example. B obtain written prior authorization from the customer to conduct such transactions and provide specific written information to customers. Compliance with Rule 206 (3)-2 is generally not necessary for transactions that are crossed or conducted internally between two or more clients, who advise you and for which you do not receive additional compensation (i.e. commissions or transaction-based compensation); However, full disclosure of this practice must be made to your customers. In addition, the employee must disclose to the potential client his or her status as a partner, public servant, director or collaborator of the advisor (or type of consultant affiliation) when a consultant wishes to offer employees an incentive for money to pass on new clients to the company. Technically, this disclosure of status or membership should not be written, but the old regulatory saying «if it`s not written, it never happened» is hard to ignore. However, the provision of such a simple business card, with the title of the in-house lawyer and the name of the law firm, should be sufficient in this regard.