The agreement or an annex to the agreement should contain the investment guidelines under which the account is managed. These guidelines should define not only the investment objective of the account (e.g. B capital increase), but also any investment allocation (e.g. B a target of 60% equity and 40% debt) and restrictions on investment (e.g.B. no more than 20% in foreign securities, only investment debt, no derivatives). You should discuss with the advisor the initial instructions to be given based on your current circumstances and risk tolerances, and regularly check these policies. Investment policies are the main way to control the consultant`s activities, so make sure they are clear and that you are familiar with them. The agreements between an investment advisor and his client are recalled in an investment management contract. While the advisor has generally recognized his or her own form of agreement, the client must make certain decisions, perhaps wish to negotiate certain points and should in any case understand the basic terms of the agreement. If you are a client, some of the basic conditions to follow are: the agreement should indicate whether the advisor or you are responsible for voting by proxy regarding the securities on the account.
Some councillors do not like to elect substitutes because of the administrative burden. However, proxies can be important (for example. B a vote on an upcoming acquisition) and the consultant is often better able to assess problems and ensure that your voice is recorded on time. For similar reasons, you may also require the advisor to file a class action on your behalf. The costs to be paid to the consultant should be defined in the agreement or an annex. Typically, fees are expressed as a percentage of account assets (e.g. B 1% per annum) and are payable quarterly in advance or late. Although consultants have standard pricing plans, fees can be negotiated. For example, the advisor should be willing to charge lower fees for a larger account and for certain parts of the account that are easier to manage (for example.B.
bonds and cash). In addition to the consultant`s fees, you are responsible for brokerage commissions and fees and expenses of the custodian bank and other providers (unless it is a “Wrap” account). The agreement should designate the depositary who will keep the assets in the account. The custodian bank should be a serious financial organization, for example.B. a large bank or brokerage firm, and should be independent of the consultant (again to avoid Madoff`s situation). When recommending a specific deposit bank, the advisor should explain the basis for their recommendation (e.g. B cost reduction, improvement of services or familiarization of the consultant with the depositary`s staff and systems). The advisor should also be willing to cooperate with the custodian bank you would currently use or prefer elsewhere. . . .