IFA, or Independent Financial Advisor, client agreements are essential documents that establish the terms of the relationship between the financial advisor and their client. These agreements outline the scope of services that the financial advisor will provide, as well as the fees that the client will be expected to pay. They also serve as a legal protection for both parties, ensuring that each party understands their respective responsibilities and obligations.

In this article, we will take a closer look at an example of an IFA client agreement and discuss some of its important clauses.

Title and Parties Involved

The agreement should begin by stating its title and the parties involved. For example, it could be titled “Independent Financial Advisor Client Agreement” and should include the names of both the financial advisor and the client.

Scope of Services

The scope of services should be clearly defined, including the financial planner`s responsibilities and what services they will provide. This section should also state any limitations or exclusions for services not included in the agreement. An example of this can be “The financial advisor will provide investment advice and guidance related to the client`s individual goals and needs. However, this agreement does not cover legal or tax advice, and the financial advisor is not responsible for administering the client`s investments.”

Compensation

The compensation section should clearly outline the fees that the client will be expected to pay for the advisor`s services. This can include a percentage of assets under management, hourly rates, or flat fees. The section should also state any other charges the client may be required to pay, such as transaction fees or commissions. An example of this can be “The financial advisor`s fee for services under this agreement will be 1% of the assets under management. The client agrees to pay this fee quarterly in arrears.”

Confidentiality

An IFA client agreement should also include a confidentiality clause. This section will outline the advisor`s duty to keep the client`s personal and financial information private, as well as the conditions under which they may disclose it. An example of this can be “The financial advisor is required to keep all client information confidential and may not disclose it to any third party without the client`s written consent, except as required by law.”

Term and Termination

The term and termination section specifies how long the agreement will last and the conditions under which it can be terminated. For example, it can state that the agreement will continue until a specified date or until the client terminates it. It should also state the process for terminating the agreement, such as providing a certain amount of notice. An example of this can be “This agreement will remain in effect for an initial term of one year and will automatically renew unless terminated by either party with 30 days` written notice. Either party may terminate the agreement at any time with written notice to the other party.”

Conclusion

An IFA client agreement is a crucial document that establishes the terms of the relationship between the financial advisor and their client. It is essential to have a well-written and comprehensive agreement to ensure both parties are legally protected and understand their obligations and responsibilities clearly. The above example clauses can serve as a starting point for creating an effective and comprehensive IFA client agreement.