As defined by the Investment Advisors Act of 1940, any person or group that makes investment recommendations or conducts securities analysis in return for a fee, whether through direct management of client assets or via written publications. An investment advisor who has sufficient assets to be registered with the SEC is known as a Registered Investment Advisor, or RIA. Investment advisors are prohibited from disseminating advice known to be deceitful or fraudulent, and from acting as a principal on their own accounts by buying and selling securities between themselves and a client without prior written consent. Most investment advisors charge either a flat fee for their services or a percentage of the assets being managed. In most cases, there are very limited conflicts of interest between investment advisors and their clients, because the advisor will only earn more if the clients' asset base grows as a result of the advisor's recommendations and securities selection.
Letter Agreement Between Investment Adviser and Individual Investor To: (Name of Investment Adviser) (Address of Investment Adviser) Under the terms of this letter, I hereby retain you, (Name of Investment Adviser) (the Adviser), as Investment Adviser to manage and supervise the investment of those assets of mine set forth in the Schedule A attached to this Agreement and incorporated by this reference, including any additional assets delivered to the Custodian for management and supervision, all proceeds of sale, reinvestments of assets, and all income from them and additions or accretions to them (the Portfolio), in consideration of the payment to the Adviser of a fee as provided for in Paragraph 6 below. This Agreement will be effective as of (effective date). 1. Custodian Agreement. Contemporaneously with this letter, I am entering into a Custodian Agreement with (Name of Custodian), of (street address, city, state, zip code), (the Custodian). I agree to forward and deliver to the Custodian the cash and securities set forth in the above-described Schedule, and any assets that I later add to the Portfolio, to be held by the Custodian and to be invested and reinvested by the Adviser under this Agreement. 2. Supervision and Management of Portfolio. I hereby authorize the Adviser to manage the Portfolio, and to invest and reinvest my assets in the Portfolio and take any action with respect to the Portfolio that the Adviser determines in the Adviser's discretion as freely as I might do on my behalf. In carrying out these responsibilities under the terms of this agreement, the Adviser agrees to place all orders for the purchase and sale of securities included in the Portfolio. 3. Discretion. I hereby agree that the Adviser has complete discretion in determining purchases and sales of securities in the Portfolio without consultation with or ratification by me. I also acknowledge and agree that any costs, indebtedness, losses, or other liabilities sustained by the Portfolio while under the Adviser's investment management under this agreement will be borne solely by me and by the Portfolio. 4. Choice of Broker-Dealer. I agree that the Adviser has the right to choose the broker or dealer through which each purchase or sale of securities for the Portfolio is made. The Adviser is authorized to select brokers and dealers who provide brokerage and research services which the Adviser believes to be of value, either to the Portfolio or generally to all the accounts for which the Adviser provides investment advice. The Adviser is authorized to cause the Portfolio to pay commissions on any transactions which the Adviser determines in good faith to be reasonable in relation to the value of the brokerage and research services, viewed in terms either of that particular transaction or the overall responsibilities of the Adviser with respect to the accounts for which the Adviser exercises investment discretion. 5. Portfolio Analysis. As part of these services, the Adviser agrees to provide me with a quarterly statement reflecting the status of the Portfolio and periodic reviews of the performance of the Portfolio. 6. Fees. I hereby agree to pay the Adviser quarterly fees based on Schedule II attached to this letter and incorporated by this reference. The fee for the first quarter during which the Adviser renders investment advisory services under this Agreement will be paid at the time of acceptance by the Adviser and will be based on the initial market value, including cash, of the Portfolio, subject to the minimum fee provisions set forth below. Subsequent quarterly fees will be based on the market value of the Portfolio on the last day of each quarter, including the initial quarter, and will be paid to the Adviser in advance on the first day of the following quarter. I agree that a minimum fee of $___________ per quarter will be paid to the Adviser. All fees will be deducted automatically from the income received on the Portfolio. If the income is insufficient to pay the fees, the fees will be charged against principal in the Portfolio. I acknowledge that I have granted the Custodian authority to pay the fees from the Custodial Accounts. The Adviser can submit the Adviser's statements directly to the Custodian. 7. Other Clients. I understand that the Adviser performs similar services for other clients and that the Adviser will be supervising and managing Portfolios of others, including institutions, and serving as investment Adviser for the Portfolio at the same time. At times purchases and sales of the same securities will be recommended for the Portfolio and for one or more of the other accounts, in which cases the purchase and sale transactions will be allocated among the accounts, including the Portfolio, in a manner that the Adviser believes to be equitable to each. 8. Securities Transactions by the Adviser. I understand that the Adviser can purchase and sell securities for the Adviser's own account. These securities can include the same securities that are purchased for the Portfolio, provided that no purchase or sale will be made which will, in the judgment of the Adviser, result in any detriment to the Portfolio. I consent to these purchases and sales by Adviser. 9. Compliance with Law. The Adviser agre
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