Client Contracts

What this video covers

• The seven mandatory elements of an investment adviser (IA) client contract and why each exists to protect the client from a specific harm
• Why exculpatory clauses attempting to waive rights under the Uniform Securities Act (USA) or Investment Advisers Act of 1940 (IAA) are completely void and unenforceable regardless of client consent
• The qualified client exception to the performance-based fee prohibition: $1.4 million in assets under management (AUM) or more than $2.7 million net worth excluding primary residence, with only one test required
• What counts as an assignment under the no-assignment-without-consent rule: direct or indirect transfer, majority ownership change exceeding 50%, or complete firm acquisition or merger
• The critical distinction between majority partnership changes requiring client consent and minority changes requiring only written notification
• How wrap fee programs bundle advisory, execution, clearing, and custody fees into a single asset-based rate, and why they harm infrequent traders
• The exam trap of confusing assignment with physically handing over a contract, when a corporate buyout automatically triggers the consent requirement