Asset Management Company Agreement: What You Need to Know
When you decide to invest in assets such as stocks, bonds, and real estate, you`ll need to work with an asset management company to manage your portfolio. It`s essential to have a solid agreement in place to protect your investment and outline the responsibilities of both parties.
Here are some key points to keep in mind when drafting an asset management company agreement:
1. Scope of Services
The agreement should specify the scope of services that the asset management company will provide. This typically includes investment advisory services, portfolio management, and reporting. Be sure to discuss and agree on the specific types of assets that will be included in your portfolio.
2. Fees and Expenses
The agreement should outline the fees and expenses associated with the asset management services. This may include management fees, performance-based fees, and expenses such as custodian fees and administrative expenses. Make sure you understand all the costs involved and how they will be calculated.
3. Reporting and Communication
Communication is key when it comes to managing your portfolio. The agreement should outline how often the asset management company will provide reports and updates on your portfolio`s performance. You should also agree on the methods of communication, such as email, phone, or in-person meetings.
4. Investment Objectives and Guidelines
Before investing your money, the asset management company should understand your investment objectives and risk tolerance. The agreement should outline the investment objectives and guidelines and how they will be achieved. It should also specify any restrictions or limitations on investment decisions.
5. Termination and Liability
The agreement should specify the circumstances under which either party can terminate the agreement. It should also outline the liability of the parties. For example, the asset management company should be liable for any losses caused by their negligence or failure to follow the agreed-upon investment guidelines.
In conclusion, an asset management company agreement is an essential document to protect your investment and ensure clear communication between you and the asset management company. Make sure to carefully review the agreement and ask questions before signing it. By doing so, you can be confident that your investment is in good hands.