My finances, my projects, my life
February 23, 2024

The advisory contract: take your own, well-informed decisions

  Compiled by myLIFE team myINVEST September 15, 2021 872

Advisory agreements must contain as much detail as possible on the terms of cooperation

There are a variety of approaches possible in the investment sector. One popular option is an advisory agreement. Through this route, you have the support of expert advice, but the decisions on what happens in your portfolio remain your own. Experts will provide you with the information you need to manage your investments, based of course on the experience of our well-established teams.

A question of time

It’s a fact that, on average, people spend more time planning their holidays or even buying a fridge than they do choosing financial investments. When it comes to managing your assets, time plays a particularly crucial role. As financial markets are exceptionally volatile, regular oversight and a swift response are essential.

Of course, successful investing also requires a high degree of expertise and specialist knowledge.

Of course, successful investing also requires a high degree of expertise and specialist knowledge. And you can buy in these very skills if you want to set up an investment portfolio. In this context, popular options include taking out an advisory agreement or delegating the management of your portfolio (this is referred to as discretionary portfolio management).

Under an advisory agreement, you receive expert advice and individual recommendations, all based on your personal investor profile. An advisory agreement also offers the added benefit of the swift response of sector professionals providing precise and specific information on a regular basis. You will be responsible for managing the actual portfolio. This type of relationship is defined in a contract, which sets out the rights and obligations of both parties in a precise, transparent and detailed manner.

An advisory agreement includes the following specific information:

    • your investor profile;
    • full details of the cooperation, i.e. the advisory services to be provided;
    • the relevant time horizons;
    • the procedures for placing and executing investment orders;
    • the level and terms of remuneration for the services provided; and
    • the length of the contract.

Nothing is left to chance

The length of an advisory agreement is generally not defined; in principle, it can be terminated by either party in writing. Details included in the agreement should be as precise as possible, clearly stipulating the information and the personalised and proactive investment assessments expected (regarding markets, sectors, financial instruments, etc.). This also applies to the recommendations made by the investment adviser. The frequency of contact with your relationship manager or a financial adviser should also be agreed in advance.

It is very difficult to determine a standard profile for the type of investor suited to an advisory agreement, but a few issues should be considered. You must certainly be willing to regularly spend time informing yourself, as you are ultimately responsible for any investment decisions. You should also have sufficient experience and knowledge of the investment sector to understand the risks involved with the products being offered or requested. As speed of response is often a decisive factor on financial markets, you must of course always be on standby to take proper advantage of any recommendations you receive from your adviser. As outlined above, time plays a key role in the investment world.

Based on personal factors, your investor profile identifies how best to allocate your assets.

Defining your investor profile

Based on personal factors, your investor profile identifies how best to allocate your assets to achieve your investment objectives within the desired time-frame. Our experts mainly determine your investor profile on the basis of the following elements:

    • your investment objectives with regards to capital protection, returns and investment horizon;
    • your risk appetite;
    • your understanding of financial matters;
    • Your financial means and outgoings, (sources of income, financial obligations, financial assets, etc.).