ContractsCounsel Logo
Home Types of Contracts Investment Management Agreement

Jump to Section

ContractsCounsel has assisted 54 clients with investment management agreements and maintains a network of 56 financial lawyers available daily.

Investment management agreements give investment managers the authority to manage a client’s portfolio while setting expectations and legal guidelines with the client. If this is your first time drafting an investment management agreement, negotiating and drafting one can prove to be challenging. However, clear legal information can help clear up misconceptions while providing insight into the process.

The article below discusses everything you need to know about investment management agreements:

What is an Investment Management Agreement (IMA)?

Investment management agreements (IMAs) are legal documents that give investment managers the authority to manage capital on behalf of investors. They detail the terms and conditions under which a client will invest in a shared vehicle while agreeing to pay investment management service fees and direct expenses. An IMA contains other standard provisions, including monitoring fees, the scope of activities, and managerial indemnification.

You can view a sample of an IMA at this website .

What Do Investment Managers do?

An investment manager is a person or business that manages a client’s investment portfolio. They buy and sell securities on behalf of the client and monitors the portfolio’s overall performance. Investment managers develop an investment strategy to meet a client’s objectives and then use it allocating the client’s asset portfolio, which may include stocks and bonds.

Other activities that an investment manager performs include:

  • Conduct economic and market research
  • Interpret complex financial information
  • Maintain professional training credentials
  • Make financial recommendations
  • Meeting with analysts to discuss financial matters
  • Read financial briefings
  • Research investment companies and vehicles
Meet some lawyers on our platform

Darryl S.

79 projects on CC
CC verified
View Profile

Daniel R.

154 projects on CC
CC verified
View Profile

Ryenne S.

673 projects on CC
CC verified
View Profile

Sarah S.

35 projects on CC
CC verified
View Profile

Key Terms of an IMA

Investment management agreements are similar in appearance to standard contracts. You should always get the terms and conditions of the IMA in writing to avoid or resolve future disputes. However, what makes IMAs different from other contracts are the key terms they typically contain.

The key terms of an IMA are as follows:

Key Term 1. Parties

Ensure you correctly identify all investment management agreement parties. They should sign the agreement, including company founders and shareholders. However, it may not be practical to include all minority shareholders if there are many of them.

Key Term 2. Warranties

Warranties are contractual representations that the company’s statements are true and accurate as of the completion date. Although investors conduct due diligence before investing, they are still entitled to sue the company’s founders for willful or negligent misrepresentations. Investors prefer that companies expressly include warranties in the contract.

Key Term 3. Investor Consent

Investors will seek a contractual provision prohibiting managers from making significant decisions without their consent. Consent is highly dependent on the number of investors in the business. If there is only one investor, then they are the sole decision-making body.

Key Term 4. Shared Vehicles

Investment managers frequently invest their clients’ funds entirely in mutual funds, hedge funds, bank funds, and other shared vehicles. They generally manage these vehicles directly or through unaffiliated managers. Additionally, an investment manager may contract with independent managers to invest all or a portion of assets in a separate account, which means the agreement should include these authorizations.

Key Term 5. Custody

The investment management agreement should also specify the custodian who will hold the account’s assets. Custodians are typically reputable financial institutions, such as large banks or brokerage firms, and separate entities from the investment manager.

If the investment manager recommends a specific custodian, they must explain their reasoning. Additionally, the management company should be willing to work with the client’s preferred custodian and name them in the IMA.

Key Term 6. Reporting

An investment management agreement should specify the type and frequency of written or verbal reports. Reports are typically issued each quarter and include general market conditions, account activity, current holdings, and performance. This provision should cover the terms and conditions surrounding your reporting methods, intervals, and limitations.

Key Term 7. Investment Principles

Your investment management agreement should also specify the investment principles used for managing the account. The parties will want to discuss them collectively and transparently. An investment manager should base the initial policies on the client’s current circumstances and risk tolerances and revisit them regularly.

The investment principles are the primary means by which the client can exert control over the investment manager’s activities, so you should ensure that the terms are transparent and comprehensive without infringing upon their ability to perform optimally.

Key Term 8. Expenses and Fees

The investment manager’s fees are typically specified in an appendix. Typically, payments are expressed as a percentage of account assets and are payable quarterly in advance or on invoice receipt. Along with the investment manager’s fees, clients are responsible for brokerage commissions, custodial fees, and any other service providers, except for wrap accounts.

As you can see, there are several unfamiliar and complicated terms surrounding investment management agreements that can result in unintended legal implications if you do not fully understand them. However, investment lawyers can help with negotiating and drafting an appropriate agreement while achieving the intended legal and financial result.

Here is an article that also outlines the key terms of an IMA.

ContractsCounsel Investment Management Agreement Image

Image via Pexels by Pixabay

What Is a Discretionary Investment Management Agreement?

Discretionary investment management agreements are a legal document that establishes the terms between a client and an investment manager. The investment manager handles buying and selling decisions on behalf of their client. These terms contrast standard investment management agreements where the client has sole decision-making authority.

An investment manager has broad powers under a discretionary investment management agreement. As such, clients must carefully select a provider and have complete faith in an investment manager’s capabilities and resources. The client can monitor progress through quarterly reports.

Examples of Investment Management Agreements

The most important factor to remember about investment management agreements is that they specify how the client and manager will work together. They also clearly place limitations on the types of decisions that a manager can make without their permission. However, these concepts are more abstract in thought than when we examine a hypothetical example.

Here is an example of how investment management agreements work:

  • John Spires offer investment management services on private equity funds to consumers
  • Prospective clients meet with John for an initial consultation
  • If the parties are a good fit, John can agree to take them on as clients
  • John will offer new clients an investment management agreement
  • The investment management agreement establishes vital terms of the relationship
  • John must not make any significant financial decisions without the client’s consent
  • The investment management agreement protects John if clients are not forthcoming about their finances

As you can see, investment management agreements are relatively straightforward. However, the contract’s provisions may be more complicated, depending upon the firm, client, instruments used, reporting measures, and more. Get legal help with investment management agreements for the best result.

This web page also offers an example of investment management agreements.

Get Help with an Investment Management Agreement

The most practical approach toward drafting and negotiating an investment management agreement is seeking advice from a licensed professional. If you need help with investment management agreements, investment lawyers have the training, experience, and knowledge to help you forge ahead. They can also ensure that your document is valid for your geographic location and accomplishes your intent when working with clients. Post a project in ContractsCounsel’s marketplace to get free quotes from lawyers for help.


ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


Need help with an Investment Management Agreement?

Create a free project posting
Clients Rate Lawyers 4.9 Stars
based on 11,588 reviews

Meet some of our Investment Management Agreement Lawyers

Wendy C. on ContractsCounsel
View Wendy
4.9 (33)
Member Since:
January 17, 2023
Michael S. on ContractsCounsel
View Michael
5.0 (6)
Member Since:
April 16, 2023

Michael S.

Managing Partner
Free Consultation
Los Angeles, California
29 Yrs Experience
Licensed in CA, NY
Harvard Law School

I began my career at "big law" firms, worked in-house for 14 years, and now have my own practice, providing big law quality at small firm rates. My practice focuses on strategic and commercial transactions, including M&A, preferred stock and common stock offerings, asset purchases and sales, joint ventures and strategic partnerships, stock option plans, master services agreements and SOWs, software development and license agreements, SaaS agreements, NDAs, employment and consulting agreements. I also manage corporate governance, advise boards and executives, and act as outside general counsel. I represent clients across the country and around the world.

Mark P. on ContractsCounsel
View Mark
4.6 (9)
Member Since:
July 21, 2023

Mark P.

Owner
Free Consultation
Kansas City, MO
9 Yrs Experience
Licensed in KS, MO, NE, TX
University of Missouri - Kansas City

www.parachinilaw.com I represent a diverse mix in a vast array of specialties, including litigation, contracts, compliance, business and financial strategies, and emerging industries. Credit for this foundation of strength goes to those who taught me. Skilled professors and professionals fostered my powerful educational and professional background. Prior to law school, I earned dual Bachelor’s degrees in Business Administration & Accounting from Peru State College. I received a Master of Business Administration degree from Chadron State College. My ambitions did not stop there. While working full time as a Senior Accountant for the University of Missouri, Columbia, I achieved the lifelong goal of becoming a licensed Certified Public Accountant (CPA). Mizzo provided excellent opportunities and amazing experiences. Managing over $50M in government and private research funding was a gift. As a high ranking professional in the Department of Research, I was given priceless insight into the greatest scientific, journalistic, medical, and legal minds in the world. My passion for successful growth did not, and has not stopped. I graduated summa cum laude (top 3%) with a Doctorate in Law, emphasizing in urban, land use and environmental/toxic tort law from the University of Missouri, Kansas City. This success lead to invaluable experiences of serving as Hon. Brian C. Wimes' judicial clerk for the U.S. District Court for the W. D. of Missouri, as a staff editor/writer for UMKC Law Review, and as a litigation and transactional attorney with Lathrop GPM (fka Lathrop & Gage). My professional and personal network is expansive, with established relationships throughout the U.S. and overseas. Although I engage in legal practice all over the country, I maintain law licenses in Missouri, Kansas, and Nebraska. Federally, I hold licenses in the W.D. and E.D. of Missouri and the District of Nebraska. To offer extra value, efficiency, and options, I maintain a CPA license and am obtaining a real-estate brokerage license.

Jarrett S. on ContractsCounsel
View Jarrett
5.0 (2)
Member Since:
October 14, 2020
Melissa L. on ContractsCounsel
View Melissa
4.9 (4)
Member Since:
October 26, 2020

Melissa L.

Attorney
Free Consultation
Des Moines, IA
16 Yrs Experience
Licensed in IA
City University School of Law

Seasoned negotiator, mediator, and attorney providing premier legal advice, services, and representation with backgrounds in the following but not limited to law areas: business/commercial (restaurant & manufacturing), contracts, education, employment, family and matrimonial, healthcare, real estate, and probate & wills/trusts

Benjamin M. on ContractsCounsel
View Benjamin
Member Since:
October 26, 2020

Benjamin M.

Attorney
Free Consultation
Atlanta, GA
12 Yrs Experience
Licensed in GA
Georgia State University

Experienced Attorney focused on transactional law, payments processing, banking and finance law, and working with fintech companies with a demonstrated history of driving successful negotiations in technology sourcing and transactions and strong understanding of government contracts and the procurement process

Ross F. on ContractsCounsel
View Ross
Member Since:
October 27, 2020

Ross F.

Managing Partner
Free Consultation
Bedford, New Hampshire
13 Yrs Experience
Licensed in MA, NH
University of Arizona

I am an experienced technology contracts counsel that has worked with companies that are one-person startups, publicly-traded international corporations, and every size in between. I believe legal counsel should act as a seatbelt and an airbag, not a brake pedal!

Find the best lawyer for your project

Browse Lawyers Now

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

View Trustpilot Review

Need help with an Investment Management Agreement?

Create a free project posting
Clients Rate Lawyers 4.9 Stars
based on 11,588 reviews
Financial lawyers by top cities
See All Financial Lawyers
Investment Management Agreement lawyers by city
See All Investment Management Agreement Lawyers

ContractsCounsel User

Recent Project:
Investment Contract
Location: Massachusetts
Turnaround: Less than a week
Service: Contract Review
Doc Type: Investment Management Agreement
Page Count: 22
Number of Bids: 3
Bid Range: $480 - $899

ContractsCounsel User

Recent Project:
Orlando Blu Wave Loan Agreement - Natividad and Co
Location: Florida
Turnaround: Less than a week
Service: Contract Review
Doc Type: Investment Management Agreement
Page Count: 3
Number of Bids: 6
Bid Range: $0.01 - $435
User Feedback:
He did an amazing job with communication and I was very content with his service.

Need help with an Investment Management Agreement?

Create a free project posting
Clients Rate Lawyers 4.9 Stars
based on 11,588 reviews

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city