Assignment of an Advisory Contract
Transferring a client contract requires the client's consent - including by change of control.
What is Assignment of an Advisory Contract?
An adviser cannot transfer its client contracts to another firm without each client's consent. A change in control of the adviser - such as the sale of a majority interest - counts as an assignment. By contrast, changes in minority partners of a partnership are not an assignment, but clients must be told.
Assignment of an Advisory Contract: a worked example
An adviser selling its business must obtain client consent before the buyer takes over the contracts.
More terms in Ethics & Fiduciary Obligations
Form ADV Part 2 Brochure Delivery
Deliver 48 hours before the contract, or at signing with a 5-business-day exit.
Advisory Contract Requirements
Written, specific about fees, no assignment without consent, no waiver of rights.
Performance-Based Fees & Qualified Clients
Allowed only for qualified clients: $1.4M with the adviser or $2.7M net worth (from June 29, 2026).
Prepaid Fees & Financial Requirements
Prepayment over $500, six months ahead, triggers net worth and balance sheet rules.
Custody
Holding, or having authority to obtain, client funds or securities.
Discretionary Authority
Deciding the asset, the amount, or buy versus sell - without asking first.
Third-Party Trading Authorization
Anyone other than the owner needs written authority to trade the account.
Principal Transactions by Advisers
Selling to or buying from a client for the adviser's own account needs consent each time.