Third-Party Trading Authorization
Anyone other than the owner needs written authority to trade the account.
What is Third-Party Trading Authorization?
Before a person other than the account owner - including a spouse - can place trades, the firm needs a written trading authorization or power of attorney from the owner. An oral instruction from a spouse to trade the other spouse's individual account must be refused.
Third-Party Trading Authorization: a worked example
A husband calls to sell stock in his wife's individual account; without written authorization, the agent cannot act.
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.
Assignment of an Advisory Contract
Transferring a client contract requires the client's consent - including by change of control.
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.
Principal Transactions by Advisers
Selling to or buying from a client for the adviser's own account needs consent each time.