The advisory agreement, read by operations: eight details to record correctly
An advisory agreement is the signed contract that sets what an RIA does for a client and on what terms. For operations, eight details drive the daily work: the fee rate or schedule, the billing basis and valuation date, exclusions, billing frequency and timing, household grouping, discretionary authority, proxy voting, and termination terms. Record each one from the signed agreement into your systems on the day it is signed, and have someone check it, because every bill and record downstream reads from those entries.
The advisory agreement gets signed, scanned and filed. Then, months later, a bill goes out at the wrong rate, an account that should be excluded is billed, or nobody can say whether the firm has discretion on a new account. The agreement was right. The way it got into the firm's systems wasn't.
Why does operations care about the agreement?
Because billing, trading permissions and records all depend on terms that live in the agreement. If those terms are copied into your systems wrong, or not at all, every downstream process repeats the mistake.
Which eight details matter most?
| Detail | Why operations needs it | Where it should be recorded |
|---|---|---|
| Fee rate or schedule | Every bill depends on it | Client billing setup |
| Billing basis and valuation date | Which value the fee is charged on | Billing method, per client if non-standard |
| Exclusions | Assets that must not be billed | Per account or position |
| Frequency and timing | Quarterly, in advance or arrears | Billing setup |
| Household grouping | Which accounts are billed together | Household record |
| Discretionary authority | Whether you can trade without asking | Account record, discretionary list |
| Proxy voting | Whether you vote or the client does | Client record and procedures |
| Termination terms | Notice, final fee, refunds | Client record, used at offboarding |
How should the terms be recorded?
- Same day. Enter the terms the day the agreement is signed, not at quarter end.
- From the signed copy. Not from the proposal, not from memory.
- With an effective date. So you can show which terms applied when.
- Checked by a second person. Against the signed copy, item by item.
- Flag anything non-standard. A different rate, an unusual exclusion, a special termination term.
A worked example
Take a hypothetical two-person RIA with about 120 households. A new client signs an agreement with the standard fee schedule, one account excluded from billing because it's held away, household grouping with their spouse, discretionary authority on two of three accounts, and voting retained by the client.
| Term | Recorded as | Checked |
|---|---|---|
| Standard schedule | Billing setup, effective on the agreement date | Yes |
| Held-away account excluded | Exclusion on that account | Yes |
| Grouped with spouse | One household for billing | Yes |
| Discretion on two accounts | Two discretionary, one non-discretionary | Yes |
| Client votes proxies | Noted on client record | Yes |
At the first quarter end, the bill matches the agreement without anyone having to reopen the PDF.
When agreements change
A renewal at a lower rate, a new account added, a change in discretion: treat each amendment like a new agreement. Record the changed terms with the effective date, keep the old terms on file, and check the next bill against the new terms. Missed amendments are one of the most common sources of billing errors.
When is this overkill?
If every client is on one standard agreement with no exceptions, the check can be a quick tick against a short list. The process still matters for the first non-standard client, which is usually the one that causes trouble.
How Advorra fits
In Advorra, billing with exclusions, discretionary status and the strategy each account follows sit on the account records, alongside clients and households, so the terms you enter from the agreement feed billing and the discretionary register. See the product page, or read quarterly billing in arrears, the discretionary account list and client offboarding.
One thing to do this week: pick your three newest clients and check their billing setup against the signed agreement, term by term.
About recording agreed terms accurately, not legal or compliance advice. Your attorney and compliance consultant decide what your agreement says.
Questions advisors ask
Who should enter the agreement terms?
Usually the operations person, with the adviser or a second person checking against the signed copy. Two people looking once is cheaper than fixing a quarter of bills later.
What if a client's agreement differs from our standard?
Record the difference explicitly on the client record and flag it. Non-standard terms are where most billing errors start.
What happens when an agreement is amended?
Treat the amendment like a new agreement: record the changed terms with their effective date, keep the old terms on file, and check the next bill.
Should the IPS match the agreement?
They do different jobs, but they shouldn't contradict each other on things like discretion or the services provided.
Is this legal advice?
No. It is about recording agreed terms accurately. Your attorney and compliance consultant decide what your agreement says.
See it on a demo firm
Advorra is practice software for independent RIAs: clients, models, IPS, billing and compliance records in one place, on top of the custodian you already use. Built by The CollabHub.
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