Discretionary Accounts

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Mar 6, 2010 10:16 am

When it comes to discretionary accounts, do you need a full Power of Attorney from a client, or does a client's signing of the Investment Advisory Contract sufficient to meet the requirement?

Mar 6, 2010 11:27 am

Limited Power of Attorney if you are a RIA that doesn't custody trading for direct clients.  If you are a RR with a B/D, then it is covered in the Discretionary Adivosry Contract.  If you are a RIA acting as a subadvisor on a single contract SMA platform, then it is handled through the Advisory contract between the sponsor and you.  If you are a RIA acting as an Investment Advisor on a dual contract SMA platform, then it is handled through the Advisory contract between you and the client.  If you are a RR that hasn't be approved for discretionary accounts with the BD, then it is handled through a non-compliant pact between you and the client.
Any questions?
If you are a RIA and have a FULL Power of Attorney of a client's account, then that would deem you to have 'custody' under the new custody rules.
PM me if you need more.