Instructor: Benjamin Doyle

Student: Wei Zeng (Vicky)

Course: ADW

Assignment: Unit 3 – Professional Document

Date: August 4th, 2013

Professional Document

Financial industry is a quite big marketplace. It includes banking, investment, real estate, stock exchange and bonds purchasing. In other words, finance is all about money and how to make money grows. An investor, either an individual or an institution, always seeks for a professional advisor to guide them or help them to manage his or her money to grow more money. However, many unpredicted incidents happen in the world, such as global warming, environmental disasters, medical diseases, economic crisis, political issues, governmental regulations, climate changes, terrorist attacks and bankruptcy etc. In any second, the money can just evaporate in the air. In order to clarify the responsibilities and bare the risks for both parties, here is where the Investment Management Agreement works.

Investment Management Agreement is a formal arrangement between a registered investment advisor (can be an individual or an entity) and an investor or a client (can be an individual or an entity) setting the terms and guidelines, which the advisor is authorized to execute on behalf of the investor to manage the assets or the funds listed in the agreement. The agreement establishes the level to which the advisor may act in a committed goal to make investment decisions based on the prescribed strategy. However, it can be updated as the time moves on.

Unlike the other financial documentations, Investment Management Agreement is a formal and straight-forwarded documentation with no graphs chats and colors in it, which needs highly attention when creating it, editing it and updating it. It is a legal paperwork between the advisors and the clients. It is mainly consist with FOUR parts:

· Introduction Page – it contains the clients’ account name, account ID, benchmark ID, inception date, main contacts’ contact information: titles, phone numbers and e-mails

· Agreement – it contains the clients’ general information, the specific date when the project stars, the amount of funds have invested into the project, prescribed strategies, expected approaches or outcomes, possible risks during the investments and the signatures form both parties.

· Guidelines – is states the rules, term definitions, penalties or responsibilities when something happens within the business cycle and some restrictions about the investments; such as what are the clients’ restrictions on certain investment areas (health entity won’t willing to invest in the cigarette industry, etc.).

· Amendments – it specifies any changes occur during the investment cycles – global warming, environmental disasters, medical diseases, economic crisis, political issues, governmental regulations, climate changes, terrorist attacks and bankruptcy etc. It also needs signatures from both parties after the approvals.

Investment Management Agreement is important in the Financial Industry because any single investment transaction is based on the Investment Management Agreement. It states the rights and permissions for an advisor to manage the clients’ money legally with prescribed strategies, hidden risks’ bearer and penalties. In the other words, without the IMA, nothing can be started in the financial industry.

Recall the Unit 2 issue:

- How Could the Chinese Government’ s actions Over Real Estate Improve Chinese Living Standards?

My project will focus on the Chinese government’s new regulations over the real estate in China, and how these restrictions could work more effectively toward the people’s living standard. The new regulations and restrictions were announced in 2012 and executed around the middle of 2013. They are the quantity control, the selling taxation, property taxation and the increases of the down payments and mortgages. It will make the investments in real estate markets in China more risky and restricted. After the governmental new regulations has been executed, the advisors need to communicate with their clients to revise the agreements and adjust the guidelines to meet the legal rights and keep everyone away from the troubles. In case to present the Investment Management Agreement clearly, I will reproduce the Investment Management Agreement under the new governmental regulations in China real estate markets step by step.

Reproducing:

Introduction Page:

The instruction page informs the basic knowledge about the client and its portfolio. It contains the client’s complete name, client’s account ID, benchmark ID, inception date and the main contact information. The client’s complete published name, which can be changed as the corporation moves on. However, the client’s account ID (usually 4-7 numbers) will state unchanged no matter what happens in the future. It’s created in the advisor’s client database for easier utilization. Moreover, the benchmark ID is a corporation has been selected for evaluating the project performances, and it is changeable based o different purposes. Lastly, the main contact information is needed for future communication purpose. The e-mails must be the corporate ones rather than personal ones. Also, the people might be changed over times due to the employment adjustments.

Agreement page:

When new governmental regulations execute in the China real estate market, the advisor will meet with the client to discuss the investment project due to the governmental changes. The advisor needs to bring out some new suggestions and strategies to better assist the clients. The risk portion needs to be updated since the new governmental regulations limit the real estate market’s profit making directly, so the stocks of the corporation in this are might experience some sorts of declines in the future. If certain problems come out, the client already acknowledges. If he or she still wants to invest the money in to the market, then they need to bare the increasing risks. After everything is clear, both parties need to confirm the agreement by print and sign the name. Then the investment project can be legally managed. However, all the changes will be stated on the amendment letters instead of on the original Investment Management Agreement Documentation. (Please see the amendment explanations below)

Guidelines Appendixes:

Guidelines are the term definitions, which states all the details about every single term that states on the agreement. Eve time any change occurs in the guidelines, the old ones will be replaced by the new ones with no records need to be kept on files. Also, the signature page needs to be file out for less confusions.

Amendment Letter:

Here are the changes on the agreement need to be presented. The original agreement date need to be included on the letter for future attached purpose.