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An Advisory Agreement sets out the formal relationship between an advisor and their client in South Africa, typically covering investment guidance, business consulting, or financial planning services. It spells out what advice will be provided, how the advisor will be paid, and what each party must do to keep the relationship running smoothly.

These agreements must follow the Financial Advisory and Intermediary Services (FAIS) Act, which requires advisors to be properly licensed and act in their clients' best interests. The agreement should cover key items like confidentiality, liability limits, and the scope of services - making it an essential tool for protecting both parties and ensuring clear expectations.

Consider implementing an Advisory Agreement when starting any professional consulting relationship, especially for financial advice, business strategy, or investment guidance in South Africa. This agreement becomes essential before sharing sensitive company information or when seeking specialized expertise for major business decisions.

The FAIS Act requires these agreements for regulated financial services, making them mandatory for investment advisors and financial planners. They're particularly valuable when bringing in external experts for mergers and acquisitions, restructuring, or strategic planning - situations where clear boundaries, confidentiality, and liability protection become crucial for both parties.

• Financial Advisory Agreements: Required by FAIS Act for licensed financial advisors offering investment guidance, wealth management, or financial planning
• Business Consulting Agreements: Used for strategic business advice, focusing on management, operations, or market expansion
• Technical Advisory Agreements: Common in engineering, IT, or specialized industries where expert guidance is needed
• Project-Specific Advisory: Tailored for short-term expert consultation on specific initiatives or transformations
• Ongoing Advisory Retainers: Structured for long-term advisory relationships with regular consultation and support services

• Financial Advisors: Licensed professionals who provide investment guidance and must comply with FAIS Act requirements when creating Advisory Agreements
• Business Consultants: Independent experts offering strategic advice to companies on operations, growth, or restructuring
• Corporate Clients: Companies seeking professional guidance, from startups to established corporations
• Legal Teams: In-house or external lawyers who review and customize agreements to protect both parties
• Compliance Officers: Professionals ensuring the agreements meet regulatory requirements and industry standards

• Scope Definition: Clearly outline the advisory services, deliverables, and timeline expectations
• Party Details: Gather full legal names, registration numbers, and contact information for all involved parties
• Compliance Check: Verify FAIS Act requirements and necessary licenses for financial advisory services
• Fee Structure: Document payment terms, rates, and billing cycles
• Confidentiality Terms: Define what information must be protected and how
• Performance Metrics: Establish clear success indicators and reporting requirements
• Exit Clauses: Include termination conditions and notice periods for both parties

• Parties and Credentials: Full legal names, FSP numbers for financial advisors, and contact details
• Service Description: Detailed scope of advisory services aligned with FAIS Act requirements
• Fee Structure: Clear payment terms, rates, and billing arrangements
• Confidentiality Clause: Protection of sensitive information and trade secrets
• Duration and Termination: Agreement period and conditions for ending the relationship
• Liability Limitations: Clear boundaries of advisor responsibility and indemnification terms
• Dispute Resolution: South African jurisdiction and conflict resolution procedures

An Advisory Agreement differs significantly from an Agency Agreement, though both involve professional services. The key distinctions lie in the scope of authority and nature of the relationship between parties.

• Authority Level: Agency Agreements grant the agent power to act on behalf of the principal and bind them legally. Advisory Agreements only provide recommendations, leaving decision-making power with the client
• Regulatory Requirements: Advisory Agreements must comply with FAIS Act requirements when involving financial services, while Agency Agreements focus on representation rights and duties
• Liability Scope: Advisors typically face limited liability for client decisions based on their advice, while agents can be directly liable for actions taken on behalf of principals
• Duration Structure: Advisory relationships often work on renewable terms or project basis, whereas agency relationships typically establish ongoing representation powers