What is the purpose of an investment management agreement in the investment process?

The purpose of an investment management agreement in the investment process is to create a contract between the parties involved. This document states the obligations of the parties involved, including the responsibilities of the investment manager and the expectations of the investor. The agreement should clearly detail the investments to be made, the terms of the agreement, and the time frame of the contract. This document also provides investors with protection in terms of potential losses and other risks in the investment. An investment management agreement allows the investor to participate in the investment process without directly managing every aspect of the investment. This agreement also allows for the investment manager to manage the portfolio on behalf of the investor and take on certain responsibilities, such as conducting research or providing advice. Additionally, the agreement allows the investor to set out specific performance targets, which the investment manager must meet. This provides assurance that the investment manager is doing their job according to the investor’s wishes and requirements. At a state level, in Tennessee, investment management agreements are subject to the Tennessee Uniform Securities Act, which regulates the sale and distribution of securities within the state. This act requires that all investment management agreements must be written in plain language and must include certain provisions, such as the definition of the investment, the responsibilities of the parties to each other, the rights of the parties to the agreement, and the terms of the agreement. This protects the investor from potential losses or unexpected changes in the investment process.

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What is the purpose of an investment management agreement in the investment process?

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