Employment Contract
Secure your firm with an employment contract for independent financial advisors in Michigan. Compliance with FINRA, SEC, and Michigan Right to Work laws.
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In the highly regulated world of financial services, a standard employment template is insufficient. Independent financial advisors manage critical fiduciary duties and Assets Under Management (AUM)... Read more
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In the highly regulated world of financial services, a standard employment template is insufficient. Independent financial advisors manage critical fiduciary duties and Assets Under Management (AUM) that require precise contractual definitions to mitigate liability. This document ensures compliance with the Investment Advisers Act of 1940 and FINRA standards while addressing Michigan-specific mandates, including the Bullard-Plawecki Employee Right to Know Act and the state's Right to Work law. By clearly outlining compensation structures, non-solicitation parameters, and SEC/State registration requirements, you protect your firm from E&O claims and regulatory scrutiny.
Beyond the standard employment contract sections, this template adds fields specific to Independent Financial Advisor:
An employment contract establishes a formal employment relationship between an employer and an employee, outlining the terms and conditions of employment, rights, obligations, and responsibilities of both parties. It provides legal protection and clarity, ensuring compliance with employment laws and minimizing the risk of misunderstandings and disputes.
Fiduciary Liability for Breach of Duty
Inclusion of detailed fiduciary responsibility clauses in contracts, comprehensive disclosure documents for clients, and maintaining up-to-date compliance procedures.
Investment Losses
Clear risk disclosures, precise portfolio strategies aligned with disclosed risk tolerance, and inclusion of indemnification clauses where allowable.
Regulatory Compliance Violations
Rigorous compliance programs, regular audits, and adherence to reporting requirements as delineated by the SEC and FINRA rules.
Errors and Omissions (E&O)
Maintaining strong E&O insurance coverage and precise language around scope of services and limitations of liability in client agreements.
For this employment contract to be legally valid:
Common mistakes to avoid:
Investment Advisers Act of 1940
Governs the behavior of investment advisers in the United States by requiring registration with the SEC and adherence to fiduciary duties.
Enforced by Securities and Exchange Commission (SEC)
FINRA Rules
Financial Industry Regulatory Authority (FINRA) regulates broker-dealers and advisors who are also brokers, setting standards for investments and financial conduct.
Enforced by FINRA
State Securities Regulations (Blue Sky Laws)
State-level regulations that require financial advisers to register with state securities regulators if not registered with the SEC. These laws vary by state.
Enforced by State Securities Regulators
Recommended coverage: Errors and Omissions (E&O) Insurance · Fiduciary Liability Insurance · General Liability Insurance
Under Michigan law (MCL 423.209), the contract cannot require an advisor to join a union or pay union dues as a condition of employment. This agreement is structured to remain compliant with Michigan’s Right to Work status while focusing on the unique regulatory obligations of Registered Investment Advisers (RIAs).
Yes, but they must be strictly reasonable under MCL 445.774a. To be enforceable, the restriction must protect a legitimate business interest—such as client relationships or trade secrets—and be limited in duration, geography, and scope. Our document provides a framework to help you define these boundaries legally.
Per the Bullard-Plawecki Employee Right to Know Act (MCL 423.501), Michigan employers must allow employees to review their personnel records. This is particularly important for financial advisors regarding performance reviews and compliance disciplinary records that may impact their FINRA Form U4 or U5 filings.
The contract includes specific clauses defining the scope of fiduciary duty in accordance with the Investment Advisers Act of 1940. It mandates adherence to firm compliance programs, regular audits, and the maintenance of Series 65 or equivalent licensing to mitigate investment loss liabilities and regulatory violations.
State laws affect what must be in this document. Pick your jurisdiction.
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