Understanding the Advisor's Client Account: A Legal Overview
Definition & Meaning
An advisor's client account, often referred to as an omnibus account, is a type of brokerage account where an investment adviser combines the funds of multiple clients. Each client's share of the account is recorded, but the brokerage firm does not have access to the identities of the individual clients. The investment adviser is responsible for purchasing securities and managing margin calls, while clients make their payments directly to the adviser.
Legal Use & context
This term is commonly used in the fields of finance and investment law. An advisor's client account is relevant for investment advisers who manage client funds and must comply with various regulations regarding client privacy and fund management. Users can often manage related legal processes through templates provided by services like US Legal Forms, which offer ready-to-use legal documents for investment advisers.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A financial adviser manages an omnibus account for 50 clients, pooling their investments to purchase stocks. Each client has a recorded percentage of the total account based on their contributions.
Example 2: An investment firm uses an advisor's client account to manage funds for various clients, ensuring that individual identities remain confidential while still allowing for efficient fund management. (hypothetical example)