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Understanding the Role and Definition of an Investment Manager
Definition & Meaning
An investment manager is a type of fiduciary responsible for managing an investment plan's assets. This role involves making decisions about acquiring, managing, or disposing of these assets. To qualify as an investment manager, the individual or entity must be registered as an investment adviser under the Investment Advisers Act of 1940 or meet specific criteria set by state laws. Additionally, they must acknowledge their fiduciary status in writing, ensuring they act in the best interest of the plan and its beneficiaries.
Table of content
Legal Use & context
The term "investment manager" is primarily used in the context of fiduciary duties and investment management within retirement plans and other investment vehicles. Legal professionals may encounter this term when dealing with employee benefit plans, pension funds, or investment trusts. Users can manage some aspects of these investments themselves by utilizing legal templates available through services like US Legal Forms, which provide guidance on creating and managing investment-related documents.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A financial firm manages a pension fund for a company. The firm acts as the investment manager, making decisions about which stocks and bonds to buy or sell to grow the fund's assets.
Example 2: A registered investment adviser manages individual retirement accounts (IRAs) for clients, ensuring that the investments align with the clients' goals and risk tolerance (hypothetical example).
Relevant laws & statutes
The primary statute governing investment managers is the Investment Advisers Act of 1940. This act outlines the registration requirements and fiduciary duties of investment advisers. Additionally, relevant state laws may apply depending on where the investment manager operates.
State-by-state differences
State
Registration Requirements
California
Requires registration with the state if managing more than $100,000 in assets.
New York
Similar requirements, with additional regulations for investment advisers.
Texas
Requires registration for firms managing over $100,000 and specific disclosures.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Investment Adviser
A professional who provides advice on securities investments.
All investment managers are investment advisers, but not all advisers manage assets directly.
Trustee
An individual or entity that holds and manages assets for the benefit of another.
Trustees have different legal responsibilities and are not classified as investment managers.
Common misunderstandings
What to do if this term applies to you
If you believe you need an investment manager, consider evaluating your investment goals and risk tolerance. You can explore US Legal Forms for templates that can help you create necessary documents or agreements. If your situation is complex, seeking professional legal or financial advice may be beneficial.
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