It sounds easy, right? Your new independent adviser works with the same bank you already use. So, no new account, no new bank, no hassle? Not quite.
Even if the custodian stays the same, the moment a client switches from direct private banking to an external asset manager (EAM), the legal and regulatory groundwork must be re-established. Skipping this step at the initial stage isn’t just risky—it’s non-compliant.
This guide is built for relationship managers and client advisers working at or with EAMs. It explains precisely what needs to be signed and documented when onboarding a client who already holds an account at the custodian bank.
1. No New Account – But Yes, a New Relationship
The fact that the client already banks with your custodian saves time, but doesn’t remove the need for formal onboarding. You still need to submit or refresh:
- Updated KYC and AML documentation
- Investment Management Agreement (IMA)
- Power of Attorney (LPOA) for portfolio management
- Formal instruction naming the EAM as the adviser
Advisers often underestimate this step. Without it, the relationship is informal and unregulated.
2. Formal Appointment of the EAM
The client must explicitly mandate the EAM as their portfolio manager. This authorisation is usually issued through a custodian-provided form or internal letter and confirms:
- The advisory or discretionary mandate
- Permission for the custodian to share data
- Trading and communication authority for the EAM
Most EAMs handle this admin, but it must be signed and submitted to make the adviser official.
3. Power of Attorney – Specific to This Setup
Even with an existing account, the client must issue a Limited Power of Attorney tailored to the new adviser. This allows:
- Execution of trades
- Full portfolio monitoring
- Document access for tax and reporting
Without this, the EAM remains a spectator, not a manager.
4. Compliance: No Shortcuts Here
Even if the custodian holds valid KYC data, the EAM must build its compliant file. The client must provide:
- Proof of identity and address
- CRS/FATCA declarations
- Source of wealth documentation
- PEP status confirmation
This step isn’t just bureaucracy—it’s legally required by FINMA, FCA, or MiFID II, and protects both the client and the adviser.
5. Investment Management Agreement (IMA)
The IMA is the heart of the advisory relationship. It sets the scope, responsibilities, and rules of engagement:
- Investment goals and risk preferences
- Reporting standards and contact frequency
- Fee model (fixed, tiered, performance-based)
- Legal liability and conflict disclosures
Portfolio management cannot begin without a signed IMA, no matter how well the client knows you.
Conclusion
Onboarding a client who already banks with your custodian may feel like a shortcut, but skipping the formal steps risks the client, the adviser, and the relationship.
Make it smooth, but make it official. By guiding the client through these final (and essential) signatures, you protect the relationship, ensure compliance, and unlock the full benefits of the EAM model.
