Why are client lists particularly valuable for investment advisors?

Client lists represent years of relationship building and often constitute an advisor's most valuable business asset. Courts have recognized qualified client lists as protectable trade secrets when maintained confidentially and providing competitive advantage.

How should investment strategy confidentiality be addressed?

Investment strategies, model portfolios, and allocation methodologies should be explicitly defined as confidential information. Include restrictions on replication and derivative work creation, with residuals clauses carefully limited to avoid strategy migration.

What SEC examination provisions must be included?

NDAs must include explicit carve-outs permitting disclosure to SEC examiners, FINRA (for broker-dealers), state securities regulators, and any information required to be filed on Form ADV or disclosed to clients under fiduciary obligations.

How do non-solicitation provisions work in advisor NDAs?

Non-solicitation provisions restrict departing employees from soliciting clients for a defined period. Enforceability varies by state, with some states like California limiting enforcement. These provisions often appear in employment agreements rather than standalone NDAs.

Investment Advisor NDA | RIA & Wealth Management

🔒 What This NDA Protects

👥 Client Lists & Relationships

Names, contact information, account sizes, risk profiles, and the nuanced relationship data that represents years of practice building.

📈 Investment Strategies

Proprietary allocation models, rebalancing methodologies, security selection criteria, and portfolio construction approaches.

📊 Performance Data

Historical returns, benchmark comparisons, risk metrics, and performance attribution analysis that demonstrates competitive advantage.

💰 Fee Structures

Pricing models, fee schedules, breakpoint structures, and negotiated arrangements that reflect market positioning.

⚖️ Key Provisions for Advisor NDAs

SEC Examination Carve-out

Explicit permission for disclosure to SEC examiners, state securities regulators, and FINRA (for dual-registered advisors). Cannot restrict regulatory cooperation.
Form ADV Carve-out

Allow disclosure of information required on Form ADV including disciplinary history, material conflicts, and business practices required to be publicly disclosed.
Fiduciary Disclosure Carve-out

Permit disclosures required by fiduciary duty to clients, including conflicts of interest, compensation arrangements, and material facts affecting advice.
Client List Definition

Specifically define client lists, prospect lists, and relationship information as confidential. Address what constitutes protectable trade secret status.
Strategy Replication Restriction

Prohibit replication of proprietary investment strategies and model portfolios. Address derivative work restrictions for enhanced versions.
Residuals Limitation

Strictly limit any residuals clause to exclude investment strategies, client information, and performance data from "general knowledge" carve-outs.

When to Use This NDA

Common situations requiring advisor-specific protection

👥

New Employee Onboarding

Protect client data and strategies when hiring advisors who will have access to firm IP

🤝

Strategic Partnerships

Share capabilities with potential partners, custodians, or platform providers

🏢

Firm Acquisition

Due diligence discussions involving client books and practice valuations

💼

Vendor Evaluation

Technology vendors, research providers, and service firms accessing practice data

📋

Succession Planning

Discussions with potential successors about practice transition

🔬

TAMP Relationships

Sharing model portfolios with turnkey asset management platforms

⚠️ Non-Solicitation Provisions: State Law Matters

Many advisor NDAs include non-solicitation provisions restricting the recipient from soliciting clients for a period after the relationship ends. However, enforceability varies significantly by state:

California: Generally unenforceable under Business & Professions Code Section 16600
New York: Enforceable if reasonable in scope, duration, and geography
Texas: Must be ancillary to an otherwise enforceable agreement
Florida: Presumptively valid if reasonable; two-year maximum common

Consult with an employment attorney in your jurisdiction before relying on non-solicitation provisions. Consider whether these belong in the NDA or a separate employment/consulting agreement.

⚠️ Consult a Securities Attorney

Investment advisors operate under the Investment Advisers Act and state securities laws with specific confidentiality and disclosure requirements. This template addresses common issues but should be reviewed by counsel familiar with SEC and state RIA regulations. Broker-dealer associated persons face additional FINRA considerations not fully addressed here.