A Fixed Term Agreement (FTA) is a contractual relationship between an adviser and a client where the specified period is 12 months or less.
The below factors are considered in determining Fixed Term Agreement status:
- The agreement is limited to a fixed-term period of 12 months or less.
- Fees stop being charged at the end of the fixed-term period and do not exceed 12 months.
- The adviser or licensee has back-office or administrative systems and processes in place to turn off the fees by the end of the fixed-term period.
- There is an understanding between the client and the adviser or licensee that the client will be charged for a period of 12 months or less. This can be demonstrated by information given to the client. The Fixed Term Agreement (FTA) will outline the terms of the agreement, proposed fees applicable for the period and services to the client will be entitled to.
Fixed Term Agreements in AdviserLogic
We have upgraded the Compliance module, allowing users to better manage Ongoing Fee Arrangement, and Fixed Term Agreements by enabling the functionality for our users to choose between these, to generate and manage them from within the Compliance module in AdviserLogic.
Go to the Compliance tab from a client, and select Initiate Agreement to set up a new OFA (Ongoing Fee Arrangement) or FTA (Fixed Term Agreement).
There are two options visible within the Agreement Details window:
Select Ongoing Fee Arrangement to continue with this option, entering the requisite fields marked with a Red * Asterix. OFA is for fees on an ongoing basis. Renewed every year, reflecting the actual services provided and fees charged for the prior 12 months and future looking 12-month period. OFA can be renewed annually
Select Fixed Term Agreement to continue with this option, entering the requisite fields marked with a Red * Asterix. The FTA agreement is limited to a fixed-term period of 12 months or less.
The requisite fields MUST be entered to initiate the Fixed Term Agreement.
Agreement Start Date - The date at which the agreement will commence.
Agreement End Date - The date at which the agreement will automatically terminate.
The agreement period should always remain less than or equal to 1 year (accounting for a leap year where relevant).
Next, under the heading Services Providing for Proposed Term, enter the Service Level by selecting it from the drop down. Select Save to initiate the agreement.
A File Note will be generated as the key actions are triggered on the system for compliance record keeping.
FTA Service Fee Statement Display
The Fixed Term Agreement Service & Fee section will display
Proposed Agreement Status
Service Level - The service level and the underlying services for the proposed term.
Fee To be charged - Fees to be charged for the proposed term based on a Portfolio Based Fee or Fixed Fee nominated.
Once the agreement is initiated, 2 cards will be displayed.
- Agreement Start Date
- Agreement End Date
- Days until the agreement ends. Note, if the agreement is overdue the message will be red and indicate the number of days since it has become overdue.
This will indicate the state of the agreement as either
Proposed - The agreement has been created or sent to client for acceptance.
Active - The agreement has been accepted by the client and will be in force until the end date.
Terminated - The agreement has been terminated and is no longer valid.
To record the key dates and mark the status
Mark as Sent to client
Selecting this records that the agreement has been sent to the client. This will not change the status of the agreement and will remain in Proposed status.
The date this button is selected will be populated below the Agreement Status.
Mark as Client Accepted
This option will remain disabled until Mark as Sent to Client has been selected. The agreement status will be changed to Active on selecting Mark as Client Accepted.
The date this button is selected will be populated as the date on which the client has accepted the document.
Mark as terminated
The agreement will be terminated when selecting this button. A date will be populated as the date at which the agreement is terminated, and the status will change to Terminated.
The Terminated status will also be highlighted on the headline Service Fee Disclosure.
Once the agreement is terminated, no changes can be made to the expired agreement.
If not selected earlier, the agreement will be agreement will be terminated automatically once the Agreement End Date is reached.
Generate Agreement - Will generate and download the FTA (Fixed Term Advice and Service Agreement) document which will consist of the key dates, services, and fee details for the client.
For compliance record keeping, all the above actions will trigger a file note to be generated within the client File Note section.
Active Agreement Status
Once the agreement is in the Active state, the Service Fee Statement display will be separated into 2 sections.
Actual - This will show the actual fees levied on the client and the actual services applied for the period. Changes can be implemented in the Actual Service Fee section during the active period to demonstrate services provided and fees received.
Proposed - This will display the fees and services listed for the client while setting up the FTA. This cannot be edited.
Previous Agreement Versions
A dropdown has been added to the Service Fee Disclosure interface in the Compliance module to show all previous agreements (either Ongoing Fee Arrangement or Fixed term Agreement)
No changes can be made to previous agreements and the information is read only.
The Generate Agreement button will be disabled for previous agreements.
The agreements will be sorted based on the Agreement Due Date, i.e.: The agreement with the latest due date will be the first entry, followed by a list of all the agreements in descending order.
On the top right of the Fixed-term Agreement Compliance window, there are a series of buttons that allow users the flexibility of changing the previously entered values.
Clear Dates - Clear the dates and agreement details previously entered.
Note that only current agreements can be cleared.
Switch to OFA - Convert the current agreement into an Ongoing Fee Arrangement.
New Agreement - Initiate a new agreement while a Fixed Term Agreement is already in an active state or proposed state.
Service Fee Disclosure Widgets
Agreement Type Dropdown: Select from the 3 options available.
All Agreements - Choosing this option will highlight clients which are onboarded based on both OFA (Ongoing Fee Arrangement) and FTA (Fixed Term Agreements).
OFA Agreement - Choosing this option will highlight clients which are of OFA type only.
FTA Agreement - Choosing this option will display clients which are of FTA type only.
Agreement Type column Identifies the type of agreement in place (OFA or FTA).
Agreement End Date column is used to determine important actions and dates such as:
FTA - The agreement will be terminated on the Agreement End Date.
OFA - The agreement will need to be renewed with client consent within specific timeframes.