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Securities & Commodities Client Engagement Letter

Securities, Commodity Contracts, and Other Financial Investments and Related Activities · NAICS 523 · Client Engagement Letter

A client engagement letter is the foundational contract between a financial firm and its client. In the securities and commodities industry, it is not just a formality—it defines the scope of advisory or brokerage services, fee arrangements, fiduciary duties, and dispute resolution mechanisms. A well-drafted engagement letter helps prevent misunderstandings and regulatory issues. It also demonstrates compliance with SEC, FINRA, and CFTC requirements. This tool generates a tailored engagement letter that reflects your firm's specific services, fee structure, and risk disclosures, ensuring you start every client relationship with clarity and professionalism.

When you need this document

When onboarding a new retail or institutional client for investment advisory services
When establishing a brokerage account with execution and clearing services
When entering into a commodity trading advisory (CTA) or pool operator (CPO) relationship
When providing financial planning or consulting services on a fee basis
When transitioning a client from one service model to another (e.g., from commission-based to fee-based)
When a client requests a written summary of the terms of an existing oral agreement

What the generated draft includes

Parties and effective date
Detailed scope of services (advisory, brokerage, commodities, etc.)
Fee schedule and billing terms
Fiduciary and regulatory disclosures (SEC, FINRA, CFTC)
Risk disclosure specific to securities and commodity trading
Termination and dispute resolution clauses
Client responsibilities and acknowledgment of receipt of Form ADV or disclosure documents
Signature blocks for both parties

Frequently asked questions

Is a client engagement letter legally required for securities firms?

While not always legally mandated, SEC and FINRA rules require written agreements for certain services, such as advisory accounts. Even when not required, it is best practice to document the relationship to avoid disputes and demonstrate compliance.

Can I use the same engagement letter for both advisory and brokerage services?

It is possible, but you must clearly delineate the services and fee structures. Mixing fiduciary and non-fiduciary roles in one letter can create confusion. This tool lets you select the specific scope to ensure the letter is tailored.

What should I do if my client wants to change the scope of services later?

Any change should be documented in a written amendment to the engagement letter, signed by both parties. This tool can generate a new letter with updated terms, but you should also keep a record of the original agreement.

Self-help document generator: you get a structured draft based on the facts you provide. It is not legal, tax, or financial advice; verify jurisdiction-specific rules before sending.