Record whether advisory-fee withdrawals are the only custody
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- From the advisory contract and the custodian arrangement, record whether the adviser is authorized or permitted to withdraw client funds or securities on its instruction to the custodian, and whether the file describes that authority as limited to payment of the advisory fee. Record whether the qualified custodian is described as a related person. Do not decide that an independent verification is excused, and do not treat a missing consent form as a breach.
- What the lawyer must review
- The lawyer decides whether the adviser has custody and whether the fee-deduction exception applies. Under 17 CFR 275.206(4)-2, custody includes any arrangement, including a general power of attorney, under which the adviser is authorized or permitted to withdraw client funds or securities maintained with a custodian upon the adviser's instruction. Paragraph (b)(3) says the adviser is not required to obtain the independent verification in paragraph (a)(4) if the adviser has custody solely as a consequence of authority to make withdrawals from client accounts to pay the advisory fee, and, if the qualified custodian is a related person, the adviser can rely on paragraph (b)(6). The opened text does not require a written client consent, and it does not set a 60-day or 12-month consent window. The same custody definition and fee-deduction exception appear on the eCFR page.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Do not begin AI assistance until the responsible lawyer has defined and confirmed its permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Open each relied-on authority independently. Confirm its existence, current status, proposition and any quotation or pinpoint reference.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.