Final answer:
A written agreement is essential for an advisory contract to take effect. The SEC, which was established to regulate the investment industry after the Federal Securities Act of 1933, oversees the adherence to legal standards within these contracts.
Step-by-step explanation:
No advisory contract, whether initial or renewal, may take effect without a written agreement. This requirement is established by regulatory authorities to ensure that both parties clearly understand their obligations and rights. When discussing the implementation of an advisory or investment contract, the reference is often to the rules and regulations established by the Securities and Exchange Commission (SEC), which was formed to oversee and regulate the investment industry. This regulatory body ensures that firms operating in the securities and investment sectors comply with the necessary disclosure and registration requirements, as established by legislation such as the Federal Securities Act of 1933.While FINRA (Financial Industry Regulatory Authority) does oversee certain aspects of brokerage firms and their activities, the approval of advisory contracts by FINRA is not typically a condition for their activation. Instead, firms must adhere to SEC regulations, and ensure they are properly registered with this commission if required by the type and scope of their services. As such, the key element for an advisory contract to take effect is a written and, usually, SEC-regulated agreement.