As a fee-based financial investment advisor, you provide independent advice on financial products, working on a fee basis for the client. However, you may not receive any commissions or benefits from the provider of the financial products. In this case, you must apply for a license as a financial investment broker. However, you may not act as both a financial investment broker and a fee-based financial investment advisor at the same time.
As a fee-based financial investment advisor, you are limited to certain financial products under the so-called “sectoral exemption” of the German Banking Act (Kreditwesengesetz).
The license covers (optionally) three product categories:
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Units or shares in domestic open-end investment funds, open-end EU investment funds, or foreign open-end investment funds that may be distributed in accordance with the German Capital Investment Code.
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Units or shares in domestic closed-end investment funds, closed-end EU investment funds, or foreign closed-end investment funds that may be distributed in accordance with the German Capital Investment Code.
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Investment products as defined in Section 1(2) of the Investment Products Act
The scope of your license may be restricted or subject to conditions if the authority deems this necessary to protect the general public or investors. Under the same conditions, the subsequent addition, modification, or supplementation of conditions is also permitted.
In order for you to be granted a license as a commercial fee-based financial investment advisor, you must
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be of good character,
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have sound financial circumstances and
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have professional liability insurance, and
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provide proof of having successfully passed a proficiency examination administered by a Chamber of Industry and Commerce or of holding an equivalent professional qualification.
If the license is applied for by submitting the § 34f license certificate (for financial investment brokers), no review of personal reliability, financial standing, or professional competence will be conducted. The § 34f license expires upon the issuance of the § 34h license for fee-based financial investment advisors.
You must apply to the competent authority for permission to work as a fee-based financial investment advisor. Individuals (natural persons) apply for permission themselves or through authorized third parties. In the case of legal entities, the application is submitted by their legal representatives or by third parties authorized in writing.
Once you have submitted your application and all the necessary documents are complete, the competent authority will check whether you meet all the requirements.
If you meet all the requirements, you will be granted permission to work as a commercial fee-based financial investment advisor in the form of a permit notice.
You may only start working once you have received the license. At the same time as you start working, you must register your business with the authority responsible for business registrations in accordance with Section 14 of the Trade Regulation Act (GewO). In addition, once you have started working as a fee-based financial investment advisor, you must immediately apply for entry in the register in accordance with Section 11a (1) of the Trade Regulation Act.
In addition to obtaining a license, you must also be registered in the broker registry. Individuals directly involved in the consultation must also be registered in the broker registry.
You may only employ individuals who are directly involved in the consultation if you ensure that these individuals hold a certificate of competence and have verified that they are trustworthy.
Violations of the “required” licensing obligation and violations of enforceable conditions constitute administrative offenses that are punishable by a fine.
Section 34f (1) of the Trade Regulation Act (GewO)
The permit must be granted before operations begin; therefore, it is necessary to submit the application in a timely manner (a few weeks before the intended start of operations).
You must also notify the agency responsible for business registrations of the start of your business activities at the same time.
Please contact the relevant trade office.
Alternatively, you can contact the Single Point of Contact in Rhineland-Palatinate. The Single Point of Contact is a public agency through which you can handle all administrative procedures and formalities required for the establishment and performance of your service activities, as well as for the recognition of a foreign professional qualification. Further information is available on the Single Point of Contact’s website.
