As a fee-based financial investment advisor, you provide independent advice on financial products and are paid a fee by the client. However, you are not permitted to receive 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 are not permitted to 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 restricted to certain financial products by the so-called area exemption of the German Banking Act.
The license covers (optionally) three product categories:
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Shares or stocks in domestic open-ended investment funds, open-ended EU investment funds, or foreign open-ended investment funds that may be distributed in accordance with the German Capital Investment Code.
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Shares or stocks 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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Investments within the meaning of Section 1 (2) of the Investment Act
The content 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, amendment, and supplementation of conditions is also permissible.
In order to be granted permission to act as a commercial fee-based financial investment advisor, you must
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be personally reliable,
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have your finances in order, and
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have professional liability insurance and
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provide evidence of having successfully passed a proficiency examination at a chamber of industry and commerce or equivalent professional qualification.
If the license is applied for by submitting the § 34f license certificate (for financial investment brokers), there is no check of reliability, financial circumstances, or expertise. The § 34f license expires when the § 34h license for fee-based financial investment advisors is granted.
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 entered in the broker register. Persons directly involved in the consultation must also be entered in the broker register.
You may only employ persons directly involved in the consultation if you ensure that these persons have a certificate of competence and have verified that they are reliable.
Violations of the "required" licensing requirement and violations of enforceable conditions constitute administrative offenses that are punishable by a fine.
Section 34f (1) of the Trade Regulation Act (GewO)
Permission must be granted before commencing business activities, so it is necessary to submit your application in good time (several weeks before you intend to start trading).
You must also notify the authority responsible for business registrations of the start of your business activity at the same time.
