). However, not every example of using algorithms to generate recommendations will be treated as meeting the requirements of investment advisory services. The key thing in this case is to take into account the individual situation of the client in the recommendation. For instance, the sole usage of digital tools to support the decision-making process should not cause “robo-advisory” services to be regulated differently, if the natural person would be the one to make the decision. The provision of adjacent services that are general rather than individual in nature is, in principle, not regulated and does not require authorization.
Robo-advisors will therefore be computer programs that operate on the basis of algorithms which provide investment advice directly to investors and employees of investment firms. They will also take into account the needs and preferences of investors (i.e. their “appetite for risk”).
Brokerage activities may be conducted based on a permit granted by the Financial Supervision Authority. The legal basis for granting authorisations and rules of conducting brokerage activity is the Act on Trading in Financial Instruments Brokerage activities may be conducted by investments firms, which are for example brokerage houses. The amount of the fee for brokerage activity permits depends on the scope (types) of brokerage activity for which the permit is granted. The maximum amount of fees charged may not exceed EUR 4,500. The initial capital of a brokerage house for conducting brokerage activity is, as a rule, at least EUR 125,000. It is important to also take notice that a brokerage house must conduct certain additional procedures regarding the client, i.e. an investment survey/questionnaire concerning it’s “appetite for risk”. This assessment falls within the scope of obligatory KYC (Know Your Client) procedures, which are mandatory under MiFID II Directive.
Additional comments regarding the legal situation for financial advisory and broking services, or adjacent services or what FinTech’s must be aware of in this business area
National regulations do not distinguish between 'traditional' and technology-enabled advisory. These regulations are 'technology neutral'. The investment firm is responsible to the client for the performance of the service. This means that it cannot exempt itself from liability to the client by indicating that it used technical solutions provided by another entity in the process of providing the service. Liability of an investment firm for damages caused to clients as a result of non-performance or improper performance of an outsourcing agreement (i.e. an agreement under which the investment firm has entrusted the execution of operations related to the activities conducted by the investment firm to a foreign entrepreneur or trader), by the entrepreneur or foreign trader, cannot be excluded or limited.
Economic conditions
Market size for financial advisory and broking services as well as adjacent services and biggest companies in this business area
Assets under management in robo-advisory are projected to reach approximately US$5.05 billion in Poland in 2025. The key players in robo-advisory services in Poland are the Polish bank ING, Slovak brokerage house Finax, and Fondee and Portu from Czech Republic.