Financial advisory and broking services including robo advisory and auto-trading
FinTechs belonging to this category offer advisory and broking services for investments usually via an internet platform.
Robo advisory services usually offer an investment proposition following a series of questions concerning the personal financial background and the risk-bearing capacity of the user. Sometimes the respective platform also enables the user to directly execute the proposed investment.
Auto-trading concerns all services which automatically trade on behalf of the customer according to his or her specifications.
Apart from that some FinTechs collect and offer merely or as an ancillary service market information or operate comparison portals to increase the transparency of the capital markets and to help the investor with his decision-making.
There are also FinTech-advertising-services which advertise various financial services or products.
Attitude of the country towards modern financial advisory and broking services
It could be said that financial advisory through FinTechs is being accepted as a real financing alternative, mainly because FinTechs companies offer more agile and less costly financial services through communication and information technologies. Proof for that is their annual growth of up to 15 per cent. Automated investment platforms, including robo advisory, have grown over the last two years.
Obligations and requirements to provide financial advisory and broking services, or ancillary services described above
In Spain, financial advisory companies (“Empresas de Asesoramiento Financiero”, “EAFi”) are regulated in the Spanish Securities Act (Ley del Mercado de Valores). Anyone, who provides investment advice, is subject to an authorisation requirement by the CNMV. Also, companies must comply with anti-money laundering and data protection regulations.
Among other requirements, the minimum capital of an EAFi is €50,000.
The fact that advice is automated does not imply any difference regarding the regulation applied to services offering investment advice (technology neutrality principle). Such automated investment service must be provided in compliance with all applicable rules of conduct and, in particular, following the suitability assessment of its customers.
Finally, as for CNMV fees, costs for getting a license to run an EAFi are €1,040.60. Also, there are additional costs regarding the registration of the company in the commercial registry which will depend on the amount of the capital of the EAFi, but would range from €1,500 to €3,000, including notary fees.
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
It is quite simple to obtain the authorization from the CNMV to set up an EAFi. Providing advisory services without having obtained a licence can trigger heavy fines.
Market size for financial advisory and broking services as well as adjacent services and biggest companies in this business area
There are 170 financial advisory companies (“Empresas de Asesoramiento Financiero” “EAFi”) in Spain and the market is growing. The biggest companies are Abante and Arcano.
Additional comments regarding the economic situation for financial advisory and broking services as well as adjacent services or what FinTech’s must be aware of in this business area