On 30 September 2026, the Dutch Authority for Financial Markets (Autoriteit Financiële Markten, AFM) published a consultation on model portfolios for self-directed investing (execution only). The consultation addresses model portfolios as an innovative investment concept, including automatic rebalancing and risk reduction functionalities. Investment firms that offer such model portfolios set up several standard portfolios with different risk profiles, which investors can choose from. According to the AFM, this service aligns with broader European initiatives which aim to increase participation of retail investors in the capital markets.
Market participants requested the AFM to clarify whether model portfolios and functionalities such as automatic rebalancing and automatic risk reduction can be offered as part of the execution-only investment services. The AFM states that in principle, this is possible, but that certain business models may straddle the lines between execution only, investment advice and individual portfolio management.
For offering model portfolio as part of the provision of execution-only services, the AFM maintains three conditions:
- The retail investor takes the investment decision independently. Retail investors may develop the expectation that the investment firm provides them with investment advice or individual portfolio management. Therefore, investment firms should clearly explain which service is being provided, that the retail investor must make the investment decision and that the service is not tailored to the specific circumstances of the investor.
- The investment firm does not have any discretionary decision-making authority. The composition and rules of the model portfolio are determined in advance at the level of the underlying financial instruments. The investment firm only executes transactions that are required to purchase the model portfolio selected by the investor or to implement predetermined decision rules, which are the rules that determine when and how transactions in the underlying financial instruments of the model portfolio take place.
- The investment firm does not provide personalised recommendations. The investment firm is not allowed to state which model portfolio is recommended, appropriate or suitable for an individual investor. The model portfolios must be presented in a neutral manner. The investment firm may, however, provide information about the characteristics, risks, and operation of the model portfolios.
These conditions also apply to automatic rebalancing or automatic risk reduction. The investor must decide independently whether they want to use this functionality, and the conditions must be clear in advance. The investment firm should not independently make a change to a retail investor’s existing model portfolio and should not propose a specific alternative financial instrument to a retail investor, as this may affect the classification of the investment service.
The AFM has described several cases and invites market parties to consider and respond to these cases. Market parties can respond to the consultation until 11 November 2026. The AFM will take the responses into account when preparing its final position. The consultation is available here.