On 23 August 2016, the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, the AFM) published a guidance document in which its addresses three questions it received from investment firms and funds on innovative service concepts in the investment services field (the Guidance Document). The AFM answers the following questions in the Guidance Document:
- When does a service qualify as investment advice (beleggingsadvies)? The AFM indicates that innovation can blur the distinction between execution-only services and investment advice, for example if an investment firm provides execution-only services to a customer, but also offers an online tool assisting such customer in making investment decisions. Therefore, the AFM believes it is important to set out a framework which allows parties to assess how they can be innovative in assisting their customers, without being considered to be providing investment advice.
- When does following up investment recommendations qualify as portfolio management (vermogensbeheer)? According to the AFM, there are a number of scenario’s in which it may be difficult to distinguish between the provision of execution-only services and portfolio management. For example, investment firms offering highly automated portfolio management services or investment firms offering their customers the ability to follow up investment recommendations in a system that is (originally) set up as an execution-only service. In the Guidance Document, the AFM provides guidance on when following up investment recommendations qualify as portfolio management.
- Is a one-off review of an investment portfolio a possibility? Investment advice and portfolio management services are generally provided on an on-going basis. However, the AFM indicates that customers are not always interested in receiving on-going services; certain customers only want a one-off review of an investment portfolio by an expert. Various investment firms are willing to offer this service and they have asked the AFM how, and under what conditions, they are able to offer this service.
View the Guidance Document (Dutch only), 23 August 2016.