You require a licence under trade law to act as a fee-based financial investment adviser if you
- advise on transactions with certain financial instruments and your recommendation is based on an examination of the investor's personal circumstances (§ 1 Paragraph 1a Number 1a of the German Banking Act ),
- you provide professional advice on financial investments within the meaning of Section 34f (1) No. 1, 2 or 3 of the Trade, Commerce and Industry Regulation Act (Gewerbeordnung) and
- this advice is not provided on a commission basis by a provider of financial investments, but only in return for a fee from your client.
The investments mentioned in § 34f paragraph 1 number 1, 2, or 3 of the Trade Regulation Act are
- Units or shares in domestic open-ended investment funds, open-ended EU investment funds or foreign open-ended investment funds which may be distributed in accordance with the German Investment Code (open-ended funds),
- units or shares in domestic closed-ended investment funds, closed-ended EU investment funds or foreign closed-ended investment funds that may be marketed in accordance with the German Investment Code (closed-end funds), and
- Investments within the meaning of section 1(2) of the German Investment Act (Vermögensanlagegesetz) (e.g. participations in companies, profit participation rights, participating loans, subordinated loans).
The fee-based financial investment advisor may also broker these products to the client, but must then pass on to the client any allowance (commission) that he receives from the product provider.