Your investment goals
- Are you pursuing special goals with your investment advice (e.g. building up assets in order to buy a property at a later date or to finance a degree)?
- Are you interested in retirement provision, asset or liquidity accumulation or speculation?
- How strong is your willingness to take risks?
- Is the system subject to a time limit?
Your financial situation
- How high are your securities assets, how high are your financial assets?
- Do you have other assets ( e.g. real estate)?
- What regular income do you generate ( e.g. salary, rental income, capital income)?
- What regular obligations do you have ( e.g. rent, loans, maintenance payments)?
- Your knowledge and experience
- How well do you know about financial instruments and financial services?
- Which financial instruments and financial services do you have experience with?
- How long did you gain experience?
- What amounts did you bet?
- Do you have experience with investments in foreign currencies?
These are common questions. The advisor may also ask you for further information. You can also name other investment goals that are important to you. It is important that the investment advisor receives the most comprehensive picture possible through his questions. You should therefore answer his questions conscientiously and in detail and notify your advisor of changes or updates. Your advisor will only receive all relevant information through your cooperation. The investment advisor cannot and may not advise you without information about your investment objectives including your risk tolerance, your financial situation, your ability to bear losses, and your knowledge and experience.
What information does your advisor need to give you?
Before starting advice, you must be informed whether the advice will be provided as an independent fee-based investment advice. If this is the case, the consultant is not allowed to accept or keep any commissions, but has to have the advice paid directly by you. In the case of fee-based investment advice, the commission must be paid out to you in full and immediately. You need to get information about all the circumstances of the plant that are material to you. This also includes information about all costs of the financial instrument and service offered and their effects on the return. Donations, such as commissions paid by third parties, must also be disclosed.
This information must be printed out or made available electronically in front of your system, for example. If you request this, your advisor must also give you a breakdown of costs according to the individual items.
Your advisor is also required to provide you with an information sheet prior to entering into any trade in financial instruments. This provides information about the key factors of the respective financial instrument and contains, among other things, information on the type and functionality as well as the risks and costs. In the case of so-called packaged investment products, such as certificates and structured bonds, one speaks of a basic information sheet and, in the case of investment funds, of key investor information.
Which products can the investment advisor recommend to you?
Your advisor may only recommend financial instruments that are suitable for you. The recommended deal must meet your investment objectives, you must be able to accept the investment risks, and use your knowledge and experience to understand the risks.
What is the purpose of a declaration of suitability?
Every time you give investment advice, you must be given a declaration of the suitability of the recommendations – for example, printed out or electronically.
This declaration of suitability is intended to enable you to understand the reasons for the recommendation before concluding the contract so that you can make an informed investment decision. This means that you can immediately identify and address discrepancies in your information. Even after a while and for follow-up advice, you can still refer to the documentation and the reasons for recommendation given therein. You must also be provided with a declaration of suitability if you use the advice several times or at regular intervals or if you do not buy a financial instrument after the advice.
The contract for the recommended business may only be concluded after you have received the declaration of suitability. Exceptions only apply if the advice is given by telephone, for example, and you insist that the contract be concluded immediately. Then the consultant may provide you with the suitability declaration even after the contract has been concluded.
What other records are there?
If you give your advisor an order after the consultation, the time and place of the meeting, the people present, the initiator of the conversation and information about the order itself (such as price, scope and type of order) must be documented. You can request that this documentation be given to you. Companies can combine this information with the suitability statement. If advice is given or an order is placed by telephone or electronically, the company records the content (taping). They must inform you about this in advance. You can object to the recording, but then the company is not allowed to provide the service in this way. The company has to keep the records for five years. You can request a copy of the recording at any time.
Remember: your participation is essential! Check carefully that the documents are correct. In particular, you should carefully read the information about your personal situation, i.e. your investment goals, financial knowledge and experience, and your economic situation. Make sure to check whether the advisor has made the right balance between higher earnings opportunities and the safety of an investment.