When Can I Take Advice From a Non-EU Financial Adviser Firm? 

by | Sep 22, 2023

It depends on who initiates the conversation.

We have talked a lot about financial adviser regulations both on our website and elsewhere. We’ve emphasized how important it is to ensure the adviser you are dealing with has the appropriate licenses in the Czech Republic. Does that mean you cannot take advice from a non-EU adviser firm that has no Czech or EU regulatory licenses? 

The fact is, there are going to be occasions when an EU resident needs advice on a product or financial plan from outside of the EU. For example, where would an Australian or Canadian get advice about their pensions and investment products that are held within financial institutions back in their home country? Who here in the Czech Republic has the knowledge or licenses to provide advice and financial planning on such products?  

There is a simple answer 

The likelihood is that the best way to get advice is to talk to advisers in those countries – providing their firms have the necessary professional insurance to advise cross-border. 

An example of this non-EU advice could be advice about British pensions. Only firms regulated in the UK are able to be the ‘advising agent’ on all UK pension providers and, especially those pensions with guarantees.  

However, we are finding a considerable amount of disinformation from ‘expat’ advice firms who state that a UK firm cannot provide the EU resident with advice. As a result, the only advice the EU adviser can give is to transfer the pension to another pension product – often at a cost and often for no reason other than to become the servicing adviser to generate fees. 

In many cases, the best advice would be for a British pension holder to seek both local and UK advice- on their own initiative.

Doesn’t that breach the local regulator’s rules?

No, provided that the investor contacted the non-EU adviser themselves. The investor must have done this on their own initiative and not as a result of the non-EU firm marketing into the EU or flying in under the radar to visit investors. The rules allow for this, and it is known as ‘Reverse Solicitation’ 

Bear in mind, the Czech National Bank has a very strict view on this. If there is a hint that, for example, a firm or adviser here was recommending the non-EU adviser to EU residents then this would be a breach. The regulators will scrutinize the links between non-EU firms and those influencers here carefully. We have seen such cases in action here. 

What does The European Securities and Markets Authority (ESMA) say?

ESMA highlights that: 

  • The provision of investment services in the EU without proper authorisation in accordance with the EU and the national law applicable in Member States exposes service providers to the risk of administrative or criminal proceedings, for the application of relevant sanctions; and 
  • When using the services of investment service providers which are not properly authorised in accordance with EU and Member States’ law, investors may lose protections granted to them under EU relevant rules, including coverage under the investor compensation schemes in accordance with Directive 97/9/EC.  
  • The third-country firm will not benefit from contractual clauses or disclaimers that state that the service is only provided on the request of the client. It is important that the service is factually only provided on client’s request. 
  • Offers of other regulated services by the non-EU firm are not covered by the reverse solicitation exemption. 

Aisa International, s.r.o. is a wealth management firm with an award-winning team who provides investment advice, financial planning, and asset management for U.S., U.K., and E.U. expatriate citizens residing abroad. Aisa International holds all current regulatory licenses, including the FCA license in the UK and the Investment License in the European Union. Therefore, Aisa International is uniquely qualified to provide personal financial advice for U.K. pensioners living outside of the U.K. Aisa International serves its global clients where they reside through its OpesFidelio network of highly-qualified advisors. For more information, please visit www.asiainternational.cz  

Image by Freepik

See also:

Expats.cz article: Essential Investing Tips for British and American Expats in Czechia

Unlicensed Financial Advisors Are a Threat to UK and US Expats in Czechia

Is Your Advisor Correctly Licensed and Registered? 

The views expressed in this article are not to be construed as personal advice. Therefore, you should contact a qualified, and ideally, regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. Consequently, if you do not, then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Importantly, where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.

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Post written by:

Chris Lean

In the UK he worked with accountants as an independent financial adviser, qualified as a Chartered Financial Planner and became an examiner for the Chartered Insurance Institute. He also qualified as a European Financial Planner and specializes in investment and pension advice to clients.

Aisa International is the only financial advice service company specialising in advice for expats that is regulated as a Securities Trader in the Czech Republic, USA, and UK.