Finance & Competition

Financial advisory

The independent financial advisor is a new professional figure normed by MiFID European Directive, implemented in Italy in November 2007. It is a "fee based" professional (as a lawyer or a doctor), who studies the financial markets and examines the best alternatives, explaining benefits, costs and risks of each alternative to the customer .

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The task of the independent financial advisor is to fully understand the needs of the customer in order to choose the instruments that have the highest probability of reaching the customer objectives within the given performance, risk and cost constraints.

He can only be an independent professional and cannot provide any other investment service.

Scope of advisory

Consob states that advisory on investments in securities consists in providing customers with useful information to make investment decisions and in suggesting the most appropriate operations in relation to the economic situation and the objectives of the client.

In particular, it is characterized by: 

• existence of a bilateral relationship between advisor and client, based on knowledge of investment objectives and financial situation of the customer, so that investment suggestions take into consideration the individual situation of the single investor;
• structural independence between advisor and recommended investments;
• lack of predetermined limits of the advisor regarding suggested investment;
• the fact that the only compensation received by the advisor is the one paid by the client in whose interest the service is provided.

Source: Wikipedia