Licensing for EAM

    Licensing requirement for EAM - Provision of Financial Advice

    Under the financial advisor’s licence, the EAM can advise its clients regarding investment products.[2] The EAM will provide its client recommendations regarding the buying, holding or selling of specific investment products with the client taking the decision on the transaction.

    Following its financial advice, the financial adviser’s licence also allows the EAM to assist its financial advisory client to pass the client’s orders concerning any specified products to brokerage firms for execution.[3] (This is an exemption from the requirement to hold a capital markets services licence for dealing in capital markets products that is discussed below that is generally required for any dealing in capital markets products.)

    The financial adviser’s licence would also allow an EAM to rebalance its clients’ portfolios to the extent that the portfolios comprise solely collective investment schemes and provided that the rebalancing is incidental to the advice provided, i.e. to align it again with the original recommended allocation. Safeguards apply to such rebalancing.[4] EAMs however need not rely on the authorisation under this exemption where they have discretionary power over the portfolio under their fund management licence (or as RFMC).

    Commonly, EAMs obtain an exemption from the requirement to obtain a financial advisers licence complementing their fund management licence or status as RFMC.

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