Financial advisors who have obtained the § 34d/f/h license from the German Chamber of Industry and Commerce (IHK) solely provide an advisory service: they draw up investment strategies and make investment recommendations; however, at the end of the day, customers only have to decide (and sign) whether to buy a financial product (e.g. a savings plan, a fund or an insurance policy). If a contract is concluded, the advisor usually receives a commission or fee.
In this context, a distinction must be made between § 34d GewO (insurance intermediaries / insurance advisors), § 34f GewO (commission-based financial advisors) and § 34h GewO (fee-based financial advisors).
In contrast, in asset advisory and management services under Section 32 of the German Banking Act (KWG), clients give a mandate to licensed financial services providers (e.g., a family office, bank or private bank) authorizing them to invest and manage their assets on their behalf within the scope of pre-agreed parameters, limits and savings targets. In return, the managers/brokers usually receive a management fee and in some cases also a performance fee, a distribution fee, a custodian fee, as well as (in the case of a fund) an issuing premium.
