The Financial Investment Adviser (FIA) is a key player in wealth management and investment advice. Their role is not confined to traditional financial instruments; it also extends to advising on transactions in miscellaneous assets, those atypical investments (wine, works of art, containers, etc.) for which the framework has become increasingly complex. Understanding the scope of the FIA's work in this area is fundamental, as it affects both the FIA's responsibility and the investor's security. In the context of regulation of intermediaries in various goods (IBD), the provision of advice by an FIA is subject to specific rules that need to be clarified.
The status of financial investment advisers (cif) in relation to miscellaneous assets
The Monetary and Financial Code makes explicit provision for FIAs to be authorised to advise on general asset transactions. This authorisation is not simply an option; it is accompanied by a body of obligations designed to protect the end customer. The FIA acts as a compliance and relevance filter between the promoter of an atypical product and the investor.
Cif status required to advise on miscellaneous goods
The provision of advice as a regular occupation on the execution of transactions in various goods is a regulated activity. It may only be carried out by a person with FIA status, in accordance with article L. 541-1 of the Monetary and Financial Code. This requirement applies to all general asset transactions, including those covered by the "lighter" regime introduced by the Hamon Act, which applies to any investment product offering an expected return.
In practice, this means that anyone who repeatedly analyses a customer's situation and recommends that they invest in wine, forests or diamonds must be registered with ORIAS as a FIA. Carrying on this activity without the required status exposes the person responsible to severe criminal penalties. In this way, the legislator has sought to ensure that advice on products that are often complex and risky is given by professionals who meet conditions of competence and good repute.
General obligations of good conduct for cif
The status of FIA entails compliance with strict rules of good conduct, which apply fully when the advice relates to a variety of assets. The adviser must act honestly, loyally and professionally, serving the client's best interests. In practical terms, this translates into a number of fundamental duties.
First, there is an obligation to know the product. The financial adviser must have a detailed understanding of the asset-based transaction that he plans to recommend: its legal structure, the underlying assets, the specific risks and the return mechanism. Next, he must assess his client's situation. By gathering formal information, they analyse their investment knowledge, financial situation, objectives and investment horizon. The advice provided must be tailored to this profile. It would be wrong to recommend an illiquid and risky investment in old manuscripts to a client seeking security to prepare for retirement in the short term.
Finally, transparency is a key requirement. FIAs must inform their clients of any links they may have with the promoters of the products they offer and of the terms and conditions of their remuneration (fees, commission retrocessions). This transparency enables customers to understand potential conflicts of interest and to make informed decisions.
Marketing methods and canvassing
The way in which an FIA may contact a potential customer to offer advice on a variety of goods is regulated. The regulations on direct selling of banking and financial services are designed to protect those approached against hasty or ill-informed investment decisions.
Canvassing for consultancy services by the cif
A FIA is authorised to canvass clients to offer his own advisory services. Article L. 341-3 of the French Monetary and Financial Code authorises FIAs to make unsolicited contact with individuals with a view to providing them with advice, including advice on transactions involving various goods. They may authorise their employees or certain natural persons to carry out these canvassing activities on their behalf.
Within this framework, the FIA or his authorised representative must comply with a strict procedure. Before entering into any contract, they must find out about the situation, experience and objectives of the person they are canvassing, provide clear information about the advisory service and observe a fourteen-day cooling-off period. The purpose of canvassing is the FIA's advisory service, not the transaction itself.
Canvassing mandate on behalf of third parties and IBD
The situation becomes more complicated when an FIA plans to canvass not on his own behalf, but on behalf of a third party, in this case an intermediary in various goods (IBD). In principle, an FIA can be commissioned by an authorised entity to market products. The question is therefore whether an IBD is such an entity.
There is some ambiguity here. On the one hand, the IBD is not included in the list of persons expressly authorised by article L. 341-3 of the French Monetary and Financial Code to instruct direct marketers. This absence could suggest that such a mandate is impossible. On the other hand, article L. 551-1 of the same code defines an IBD as a person who offers various goods, in particular by "canvassing". This wording suggests implicit recognition of his ability to canvass. This legal uncertainty calls for great caution. For an FIA, accepting a canvassing mandate from an IBD without an in-depth legal analysis of the specific rules and obligations for intermediaries in various goods would be risky. It is essential to ensure the legality of the marketing scheme as a whole.
CIF promotional communications
Any advertising or communication aimed at promoting the services of an FIA or the products on which he advises is strictly regulated. The aim is to ensure that investors are provided with balanced information and are not misled about the nature and risks of the investments on offer.
Clarity and transparency requirements
Under Article 325-12 of the AMF General Regulation, any promotional communication by a FIA must be accurate, clear and not misleading. It must explain the risks inherent in the investment. The communication must also include mandatory information, such as the name or corporate name of the adviser, his FIA status, his ORIAS registration number and the professional association to which he belongs.
These rules prohibit unrealistic or guaranteed promises of returns if the product is not. The advantages, particularly tax advantages, must be presented in a balanced way, without glossing over the constraints or risks. The communication must be identifiable as such and not give the impression that it constitutes personalised advice if this is not the case.
Relationship with specific provisions for miscellaneous property
One question that arises is whether FIA disclosures about miscellaneous assets must also comply with the specific rules for IBDs set out in Article L. 551-1, III and IV of the Monetary and Financial Code. These provisions require disclosures to provide a "reasonable understanding of the risks associated with the investment" and give the AMF the power to request any document to verify compliance.
The texts do not explicitly settle this question. However, a cautious approach is required. An FIA who advises on miscellaneous goods should consider that his communications must comply with both the rules specific to his status and those applicable to miscellaneous goods. It is recommended that all advertising documents be validated by the product promoter (the IBD) before distribution, to ensure that the information provided to investors is consistent and compliant overall.
Responsibilities and vigilance of the FIA
FIAs are liable at every stage of their business. When advising on an investment in miscellaneous assets, he must be even more vigilant because of the often atypical and poorly regulated nature of the underlying asset. Failure to comply with due diligence obligations can have significant financial and disciplinary consequences.
The FIA's diligence in assessing products
The FIA is not simply a salesperson. They have a duty to advise, which requires them to carry out their own due diligence on the products they recommend. This obligation is particularly strong in the case of miscellaneous goods. The advisor must ensure that the offer is in order and that the promoter is serious. They must check that the intermediary offering the transaction is registered with the AMF and that the offer has received the required approval or registration number.
Advising on a product offered by an IBD that is not registered or whose information document has not been validated by the AMF would constitute serious professional misconduct. The FIA would incur civil liability for the loss suffered by his client and would be exposed to heavy fines. disciplinary and criminal sanctions. They must therefore exercise due care and diligence, bearing in mind that they are the guarantors of their clients' interests.
The legal framework governing the activities of financial investment advisers in the property sector is demanding and fraught with uncertainty. For a professional, mastery of these rules is essential to secure his practice and deliver quality advice. For any analysis of your situation or to assist you in structuring your advisory activities, our firm offers you support in the following areas financing and credit law.
Sources
- Monetary and Financial Code: articles L. 541-1 et seq. (Status of financial investment advisers)
- French Monetary and Financial Code: articles L. 551-1 et seq (Rules governing intermediaries in various goods)
- Monetary and Financial Code: articles L. 341-1 et seq (Direct marketing of banking and financial services)
- General regulations of the Autorité des marchés financiers (AMF): articles 325-1 et seq (Provisions relating to financial investment advisers)
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