EU investment advice is tightly regulated under MiFID II (Directive 2014/65/EU) and its delegated regulations. Before taking you on, a licensed investment firm must assess your knowledge, experience, financial situation and investment objectives — and recommend only products that are 'suitable' for you under Article 25 of the directive. The client agreement is where these obligations are formalised. Before you sign, understand the scope of advice you're paying for, how the firm is paid, and what suitability reports you're entitled to.
What is a MiFID II Suitability?
An EU investment advisor agreement is a contract between a client and a MiFID II-authorised investment firm for the provision of investment advice or portfolio management services. It must comply with MiFID II, the MiFID II Delegated Regulation (EU) 2017/565, and national transposition laws (e.g. BaFin rules in Germany, AMF rules in France).
Red flags to watch for
Only firms authorised by a national competent authority can provide investment advice in the EU. Unauthorised firms are operating illegally.
Article 25(2) MiFID II requires firms to assess suitability before providing personalised advice. Skipping this is a serious breach.
Article 24(9) MiFID II requires disclosure of all inducements. Many jurisdictions (e.g. UK via RDR, Netherlands) have banned inducements for retail advice.
Classification as a professional client reduces protections. Article 4(1)(10) and Annex II require specific written procedures to opt up.
Article 24(4) MiFID II requires clear, aggregated cost disclosure before and after investment. Missing cost schedules are non-compliant.
Under Article 24(1) firms must act honestly, fairly and in the client's best interest. Liability waivers for advice failures are void.
Your legal rights
MiFID II (Directive 2014/65/EU) and Delegated Regulation (EU) 2017/565 govern EU investment advice. Key rights: suitability assessment (Art. 25), cost and charges disclosure (Art. 24(4)), conflict of interest management (Art. 23), client classification rules (Art. 4), and best execution (Art. 27). Complaints can be directed to the firm and escalated to the national competent authority. ESMA publishes guidelines and the authorisation register.
Questions to ask before you sign
- 1Are you authorised under MiFID II, and by which national competent authority?
- 2Can I see a copy of my suitability assessment before you make recommendations?
- 3What inducements do you receive from product providers, and how are they disclosed?
- 4What are the total ex-ante costs and charges for my portfolio?
- 5How often will I receive suitability reports and cost updates?
- 6Where do I complain, and who is the relevant national competent authority?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.