Essential tips for American and British expats in need of a financial advisor in Czechia

According to Aisa International, it’s vital to ensure that your financial advice comes from a regulated and reputable source. Staff

Written by Staff Published on 19.09.2023 17:00:00 (updated on 22.04.2024) Reading time: 3 minutes

This article was written in cooperation with Aisa International. Read more about our partner content policies here.

If you’re not sure how pensions, investments, and retirement plans from your home country will apply within the rules of Czechia, you’re not alone. For this reason, many expats, as well as native Czechs, seek out financial advice to help them grow their money.

Many of them, however, may unknowingly receive unregulated, unlicensed, and poor-quality financial advice from advisors both within the country and elsewhere in the EU. Obtaining sound advice based on a solid understanding of local investment rules and regulations can be pivotal for making your investments a success.  

Unregulated advice can lead to heavy losses

Every country has its own specific set of regulations in place to protect investors. These rules are vitally important because they help to safeguard investors’ hard-earned money. In this context, investors should be aware of the danger to their savings posed by unlicensed advisors and unregulated funds. 

If investors act on advice given by an unregulated adviser, or from an adviser who is regulated but not for the specific fund or product being recommended, they have no recourse through the Czech regulator in the event of a loss. Although the regulator may take action against the unregulated advisor, no help will be provided to the investors themselves.

Advice across borders

As is the case in various other countries, including the United Kingdom and other major investment markets, all licenses to provide financial advice in Czechia require that the advisor concerned has relevant financial qualifications from the country in which they are operating.

“It is common – yet also illegal – for an American or British financial advisor to market advisory services in the Czech Republic, or provide advisory services while in Czechia without either obtaining the requisite Czech license, or the correct license from another EU state under financial passporting rules,” explains Chris Lean, Chief Investment Advisor at Prague-based investment management firm Aisa International.

When ‘insurance’ isn’t really insurance

Firms may advertise that they provide “wealth management services”, but “wealth management” and “portfolio management” are specifically regulated services which firms licensed only for insurance cannot legally provide. Such firms may only provide insurance products, rather than a full range of investment opportunities to suit clients’ unique circumstances.

Some investments, however, are sold to expats in Czechia as part of insurance-based products from offshore locations. There may be nothing wrong with these products in and of themselves – but crucially, from the point of view of investor security, they would not be recognized as insurance in Czechia, because there is no “underwritten risk or guarantee” accompanying the product. 

If the advisor recommending such products does not have an investment license, they would be judged to have provided unregulated investment advice by the Czech regulator. Again, this would leave investors with no recourse to the regulator if the fund were to fail and take investors’ money with it. 

How to check a financial advisor’s background and eligibility

  • The Czech National Bank Register
  • The Czech Business Register. Here you can check whether the scope of the advisor’s stated business activities match what is being offered to you.
  • The EFPA website. Use the “Find an Advisor” function to search for bona fide, qualified advisors in the Czech Republic. While there are qualified advisors who have chosen not to join EFPA (the European Financial Planning Association), this is a useful tool.
  • LinkedIn profiles. Check up on advisors’ professional history, expertise and suitability to provide you with financial advice.

Find out more about your financial advisor

Expat investors should always carefully check the background and qualifications of advisors and firms before committing any of their money to the products which they recommend. Find out how long they have been providing financial advice, where they are regulated, and for which specific services. It’s also important to establish whether the person offering you financial advice is a member of a relevant professional organization.

Aisa International invites U.S. and UK expats in Czechia to schedule a free consultation in order to ask questions, find out more about our services, and learn about our no-commission fees. Please note that Aisa International is not a tax advisor. Disclaimer: Trading financial instruments carries risks. Always ensure that you understand these risks before trading.

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