What kind of investor are you?

There are two categories of investors: professional and non-professional. Financial intermediaries, such as banks, brokers, or asset managers, determine this classification based on the customer's experience and knowledge of financial market investments, as well as their ability to assess risks. The financial intermediary is responsible for providing the customer's profile in writing, as per their obligation.

Professional VS Non-professional investor

An investor is considered professional when they demonstrate extensive knowledge and experience in the field of investments. Entities falling into this category include financial institutions, investment companies, insurance companies, investment funds, pension funds, and their managers. Professional investors typically receive lower legal protection compared to non-professional investors.

On the other hand, a non-professional investor generally possesses less knowledge and experience in investments, thus requiring a higher level of protection. Financial intermediaries offering services to non-professional investors must provide detailed information at every stage of the investment process, conduct a suitability assessment, and enter into written contracts before providing most investment services.

What are the risk profiles?

Investing involves varying degrees of risk, ranging from high to low or even none at all. To cater to these different risk appetites, investment experts classify investors into distinct categories:

Conservative or prudent: These investors are risk-averse and prefer investments that guarantee the safety of their capital. They opt for shorter-term investments with lower returns.

Balanced or moderate: This category of investors also seeks products with guaranteed capital but is willing to consider medium-term investment opportunities.

Dynamic: Investors falling under this category prioritize higher profitability and are open to investing in medium and long-term opportunities, even if it means facing some capital losses.

Bold: The primary goal for bold investors is to maximize earnings, and they are willing to accept the risk of losing part or all of their invested capital. They often prefer longer-term investments with potentially higher returns.

If you avoid risking potential gains, you have a conservative profile. If you embrace higher risk for the possibility of higher returns, you have a dynamic profile. To understand your risk profile, seek advice from experts at your bank or financial advisors.

How is the suitability of the product or service to the investor profile evaluated?

The financial intermediary is responsible for conducting a suitability test for each new service or product that a customer wants to subscribe, assessing whether the investment is appropriate for the customer's profile. To do this, the financial intermediary must inquire about the customer’s experience and knowledge in the financial market. In the case of providing portfolio management or advisory services, additional information regarding the customer’s investment goals and financial situation must be obtained.

To ensure that the financial services or products offered are appropriate to the investor's profile, the financial intermediary must request detailed information, including the investor's familiarity with financial products and operations, the nature, volume, and frequency of their financial transactions, their investment holding period, risk tolerance, ability to cope with losses, level of education, occupation, and details about their sources of income, assets, and loans.

Investor warnings

If the investor fails to provide the necessary information to the financial intermediary for assessing the service's suitability, the intermediary must inform the investor in writing about the insufficient information. Additionally, if the intermediary deems that the transaction the investor wants to undertake is not suitable for their profile, they must also provide a written warning. In such cases, the customer must confirm in writing that they have received the warning.

The financial intermediary is responsible for providing the investor with all the information necessary to make well-informed investment decisions. It is important to note that the lower the level of experience and knowledge of the investor, the more complete the information provided should be.

Information to be provided to the investor includes:

Details about the services offered by the financial intermediary and information about the company itself;

Classification of the investor's profile based on their investment needs and objectives;

Disclosure of any interest the financial intermediary has in the service being provided, its origin, and nature;

The financial instruments and investment strategies proposed;

The risks associated with the operations that will be carried out;

Outline of the financial intermediary's order execution policy;

Information on the protection of the costumer’'s assets, including whether there is a guarantee fund or equivalent protection covering the services to be provided;

Full disclosure of the costs associated with the service.