Investment Financial Advisors (IFAs) in Spain

The first Spanish Investment Financial Advisors (IFAs) were authorised by the CNMV in 2009. At that time, they were still suffering the consequences of the terrible global crisis caused by Lheman Brothers. Perhaps the bankruptcy of the world’s largest investment bank, viewed in perspective, was an incentive for some Spanish investment professionals to take the decision to start their own financial businesses and assume the risks of an unexplored terrain, convinced that another model of advice and client relations was and is possible.

An important point to understand the history of IFAs is that in Spain it was decided that financial advisory firms should be considered investment services firms, and therefore be subject to a specific legal regime defined in the Securities Market Law (“Ley del Mercado de Valores”). You can find all the information, and it is highly recommended that you read the CNMV’s investor guide on investment services firms. Ultimately, this means that IFAs have to comply with a significant number of obligations and a strong regulatory requirement, which, with the experience of twelve years of history, and together with other notable factors such as the strong banking penetration of customers and low financial education, have put a lot of pressure on Spanish IFAs, limiting their development.

The number of IFAs has been changing throughout its years of history, reaching its peak in 2016 and 2017, with a number of approximately 200 entities, a figure that after the transposition of the European directive MiFID II, began to decrease to approximately 140 operating licenses, which we have today. These figures contrast sharply with those of our European neighbours: in the case of France, it is estimated that there are around 3,200 advisors operating, in Switzerland around 2,200, and in the United Kingdom, which is the leading example, there are around 5,500 firms. There are several reasons for these strong differences. The first is the different level of financial education of citizens. Spain is a country with a strong banking structure, a poor savings culture and an absolute predominance of real estate investments, current accounts and deposits. However, the current situation, with risk-free investment yields close to zero, the unviability of the current pension system, inflation and a notable increase in life expectancy, demonstrates the need for Spanish citizens to educate themselves financially, get professional advice and carry out professional financial planning as soon as possible. And for this change to take place as soon as possible and with the greatest guarantees, the evolution and growth of the financial advice industry is key.

Continuing with the Spanish IFAs’ history, the first entities that began to operate quickly considered the need to create an association that could represent them jointly and defend their interests, and so in mid-2010 they created the “Asociación Española de Empresas de Asesoramiento Financiero – ASEAFI” (Spanish Association of Financial Advisory Firms), which I have the honour of directing. ASEAFI began by integrating as members exclusively IFAs, and in the summer of 2018 we took the decision to open the association’s statutes to include all types of investment services companies in addition to IFAs, provided that their programme of activities includes financial advice to end clients, whether institutional or retail. Today, we have 47 members, including some of the main Spanish IFAs, brokerage firms, securities firms and asset management companies.

As the national association for financial advice, we play a key role in promoting development, raising investor awareness of the benefits of financial advice and fostering the growth of the industry.

The main added value of ASEAFI is aimed at our associates, and is to serve as a contact point for them, and at the same time with the rest of the participating entities in the industry, favouring the dissemination of knowledge. And from this point, we develop all our activities, to list just a few: institutional representation of the sector before the different public bodies and all types of entities, relations with suppliers of goods and services with whom we collaborate in the development of their service offer, promotion of professional events in which to present and debate current professional issues, we organise events in which we share and disseminate current affairs and financial content, we guide foreign entities interested in setting up in the Spanish market. All of these activities contribute directly to the development of the industry.

The way in which the IFA provides its services to its clients is of great added value, and very differentiating. Firstly, it is a more traditional service, as opposed to the industrialised model of the large entities, the IFAs have to work with each new client and retain them by providing a close and quality service. This is why they do not receive complaints for malpractice before the CNMV regulator, whereas complaints against private banks are very common (among other reasons due to the industrialisation of a service that by definition must be tailor-made). Another difference is that IFAs, as they do not market their own products, reduce conflicts of interest compared to other financial groups or banking institutions that do have their own products and sell these products, which often bring them a higher return to the detriment of other, higher quality products. For the clients of the IFAs, they have access to a quality of service from a much lower volume of advised assets and at a lower cost than in comparison with banks.  Finally, each IFA has its own specialisation and business model, “its own way of doing things”, which brings diversity to the industry. 

I would like to conclude by saying that ASEAFI believes that the current levels of operational IFAs are severely limited and that this is mainly due to over-regulation. We have been able to confirm that all parties agree on the benefits that this figure brings to the provision of quality financial advice and financial health. And that we should therefore all work to strengthen its development. To put it in figures, if the industry were to double by 2055 and reach the figure of 500 entities by 2030, it would be a powerful indicator of improvement in the financial health of our country, and of savers.


José Tailhan

Director at ASEAFI

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