Boutique EAF
The fee-only firm from day one
“Independence is our message: only the client pays us. We need our range selection and the file behind each recommendation to live up to that message.”
Independent Investment Advice under MiFID II: What It Requires and How to Set It Up Right
“Independent” is not a marketing adjective: it is a legal category under MiFID II with three requirements—a broad range of instruments assessed, zero inducements retained and ex ante disclosure—that you must be able to prove client by client.
Want to present yourself as independent (or check whether you can)?
Tell us about your product range, your revenue and your structure, and we will tell you what you are missing to back up the label.
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- Inducements and retrocessions
- Art. 24
- Suitability assessment
- Art. 25
- Applicable Spanish law
- Law 6/2023
- MiFID II Directive
- Dir. 2014/65/EU
Services
Building an independent model that holds up
Six typical workstreams with EAFs, private banks and asset managers that want to sell independence without buying themselves a regulatory problem.
Design
Designing the advice model
Together with you, we define the nature of the service (independent, non-independent or hybrid), the procedure for selecting the product range, the treatment of inducements and the information given to clients. All of it documented, so that the label you use matches what you actually practice.
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TypeRangeInducementsEx ante
EAF
The natural vehicle: the EAF
Much of the independent advice in Spain is provided by financial advisory firms (EAFs). We support EAFs before the CNMV on authorization, policies and the day-to-day operation of their fee-based model.
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CNMVFeesPoliciesOperations
Inducements
Retrocessions and inducements
The rule that defines the model: nothing from third parties is accepted or retained. What to pass on to the client, how, and how to record it.
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Art. 24Refunds
Contract
Advisory agreement
The nature of the service, the fees and the scope of the product range are agreed in writing. We draft agreements that fit the way you operate.
Learn more →
FeesScope
Project
Setting up an EAF
If you are launching your independent project with your own license, this is the full route: firm type, capital, application and launch.
Learn more →
AuthorizationLaw 6/2023
Suitability
Suitability test
Independent or not, every recommendation requires suitability. The difference lies in the range you recommend from and in how you explain it.
Learn more →
Art. 25Recommendation
Profiles
Who is building (or rebuilding) an independent model
Four typical projects that come through our firm: the same legal requirements, very different pain points.
Private bank
The institution that wants a hybrid model
“We want to offer independent advice to high-net-worth clients without dismantling the network’s non-independent business. The key is to separate the two services without one contaminating the other.”
Former tied agent
The professional leaving the sales network
“For years I recommended the house product. Now my proposition is the opposite: open architecture and fees. I need a license, contracts and a flawless regulatory story.”
Asset manager
The group with its own products that also advises
“We advise on portfolios that include group funds. If we call ourselves independent, the range assessment and the treatment of linked products have to be bulletproof.”
Before you use the label
Three ways independence can turn against you
Calling yourself independent raises the burden of proof. These are the failures a supervisor or an unhappy client uses to take the model apart.
Window-dressing independence: presenting yourself as independent while the recommended range is concentrated, with no documented criteria, on in-house products or those of linked entities. The label makes the finding worse instead of protecting you.
Residual inducements: old retrocessions, placement agreements or benefits in kind that keep coming in out of inertia. In an independent model, any retained third-party payment is a direct breach of the regime.
Hybrids with no boundary: offering both types of advice with the same team, the same pitch and the same website, without the client ever knowing which of the two they are in. The confusion will be held against you.
| Model | Range and inducements | Client disclosure |
|---|---|---|
| Independent | Assesses a broad and diversified range of instruments, not limited to in-house products or those of linked entities. Does not accept or retain third-party inducements: they are passed on to the client. | Discloses its independent status ex ante, explains the basis of the selection and charges the client explicit fees. |
| Non-independent | May focus on in-house products or third-party products covered by agreements, and may retain inducements only if they enhance the quality of the service and the other conditions of MiFID II Art. 24 are met. | Discloses ex ante that the advice is not independent and informs the client about inducements: their existence, nature and amount or method of calculation. |
| Hybrid | Provides both types of advice with real separation: procedures, ranges and inducement flows differentiated by service, without presenting itself as “independent” overall. | Tells each client, before advising, which type of advice they are receiving and which range and inducements regime applies to their specific service. |
Independence is proven with evidence on file
We help you decide the nature of your advice, build the range assessment, cut off or pass on inducements, and align your contracts, website and ex ante disclosure. So that the word “independent” is an asset rather than an open flank.
Frequently asked questions
Independent investment advice: frequently asked questions from firms
What does MiFID II require to call yourself an independent advisor?
Three verifiable commitments:
- A broad and diversified range: assessing a sufficient range of instruments available on the market, not limited to those issued by the firm itself or by linked entities.
- Zero inducements retained: not accepting or keeping fees, commissions or benefits from third parties; anything received is passed on to the client.
- Ex ante disclosure: telling the client, before advising, that the service is independent and what that means.
All three are documented; none is presumed.
What counts as a “broad and diversified range”?
The rules do not set a magic number of products: they require the universe assessed to be representative across instrument types, issuers and providers, so that the client’s objectives can be met without bias toward in-house or linked products.
What holds up is a documented selection procedure: starting universe, filters, comparison criteria and periodic review. A static list inherited from the sales department does not pass that test.
Can I recommend in-house products as an independent advisor?
Independence does not flatly prohibit in-house or linked products: it prohibits limiting the range to them and biasing the selection. If a group instrument survives an honest comparison within a broad range, it can be recommended.
That said, the burden of proof is on you. The more weight linked products carry in your recommendations, the more robust your selection file and your management of the related conflict of interest must be.
What happens to retrocessions if I am independent?
You cannot accept or retain them. If a third-party payment arrives because of a fund’s share class structure or for any other reason, it must be passed on to the client with a clear audit trail, and the sensible step is to redesign the flow so that it stops (for example, by using clean share classes).
The full detail of the regime is on our MiFID II retrocessions and inducements page.
Can the same firm offer both types of advice?
Yes: the hybrid model is lawful if the separation is real and the client always knows which service they are in. That means defining procedures and ranges by service, keeping separate inducement regimes and taking care with the commercial presentation: the firm cannot market itself as “independent” overall if only part of its advice is.
In practice, hybrids fail less because of their design than because of their execution: the same banker, the same sales pitch and clients who never knew how to switch lanes.
What are the commercial advantages of the fee-based model?
Visible alignment with the client (you are paid by the person you advise, not by the product manufacturer), a differentiating argument against traditional distribution, recurring revenue that depends less on product placement, and a more comfortable position under regulatory scrutiny of inducements, including the ongoing debate on the Retail Investment Strategy.
In return, it demands discipline: defensible fees, an explicit value proposition and a range that justifies what the client pays.
Do I need a specific license to advise as an independent advisor?
You need to be authorized to provide investment advice: as an investment firm (ESI), where an EAF is the usual vehicle for advice-focused projects; as an EAFN for Spain-only business; or as a credit institution authorized to provide it. “Independent” is the nature of the service, not a separate license.
If you are building the project from scratch, see our guide to setting up an EAF.
What will the supervisor review in my independent model?
Consistency between label and practice: the range selection procedure and how it is actually applied, the absence of retained inducements (with reconciliation of flows), ex ante disclosure delivered to each client, aligned contracts and advertising and, for hybrids, effective separation between services.
We prepare that file and its defense as part of our MiFID II compliance service.
Practical guide
From label to evidence: setting up independence
Order matters: first you decide on the model with the numbers in front of you, then you build the range and the flows, and only at the end do you communicate it. That is how we work.
Deciding the nature of the service with data
We model the revenue impact of giving up inducements, map the achievable range and assess whether the project’s positioning calls for independent, non-independent or hybrid advice. The decision is reasoned in writing.
Building the range, flows and contracts
Instrument selection procedure, cutting off or passing on inducements, fee schedule, advisory agreement and ex ante disclosure of the nature of the service. For hybrids, the boundary between services as well.
Communicating and monitoring consistency
Website, sales proposals and sales scripts reviewed so they say exactly what the model allows you to say. Internal control then checks that practice does not drift toward linked products or residual inducements.
Going independent in 10 steps
- Feasibility analysis: quantify the inducement revenue you would lose and which fee schedule replaces it without choking the business.
- Decision on the nature of the service: choose independent, non-independent or hybrid, and document the reasoning and its approval by the management body.
- Product universe: define the starting market by instrument type and provider, including third parties with no links to your group.
- Selection procedure: set filters and comparison criteria that prevent bias toward in-house products or those of linked entities.
- Cutting off inducements: renegotiate or cancel retrocession agreements, migrate to clean share classes and set up the refund process for whatever cannot be avoided.
- Fee schedule: design an explicit structure (fixed, asset-based or mixed) consistent with the value of the service and with your client base.
- Contracts and ex ante disclosure: set out the nature of the service, the basis of the selection and the fees in the agreement and in the pre-contractual information.
- Separating the hybrid: if you keep both types of advice, separate teams or procedures, ranges and messages by service, and record which one each client is in.
- Sales review: align your website, presentations and advertising; never market yourself as independent beyond what your file supports.
- Ongoing monitoring: sample recommendations, concentration in linked products and third-party flows; correct deviations and document the review.
If the project requires its own license, continue with the guide on how to set up an EAF; if you already operate, review the financial advisory agreement you use to document the service.
Free resource · PDF
Download the MiFID II Checklist
The 10 conduct controls the CNMV expects to see working in an EAF or investment firm, with the typical evidence for each. Ideal as a quarterly self-assessment with your team.
- The 10 essential conduct controls
- The evidence expected for each control
- 5 signs that a control exists only on paper
- Professional PDF · 5 pages · 11 KB
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Working glossary
Independent investment advice glossary
Terms that make the difference between a commercial positioning and a well-executed regulatory category.
IndependentAdvice type
The category, not the slogan
Advice based on a broad range with no bias toward in-house products and without retaining third-party inducements, disclosed as such to the client ex ante.
MiFID II Art. 24. It is proven, not proclaimed.
Non-independentAdvice type
Advising from a limited offering
A type of advice that lets you focus on a certain range and retain inducements subject to conditions. It must be disclosed just as clearly.
Transparency is the trade-off.
Broad rangeRequirement
The universe assessed
A sufficient and diversified range of market instruments and providers on which each recommendation is built.
With a documented selection procedure.
Linked entityRisk
Group products count differently
Issuers or asset managers with close links to the advisor. Their weight in the range and in recommendations requires stronger justification.
Bias toward linked products breaks the model.
Explicit feesRevenue
Charging the client
Remuneration agreed directly with the client (fixed, asset-based or mixed) that replaces third-party inducements.
The economic basis of the independent model.
Refund to clientInducements
Third-party money does not stay
Transfer to the client of any third-party payment received in the independent service, with a record of the process.
Even better: design things so you never receive it.
Ex ante disclosureClient
Before advising
Prior disclosure of the nature of the service (independent or not), the scope of the range and the applicable inducements regime.
It must be provable client by client.
Hybrid modelStructure
Two services, one firm
Providing both types of advice with separate procedures, ranges and messages, and with each client assigned to their type of advice.
Presenting yourself as independent overall is prohibited.
Fee-onlyMarket
The commercial standard
A market label for models that live exclusively on client fees. Commercially useful if your file backs it up.
Without a file to back it, it is just marketing.
Independence playbook
The model’s requirements and the evidence that supports them
Broad range assessment
A sufficient and diversified universe of instruments, not limited to in-house products or those of linked entities, applied in each recommendation.
Approved selection procedure, documented universe and filters, and samples of recommendations with their comparison.
Inducements regime
No acceptance or retention of third-party payments; traceable refund of any residual flow and a preference for clean share classes.
Inventory of canceled or renegotiated agreements, reconciliation of flows and proof of payment to the client.
Ex ante disclosure
Each client informed, before the service, of its independent nature, the basis of the selection and the fee structure.
Versioned pre-contractual templates and a record of delivery and acceptance for each client.
Separation in hybrids
An operational and commercial boundary between the independent and the non-independent service, with each client unambiguously assigned.
Service map, differentiated procedures, sales scripts by type of advice and a record of client assignment.
Commercial and contractual consistency
Website, advertising, proposals and contracts that say exactly what the model allows, without overselling independence.
Documented review of materials, an updated advisory agreement and compliance sign-off on communications.
Signs that your “independence” would not survive a review
Five patterns we see when auditing models that called themselves independent before they fully were.
- Your website says “independent advice”, but your contracts, your ex ante disclosure or part of your revenue say otherwise.
- More than half of recent recommendations end up in group products or in those of asset managers you have agreements with, with no comparison to justify it.
- You are still signed up to “legacy” retrocession agreements that nobody has canceled or reconciled.
- In your hybrid model, the same advisor serves both services with a single sales pitch, and clients are not recorded as assigned to either type of advice.
- You could not hand over tomorrow, for a specific client, the evidence that they were informed ex ante of the nature of the service.
Related decisions
Independence: the decisions that go with it
The nature of your advice drives your revenue model, the vehicle you operate through and the contracts you sign. Before settling on the label, look at these four pieces of the board.
Inducements
The retrocessions regime
Prohibition, conditions and refunds: the full map of MiFID II Art. 24 that your model must respect.
See the regime →
Art. 24Refunds
Vehicle
Setting up an EAF
The license independent projects usually start with: firm type, capital, CNMV application and launch.
See the route →
CNMVLicense
Contract
Advisory agreement
Where the nature of the service, fees, scope of the range and responsibilities are agreed. The other half of the file.
Review the clauses →
FeesScope
Outlook
The RIS and the future of the model
The European negotiation on inducements and value for money may give an edge to those already operating on fees. Follow it with sound judgment.
See the status →
TriloguesInducements
Round out the analysis with our MiFID II compliance service, the services for EAFs page and, if your project stays in Spain, EAFN authorization. For client assessment, remember the suitability test.
Contact
Book a call
Tell us how you advise today and what model you want: we will send you a concrete plan to operate as independent, as non-independent or as a properly separated hybrid.
Independent investment advice under MiFID II: requirements, hybrids and the fee-based model
MiFID II (Directive 2014/65/EU, implemented in Spain through Law 6/2023) requires every firm that provides advice to define itself: independent or non-independent advice. It is not a matter of taste. The nature you choose determines how broad a range you must assess, what happens to third-party inducements and what you must tell the client before making the first recommendation. For EAFs, private banks and asset managers, getting this right defines the business model; executing it badly turns a sales argument into a regulatory liability.
The three requirements of independence
Calling yourself independent commits the firm to three things. First, assessing a broad and diversified range of instruments available on the market, which cannot be limited to those issued or managed by the firm itself or by entities with which it has links: you need a selection procedure with a documented universe, filters and comparisons. Second, not accepting or retaining inducements from third parties: any payment received is passed on to the client, as explained on our MiFID II retrocessions page. Third, informing the client ex ante of the independent nature of the service and what it implies, and keeping a record of it.
Hybrid models: lawful, but with a boundary
The same firm can provide both types of advice if it truly separates them: differentiated procedures and ranges, different inducement regimes for each service, clients unambiguously assigned to one type and commercial communications that do not present the firm as a whole as independent when it is only partly so. Supervisory experience is clear: hybrids do not fail because of their design, they fail in practice—the same team, the same pitch and clients who never knew which service they were in.
Why the fee-based model pays off (commercially)
Fee-based advice aligns revenue with the client’s interest, and that has become a market differentiator compared with traditional distribution: a transparent proposition, recurring revenue and a comfortable position under the scrutiny of inducements that the Retail Investment Strategy keeps open in Brussels. The usual vehicle for these projects is the EAF (or the EAFN for Spain-only business), and its core document is the financial advisory agreement, where the nature of the service, the range and the fees are agreed.
Our work: making the label and the file match
We support firms throughout the cycle: a reasoned decision on the nature of the service, building the range procedure, cutting off and refunding inducements, the fee schedule, contracts, ex ante disclosure and review of the website and sales materials. And when the supervisor asks, we prepare the response with the evidence already in order. All as part of our MiFID II compliance service, with the suitability test as the closing piece of every recommendation.
The model, piece by piece
Vehicles and project
Official sources
Key legislation, linked to the official text:
- Law 6/2023 of March 17 on Securities Markets and Investment ServicesBOE · consolidated text
- Delegated Regulation (EU) 2017/565 of April 25, 2016 supplementing Directive 2014/65/EU as regards organizational requirements and operating conditions for investment firmsEUR-Lex · Official Journal of the EU
- Directive 2014/65/EU of May 15, 2014 on markets in financial instruments (MiFID II)EUR-Lex · Official Journal of the EU
Legislation and links reviewed in .