Want to buy or sell securities, but don’t need investment advice, recommendations or to have your investment decision reviewed?
The number of such “execution only” transactions is becoming more frequent due to the increasing number of online brokerage services. The option bears both opportunities and threats for you. Execution only us suitable for investors who know exactly what they want and who have the necessary financial knowledge to be able to make their own investment decisions.
For less experienced investors, or investors wishing to have tailored investment advice, it might make sense to choose a investment services provider that offers professional advice and assistance. Be aware of the opportunities and threats associated with execution only transactions!
Opportunities
Quick settlement of transactions
Since no time is required for advice, your transactions can be settled quickly. You are able to reactly quickly to changes in the markets, without having to wait for recommendations or approval by an adviser.
Simplicity and convenience
If you possess the necessary financial knowledge and know exactly what you want, the process for executing transactions are often more simple and convenient.
Transparency
As no advice is given, there is less risk of a conflict of interests existing for the adviser.
Cost effectiveness
As you do not receive any advice, the fees are lower than in the case of comprehensive investment advice.
Autonomy
You have full control over your investments, and are able to take your own decisions at all times.
Issuer:
someone issuing securities
Commission:
performance-related remuneration
Threats
Market volatility:
shows how strongly prices for securities fluctuate.
Online broker:
provides investment services over the Internet.
A lower level of protection
It does not address Your knowledge and experience, investment objectives, financial circumstances, risk appetite, and your ability to cope with losses. Your investment decision is not reviewed. However, you are required to be informed in a standardised format.
No advice
The securities transactions that are concluded are standardised, and do not take into account your specific requirements or objectives. You do not receive any advice that is tailored to your personal requirements. This can lead to poor decisions.
A lack of information
You have to inform yourself about the financial product in question, and to examine and understand the risks it entails. You are also responsible for obtaining and analysing market data. This is time-consuming and requires expertise. If you overlook important information, the risk exists that you will make poor investment decisions.
Risk management
You have to carry out your own risk management. This may be difficult, as you have to decide for yourself how your react to market risks and market volatility.
The dangers of emotional decisions
Without objective advice you might take more emotional decisions, such as panic selling in volatile markets or spontaneously buying and selling shares animated by the gaming-like nature of trading apps.
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www.fma.gv.at > A-Z of Finance > Investments > Advisory Meetings