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What investment services can we provide you at Česká spořitelna (ČS) and what will we need from you?
At ČS we provide the investment services Acceptance and Transfer of Orders, Investment Advisory and Securities Management (better known under the name Asset Management). We also record investment instruments on your asset accounts and ensure their management in the agreed scope. Investment services are regulated by the Capital Market Business Act and European legislation known under the collective designation of MiFID II.
ČS is obliged to act with due diligence and in the best interest of the client. We will need your cooperation in order to assess which investment service solution is optimal for you. It is very important that we collect current, complete and accurate information from you. If we fail to do this, we will not be able to assess what risk the investment service or investment instrument poses for you and will not be able to provide you with some investment services at all.
Among the areas that are important for the subsequent search of the optimal investment solution is information about your knowledge and experience in the area of investments, financial situation, ability to bear loss and investment goals.
What exactly do you imagine under these names? Do the investment services have something in common? Which is the best one for you?
The basis for the possibility of providing you one of the above investment services is determining a Client Knowledge Profile (hereinafter referred to as the “CKP”). This involves several questions which we want to but also have to ask you, because this is required by various legal regulations. We ask questions through our certified bankers using an on-line questionnaire in the ČS (George) digital environment. For example, we find out which of the basic types of investment products and investment services you understand. We are also interested in whether you are already investing or have invested, how often, in what volume and in what way. We find out about all this to get an idea about your knowledge and experience in the area of investments, and can determine your individualised Client Knowledge Profile (CKP).
By establishing the CKP, we determine which investment products are appropriate for you and which are not. You do not have to have a sufficient understanding of the investment instruments we assess as inappropriate for you and perceive all the risks related to them (for example possible level of loss of the amount invested). The CKP is also the basic input parameter for assessing compatibility with the investment instrument target market, which ČS must determine for each investment instrument. The CKP allows us to partly assess whether you fall into the investment instrument target market based on your knowledge and experience. The next part for assessment of compliance with the investment instrument target market is your financial situation (with focus on the ability to bear losses), risk tolerance and investment goal with a horizon. This is nothing other than an assessment of whether the investment instrument corresponds to your preferences due to which you are buying a specific investment instrument or which we can offer you while meeting certain conditions.
The information you disclose for the needs of the CKP is valid for 2 years, or is updated with regard to your current situation and circumstances. So we do not ask you with each transaction, provided you have a CKP, we only check that it is up-to-date. We always ask the minimum of questions, which need to be asked in connection with the investment service you want to use.
Main investment services
The reception and transmission of orders concerning investment instruments means above all the reception of orders from the client to buy/sell a specific investment instrument and its transmission to the appropriate market for further execution. In this case, ČS does not execute but only transmits it for execution.
If you know exactly what investment instrument you want to buy (or sell), we will accept your order for its purchase (or sale). But we have the obligation to find out/check your CKP, whether you have got it/ is it up-to-date, during the purchase assess whether the purchased investment instrument is appropriate to your knowledge and experience, as well as assess compliance of your intention (to buy a certain instrument with a certain goal) with the parameters of the target market of this investment instrument. We must inform you of the result of our assessment. If you are provided with the investment service during a personal meeting with a ČS employee, we also have to draw up a Minutes of the Meeting. We need your signature for some information which we obtain from you or provide you with.
For selected investment instruments refer to the ČS website and also to George internet banking. Their list could differ at these sites.
An Investment Services Contract must be concluded with ČS for the provision of these services, based on which we will set up an asset account of investment instruments for you so your investment instruments can be recorded somewhere.
Management of securities means the management of the client’s assets involving investment instruments or funds intended for the purchase of securities based on the free consideration of the portfolio manager on his own behalf or on behalf of the client to his account.
The investment service is intended for clients who trust ČS to look after their finances and make investment decisions on their behalf based on contractually pre-defined conditions and rules. This service is available only at Erste Private Banking branches. The service is contractually arranged with the client by a Portfolio Management Contract.
Determining the CKP is the first essential prerequisite so that you can be provided with this service. In addition, we need information about your financial background and your investment goals. Together we will also determine the investment horizon, which is the time during which the goal should be met, and will set the risk solution of this goal so that it corresponds with your financial possibilities, preferences of sustainability and your willingness to accept a certain degree of risk. Based on the assessment of all these inputs, i.e. a suitability test, we will recommend an appropriate investment solution = an appropriate asset management strategy. There may be different investment solutions and there may be more of them if you have various investment goals. It depends on the information which you provide and on what level of investment you are considering.
You will receive each of our recommended investment solution in the form of an Investment Offer, which also serves as a Minutes of the Meeting. Various types of documents and annexes constitute an integral part of the Investment Offer. Their specific list is always a fixed part of the Investment Offer.
If a longer period of time passes between the creation of the Investment Offer and the moment when you decide to go ahead with our investment recommendation, it is a good idea to consult the relevance of our original investment recommendation again, such as due to the market trend on capital markets.
Investment advisory means the provision of an individualised recommendation by Česká spořitelna to the client regarding a transaction with a specific investment instrument based on the assessment of the suitability of the investment instrument for the client.
If you would like to invest, but do not exactly know how and into what, and need advisory, this investment service is suitable for you. In addition, you will retain a great degree of influence over the final appearance of your investment. Determining the CKP is the first essential prerequisite so that we can recommend a specific investment solution to you. But the CKP is not enough. We need to find out more information from you about your income, financial background and payment habits, and last but not least also about your goals and dreams which you will want to fulfil through investments.
So together we will also deal with your investment horizon which is the period in which the goal should be fulfilled. We also need to know your attitude towards risk so that we can assess just how great a risk the investment should be to correspond with your goal, investment horizon, your financial possibilities, but above all how much risk you can tolerate/accept. We will also find out your preferences regarding sustainability.
Based on all the above information for which the established expression of suitability test (appropriateness test) is used, we will recommend the appropriate investment solution. Investment solutions can be different and there may be more if you have various investment goals. It depends on the information that you provide us, the amount of investment you are considering to make, but also, for example, whether you prefer a simpler or more complicated solution to your investments (we may recommend one investment instrument or we may recommend more investment instruments while stating their optimal percentage distribution in the recommended investment solution). The investment solution may also differ according to whether the investment advisory service is provided at a branch or in George internet banking. Generally, bankers at the branch can offer more solutions as opposed to George internet banking (this may be due to technical reasons, the difference in the number or complexity of investment solutions, the possibility of interaction between the banker and you when he/she can take into account other investments by changing the recommendation involving the replacement of individual investment instruments with others from the same asset class and sub-class).
You will receive each of our recommended investment solution in the form of an Investment Offer which also serves as the Minutes of the Meeting. Various types of documents and annexes, depending on the place where the service is provided, (branch versus George internet banking) constitute an integral part of the Investment Offer. Their specific list is always a fixed part of the Investment Offer.
Investment advisory at ČS is free of charge and non-binding. The orders (for buying/selling/replacing specific investment instruments) leading to the implementation of the overall recommended investment solution can be traded either immediately or only after your consideration/decision. This can be done directly at a branch with your advisor/banker, or the orders can be sent to you via internet banking for subsequent trading. You give us orders at your own risk. If the period between creating an Investment Offer and the moment when you decide to implement our investment recommendation is longer, it is good to consult the relevance of our original investment recommendation again, for example due to the market trend on capital markets. Providing investment advisory does not mean means that we are obliged to continue monitoring the trend of your investment and provide you with further investment advisory regarding its market trend. We do not guarantee the appreciation of your investment nor a fall in the value of your assets or any losses in connection with transactions we recommend as part of investment advisory.
We do not provide regular assessment of the of the adequacy of investment instruments recommended to the client.
We do not provide investment advisory independently given the fact that the products we recommend to you are the investment instruments of issuers we cooperate with.
We use the wide analytical facilities of the entire Erste Group Bank. Our models built on long-term strategic and tactical allocation of assets with open investment architecture take full consideration of activities on financial markets.
So our investment recommendations are not just limited to investment products within the Erste Group Bank, but to create optimal investment solutions we include the products of well-known investment managers in investment solutions such as BNP Paribas Asset Management, Fidelity International, Goldman Sachs Asset Management, Franklin Templeton, or Allianz Global Investors and others.
Investment solutions break down (diversify) invested money among individual asset classes (above all bonds, stocks and alternative investment instruments – real estate, commodities, alternative investment strategies). Thus they diversify the potential yield, but in particular any potential market risks related to investments. Individual asset classes behave differently under the given conditions and by combining them into one investment solution we can use their interdependence (correlation) to the benefit of the resulting investment solution profile. The ratio, in other words the representation of individual asset classes in specific Investment solutions, is set by your resulting requirement for the potential of their yield and maximum rate of the fluctuation of their value, which you are able to accept. So we can provide you with this service, you need to conclude an Investment Service Contract with ČS under which we will open an asset account of investment instruments so your investment instruments can be recorded somewhere.
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