Quick answers to frequently asked questions

Honorarfinanz is an independent fee-based investment advisory firm regulated by BaFin and the Deutsche Bundesbank. What sets us apart? In short: Our clients receive high-quality, independent investment advice and wealth management services—the kind of service usually reserved for institutional investors or ultra-high-net-worth individuals. All of this at a fair price—embedded in a fair and transparent business model. Is that special? Unfortunately, yes! Most banks and financial service providers in Germany sell products to their clients in order to make money. Because many do not play with an open hand, investors cannot make free and informed decisions. The only answer is: genuine, independent advice, where the fee-based advisor stands on the client’s side, just like a lawyer.

Fee-based investment advisory is a legally protected professional title that may only be used by firms that are registered as fee-based investment advisors Register der BaFin. Fee-based investment advice is an independent service in which no commissions may be accepted from product providers. Under this business model, you pay us a pre-agreed fee directly and, in return, receive independent investment advice and commission-free products. This allows us to act as your advocate and support you with our expertise in a fair and independent manner at all times.

Fee-based investment advice has been regulated by law since 2014. This means you can be certain that we are not permitted to receive any commissions. We are compensated for our advisory services exclusively by the client and by no one else. Fee-based investment advice is legally guaranteed as INDEPENDENT INVESTMENT ADVICE under Section 36c of the German Securities Trading Act (WpHG). You can learn more on the BaFin website.

No, not in the traditional sense. Although we are a securities brokerage firm and, like any bank, are regulated by BaFin, we do not offer asset management services; instead, we provide passive investment solutions with active risk management. Within the various asset classes (e.g., stocks or bonds), we invest exclusively in passive ETFs that track a specific market at the lowest possible cost. We therefore only make adjustments to your portfolio if it changes due to market movements. One of our tasks is to rebalance it back to your original risk allocation. Unlike an active asset manager, we do not make portfolio reallocations based on opinions regarding the price performance of specific asset classes and markets. An active asset manager selects individual securities based on expected capital gains (so-called stock picking). However, countless empirical studies show that this is not effective.

One of the biggest differences is that we don’t offer off-the-shelf, standard solutions; instead, each portfolio is designed individually and tailored to your personal risk profile. This means we create a unique investment strategy for you, perfectly aligned with your life circumstances. With us, you have the opportunity to incorporate your own ideas and wishes into the portfolio design. Almost no other provider offers you this opportunity. Another major advantage is that our advice and support are not delivered through a rigid, computer-based system. While a digital wealth manager does not provide you with a personal contact person, this is included in our asset management fee. You are thus assigned a personal investor coach who, if you wish, will accompany you until your goals are achieved.

Yes. Upon request, we advise our clients on general investment matters or specific financial investments, and we also provide recommendations on individual securities. Essentially, we also advise you on whether you might be better off investing your money in paying off loans, buying a house, or starting a new business. The decision regarding which topic you’d like information on is entirely up to you. However, if you choose our services, we’ll support you every step of the way to ensure your decisions align with your needs and goals.

Honorarfinanz combines market returns with low costs. How exactly does this work? To deliver true market returns while keeping management fees low, we rely on the following insights: Our investment strategy is based on the Nobel Prize-winning research of Prof. Eugene Fama. The core of this research is the realization that stock market performance cannot be predicted. This makes beating the market’s return by selecting individual stocks a pure gamble. Instead of relying on a fund manager’s gut feeling, we invest countercyclically and across the entire market. This allows you to secure the high average returns of the global capital market and be invested in up to 15,000 companies across 90 countries. This ensures you the highest returns with minimal price fluctuations. By eliminating the fund manager, we also save on costs for analysts, the fund manager, and unnecessary securities transactions.

Fee-based financial advisors build global portfolios that are significantly more diversified, investing not only in large-cap stocks but also in small- and mid-cap companies, which leads to greater diversification and optimized returns: MSCI World vs. Global Portfolio:

• 1,643 individual stocks vs. up to 15,000 individual stocks
• Large-cap stocks vs. large-, mid-, and small-cap stocks
• 23 countries vs. global

The composition of the portfolios is based on scientific research and reflects the actual global capital market. Honorarfinanz invests globally in up to four different asset classes, representing up to 15,000 individual securities from up to 90 countries.

Our goal is to achieve the broadest possible diversification—across all continents, market capitalizations, asset classes, and currencies. To this end, we use low-cost index funds and ETFs. In total, we thus invest in up to 15,000 individual securities: for example, stocks from the largest industrialized nations, stocks of smaller publicly traded companies, stocks from emerging markets, as well as government and corporate bonds worldwide with high credit ratings. To select the products, we continuously evaluate well over 4,000 index funds/ETFs authorized in Germany based on clear, objective criteria. In doing so, we use institutional asset class index funds in addition to ETFs.

Compared, for example, to the MSCI World ETF, which tracks only the largest approximately 1,600 companies worldwide, the asset class index fund tracks around 6,500 companies worldwide and thus represents the actual asset class. Furthermore, asset class index funds allow us to invest perfectly in global small-cap and value companies, as well as in high-quality, short-term global government and corporate bonds. This is where ETFs reach their limits. Unfortunately, asset class index funds cannot be traded directly by retail investors, as these are institutional financial instruments that can only be traded through accredited fee-based advisors such as those at Honorarfinanz.

No! Even though the media writes about how easy it is to manage and grow your wealth with ETFs and index funds, they will not protect you from losses and mistakes. ETFs and index funds are merely investment vehicles that, while very cost-effective, can also be highly beneficial if used and applied correctly. However, if you choose them incorrectly or use them incorrectly, these instruments will cause more damage and loss than you would have wished. ETFs and index funds are professional investment instruments, and you should therefore treat them with caution. Just imagine if someone were to hand you a Formula 1 race car and expect you to drive it without any knowledge or experience.

Yes. As independent financial advisors, we have access to the most competitive net rates on the market. Net rates refer to insurance solutions that do not include underwriting or distribution fees. For the most part, we can tailor all portfolio strategies to your risk profile using ETFs and index funds. We have access to insurance providers offering over 100 ETFs to choose from. How can I avoid the flat-rate withholding tax on my money? We have the option to place a cost-effective insurance wrapper around your index/ETF portfolio. This ensures that all dividends and interest distributed during your investment horizon remain tax-neutral within the insurance wrapper. If your money remains invested for at least 12 years and after you turn 62, we avoid the entire withholding tax upon withdrawal, and you only have to pay tax on half of the profit generated up to that point at your personal tax rate. We always calculate whether this option makes sense for you on an individual basis.

Exchange-Traded Funds are index funds traded on the stock exchange. They track the performance of an index, such as the DAX. Essentially, ETFs combine the advantages of stocks and mutual funds into a single product. ETFs allow our investors to invest in entire markets cost-effectively with a single security. In addition to stocks, our investors can also use ETFs to invest in many other asset classes. Because of this diversity, ETFs are perfect building blocks for personal investing. ETFs simply track a market index one-to-one and, like a stock, can be traded on the stock exchange at any time. In doing so, ETFs offer the following advantages:

• they are cost-effective
• they are transparent
• they are broadly diversified
• they are flexible and liquid

For more information, see our guide on “What Are ETFs”

Just like stocks, ETFs are traded on the stock exchange. This means investors can buy and sell ETFs at any time during market hours. In contrast, traditional mutual funds are traded only once a day through the fund company. While mutual funds typically incur high front-end loads, trading ETFs on the stock exchange involves only the bank’s order fees and a usually small difference (spread) between the bid and ask prices.

ETFs are unpopular products among commission-based financial advisors and branch banks. This is because these advisors typically rely on commissions paid to them by fund providers for brokering financial products. However, such commissions do not exist with ETFs. For this reason, ETFs are now recommended almost exclusively by fee-based advisors. While ETFs are still relatively unknown among retail investors, professionals have been using them for years in their investment strategies. For large institutional investors such as pension funds and insurance companies, ETFs are a standard component of their portfolios.

Simply invest in an entire market … With ETFs, our investors can now easily invest directly in entire investment markets. This results in broad diversification of assets and prevents concentration in too few individual securities (concentration risk). Investors can achieve broad diversification of their assets with just a few transactions. Today, there is a wide selection of ETFs for a wide variety of investment markets, such as the equity, bond, commodity, real estate, and money market. This allows retail investors to invest in entire markets—globally or regionally diversified—in the blink of an eye. Investing in specialized themes such as water, energy, or sustainability is also possible with ETFs. Our investors can achieve the highest possible level of diversification by spreading their portfolio across as many investment markets, regions, countries, and sectors as possible.

Higher returns through lower costs. Low management fees and narrow trading spreads make ETFs the most cost-effective investment vehicles on the market. The ongoing costs of an ETF are reported as the total expense ratio (TER). Unlike traditional mutual funds, ETFs do not have an upfront sales charge. For more information, see our guide on “ETF Costs”

High liquidity: Attractive trading spreads in stock market trading. The ETF is as liquid as the underlying securities.

The daily disclosure of fund holdings is a clear advantage of ETFs. With traditional mutual funds, the actual portfolio composition is often disclosed with a significant delay. With ETFs, however, providers typically disclose the exact composition of the ETF on a daily basis. Thanks to the daily disclosure of fund holdings and a transparent fee structure, ETFs offer a high degree of transparency.

ETFs are traded on the stock exchange just like stocks—which means they offer a high degree of flexibility. As a result, an ETF can be bought and sold at any time during market hours. To trade an ETF, all you need to do is specify the ETF’s ISIN, the desired number of shares, the exchange where the trade is to take place, and, if applicable, a limit price. The exchange you choose determines how narrow the trading spread is and how high the brokerage fee is.

• ETFs do not offer a capital guarantee. The value of an ETF may rise or fall.
• ETFs are special funds. The fund’s assets are held separately from the ETF provider’s operating assets. In the event of insolvency, the fund’s assets are not part of the insolvency estate.
• The use of derivative financial instruments entails counterparty risk.
• The individual securities in the index may be traded in a currency other than that of the investor, resulting in currency risk that may also have a negative impact on performance.

Please note that these are very general risk factors associated with ETFs and are not intended to be exhaustive. A detailed description of the risks can be found in the prospectus of the respective ETF.

Exchange-traded commodities. Exchange-traded commodities (ETCs) offer a straightforward way to invest in precious metals and commodities. The performance of an ETC is based either on the spot price (price for immediate delivery) or the futures price (price for future delivery) of a single commodity or an entire basket of commodities. For more information, see our guide on “ETFs vs. ETCs”

If you want to invest solely in a commodity, you must purchase an ETC (Exchange Traded Commodities) . There are ETCs for precious metals, industrial metals, oil, natural gas, agricultural commodities, and livestock. Like ETFs, ETCs are traded on the stock exchange and offer the same advantages. But there is one important difference: The capital invested in an ETC is not a special fund that is protected in the event of the issuer’s insolvency. An ETC is a debt instrument issued by the ETC provider. Compared to an ETF, investors in an ETC therefore face an issuer risk. To minimize this risk, issuers rely on various methods of collateralization. For more information, see our guide on “ETFs vs. ETCs”

Most precious metal ETCs (gold, silver, platinum, palladium) generally track the spot price and are physically backed. For example, in the case of a physically backed gold ETC, physical gold bars are held in a custodian’s vault as collateral. This eliminates issuer risk for physically backed ETCs.

Our fee is calculated on a case-by-case basis according to the time and effort involved, using a flat-rate fee structure. Our mission is to empower you to make much more informed financial decisions. As a state-licensed fee-based investment advisory firm, we guarantee 100% independent financial and investment advice that is in your best interest. We would be happy to provide you with a personalized quote.

Wealth management services are tailored to your risk profile and the size of your investment. The management fee for our services is calculated as a percentage of the assets under management, billed quarterly by the custodian bank, and charged to your clearing account or your investment portfolio. The asset management fee ranges from 0.3% to a maximum of 1.2% plus VAT. You can contact us directly to find out what services you receive in return.

That’s entirely up to you. When it comes to your investment, we’re not talking about a 1- to 2-year investment horizon, but rather many years, if not decades. During this time, a lot will happen on global capital markets. There will be crashes, financial and economic crises, or rallies. You’ll receive a wide variety of recommendations from the press, media, acquaintances, and friends, which will likely leave you feeling uncertain. Since people are not capable of thinking and acting in a consistently disciplined and rational manner when it comes to money, there is a significant risk that you will make mistakes that prevent you from achieving your goals and the associated market returns. However, take a look at the following video series and then decide for yourself. Link to the video series “The Value of Advice”.

Yes and no. During the initial consultation, we’ll provide you with so much useful information that you’ll ultimately be able to take action on your own. Of course, we can’t provide this information to you for free. However, if you go on to book a specific project with us, the initial consultation will be free of charge for you, and you won’t be billed for it.

No. Generally speaking, a distinction can be made between investment advice and asset management. With investment advice, we tailor your portfolio to your individual needs, and you then manage it yourself. The decision regarding which service to use is always up to the client. For investors who wish to have us manage their assets, we handle all risk management, and you have a personal investor coach at your side. This coach will guide you toward achieving your defined investment goals in the best possible way. We apply all our expertise, experience, and knowledge to this end. You can sit back and relax. Just take a look at our video.

Yes. Determining your personal risk profile is the most important step in the investment process. If you start off on the wrong foot here, experience shows that you won’t achieve your financial goals. With our scientifically based risk profiling, we help you precisely define your personal risk profile. Once you understand yourself better, you can make the right decisions for your money. Take the test now and determine your personal risk profile.

Yes. We can take over the management of your existing investment accounts entirely. For example, if your account consists of actively managed funds, you will immediately receive a 100% refund of all kickback payments. We can also manage individual securities, such as stocks, on your behalf thanks to our regulatory authorization.

Our clients have a right to understand what is happening and want to know how their money is being used. It is important to them that their money is not mishandled. They expect value-added services in return for the fees they pay and are willing to compensate a firm like Honorarfinanz appropriately for this. Our clients expect a fair and transparent business relationship. We can guarantee this with a clear conscience. Together, we create a win-win situation. That is what our clients are grateful to us for.

Then you should take a close look at your old habits. This is a process that requires a shift in thinking, but it can also be enjoyable. So use the following questions to conduct your own personal assessment:

• Are you looking for independent advice that’s in your best interest?
• Do you recognize the concept of direct compensation as a prerequisite for true independence?
• Do you find the idea of systematic investing free from forecasts to be sensible?
• Are you looking for a partnership on equal footing?
• Is fair play important to you in a business relationship?
• Are you prepared to invest at least €100,000 with us over the long term?

If you answered “yes” to all of these questions, it seems you might be interested in modern, independent advice. Why not schedule an appointment with one of our licensed fee-based investment advisors near you?