Recently, wealth advisory services have gained popularity among Thai investors, and it could range from providing investment advice and investment planning in securities (and other types of assets), to managing client portfolios. Some investors see wealth advisory services as a tailor-made route to wealth – which could account for a variety of client's financial purposes.
For many newly set-up securities companies, providing a full range of wealth advisory may be operationally impractical. This is because client portfolio management (part of wealth advisory service) is considered to be a private fund management (the PF) service - for which the PF license is required. Moreover, after it has obtained the license, it must go through the activation process1 of the license before it can start providing PF services. The activation process of the PF license normally takes some time, and requires a heavier set-up operational system than many other securities business. Many newly set-up securities companies can find themselves at a disadvantage, as their operational system does not meet the operational requirement for activation, and hence unable to provide a full range of wealth advisory services (that include client's portfolio management).
The Office of the Securities and Exchange Commission (the Office of the SEC) is aware of this constraint and – in response to the gaining popularity of wealth advisory services – has proposed a route for securities companies to seek wealth advisor approval from the Office of the SEC (WA Approval). WA Approval will enable an approved securities company to provide complete wealth advisory services (including management of client portfolios), subject to the condition that it must obtain and activate the PF license before the WA Approval expires.
1. Eligibility for WA Approval
A securities company that has the following qualifications can obtain WA Approval:
a) it holds any type of securities or derivatives license;
b) it has sufficient and appropriate capital and personnel at all times to provide services to its clients;
c) it has a proper and adequate operational system ready to provide wealth advisory services;
d) it has an efficient, stable, and safe information technology system; and
e) it has no record of breaching any of the requirements in items a) to d).
2. Application for WA Approval
The applicant company must submit an application package, with supporting documents (listed in an as-yet unpublished manual), to the Office of the SEC. The Office of the SEC will consider the application and make a decision on WA Approval within 30 days from the date the complete application package is submitted.
3. Validity period of WA Approval
WA Approval is valid for a period prescribed by the Office of the SEC, but, in any case, any approval will be valid only until 16 July 2019, when the WA approval scheme will officially end.
4. Post-approval obligations
After WA Approval is obtained, a securities company must obtain and activate the PF license with the Office of the SEC, within the validity period of WA Approval.
We will continue to monitor the development of rules and regulations, and provide updates.
1 The activation process is a process to show the Office of the SEC that the operational system of a licensed securities company is ready and in good shape to provide PF services.
2 This includes a securities company that holds the PF license but has not activated the same.