What is an investment advisory/agency business? Explaining the registration requirements and the difference with investment management businesses
Updated: July 2026, 1
Investment advisory and agency businesses are businesses that were defined as part of the financial instruments business when the Financial Instruments and Exchange Act, which came into effect on September 19, 9, was enacted, and investment advisory (advice) businesses (based on the Act on the Regulation, etc. of Investment Advisory Business Relating to Securities (Investment Advisory Business Act)), which existed until 30, were replaced by investment advisory businesses (advice) businesses.
Investment advisory and agency business is one type of financial instruments business.
Please see the next section for other types available.
table of contents
- 1 Financial Instruments Business Type
- 2 What is investment advisory/agency?
- 3 Differences between investment advisory and agency businesses and investment management businesses
- 4 Investment Advisory and Agency Registration
- 5 Registration requirements
- 6 Regarding deposit of business guarantee deposit
- 7 Obligation to post signs
- 8 FAQ
- 9 Leave the registration procedures for investment advisory and agency businesses to us!
Financial Instruments Business Type
Financial instruments businesses are categorized into the following four types based on the business activities (type of business):
①Type 1 Financial Instruments Transaction Business
Selling and soliciting highly liquid securities (stocks, bonds, etc.)
②Type 2 Financial Instruments Transaction Business
Selling or soliciting low-liquidity securities
Example: Trading of trust beneficiary rights, offering of fund interests (collective investment scheme interests), etc.
③Investment management business
Based on discretionary investment contracts, invest money and other assets in securities, etc., and manage them.
(*Investment decisions are made by investment management companies.)
④Investment advisory/agency business
⇒We will explain this in more detail in the next section.
What is investment advisory/agency?
There are two types of investment advisory and agency businesses: investment advisory businesses and agency businesses.
What is investment advisory business?
The investment advisory business is defined as follows:
(Financial Instruments and Exchange Act, Article 2, Paragraph 8, Item 11, partially omitted)
A party enters into a contract (hereinafter referred to as an "Investment Advisory Contract") under which it promises to provide advice to the other party, either orally, in writing (excluding newspapers, magazines, books, and other materials that are published for the purpose of sale to an unspecified number of people and that can be purchased by an unspecified number of people at any time), or by other means, with respect to the following matters and the other party promises to pay a fee for such advice, and the party provides advice pursuant to said Investment Advisory Contract:
In summary, the job involves advising clients on investment decisions based on analysis of the value of securities or financial products, based on an investment advisory contract concluded with the client.
We only provide advice, and the final investment decision is made by the investor.
In addition, since investment advisory contracts require a fee, free e-mail newsletters and blogs for which no investment advisory fees are received do not constitute investment advisory services.
Cases that do not fall under investment advisory business are listed here
What is agency business?
An agency is defined as follows:
(Article 2, Paragraph 8, Item 13 of the Financial Instruments and Exchange Act)
Representation or intermediation in the conclusion of investment advisory contracts or discretionary investment contracts
We are entrusted by investment management companies or investment advisory/agency companies with the task of concluding discretionary investment contracts or investment advisory (advice) contracts, and act as an agent/mediator in concluding contracts with their clients.
Differences between investment advisory and agency businesses and investment management businesses
Investment advisory and agency businesses and investment management businesses are types of financial instruments business under the Financial Instruments and Exchange Act, but there are clear differences in the nature of their operations.
Investment advisory/agency businessIt mainly consists of the following two activities:
- Investment Advisory Services：Based on the investment advisory contract with the client, we analyze the value of securities and financial products, etc., and provide investment advice based on the results. The final investment decision is made by the client himself.
- Agency and intermediary services: Commissioned by investment management companies and other investment advisory/agency businesses, we act as an agent or intermediary between clients and businesses to conclude discretionary investment contracts and investment advisory contracts.
on the other hand,Investment management businessis a business in which an investment management company invests and manages investors' assets in securities, etc. based on a discretionary investment contract with an investor. In this case, the investment management company makes both the investment decisions and the actual investment activities.
In short, the difference between an investment advisory and agency business is that it provides advice on investment decisions and acts as an agent or intermediary in contracts, with the final investment decisions and investment actions being made by the client, whereas an investment management business is entrusted with investment decisions and investment actions by investors, and the investment management company carries these out directly.
Investment Advisory and Agency Registration
In accordance with the Financial Instruments and Exchange Act, any business engaging in investment advisory or agency work must be registered in advance with the Prime Minister (registered businesses are given the registration number, Director-General of the ○○ Financial Bureau (Financial Instruments and Exchange) No. XXX).
Both corporations (stock companies, general partnerships, limited partnerships, and limited liability companies) and individuals can register as investment advisory and agency businesses. (Note: Adequate systems must be in place.)
Specific examples include the following tasks:
| ① | Entering into investment advisory contracts with investment management companies and providing investment information |
| ② | Business that provides information on properties held as trust beneficiary interests to real estate funds for a fee. |
| ③ | Collecting membership fees and presenting stock recommendations on the membership website. |
| 4 | A paid e-mail newsletter that provides stocks that are likely to increase in price that day. |
| ⑤ | Business that provides on-time investment information to paid members using SNS, Skype, etc. |
According to the Financial Instruments and Exchange Act, if you operate an investment advisory or agency business without registration, you will be subject to ``imprisonment of up to 5 years, a fine of up to 500 million yen, or both.''
Costs for investment advisory and agency registration
The cost of applying for registration as an investment advisory and agency business is a registration license tax of 15 yen.
In addition, after registration, you will be required to deposit 500 million yen as a business guarantee with the Legal Affairs Bureau before commencing operations.
After the deposit, you will need to report the deposit to the local finance bureau or local finance office.
Who is eligible to register?
There are no specific national qualifications required to register as an investment advisory or agency business.
However, it is necessary to secure officers or employees who have sufficient knowledge and experience related to the business.
In addition, registration will not be granted if any of the reasons for refusal of registration stipulated in Article 29-4 of the Financial Instruments and Exchange Act apply.
Registration requirements
Does not fall under any of the reasons for refusal of registration
The applicant and its officers must not fall under any of the following:
① Regarding past cancellations, etc.
A person who has had his/her registration or other related duties revoked within the past five years
Those who have received a fine within the past five years
② Regarding officers of corporations
Those who are unable to perform their duties properly due to mental or physical disability
Those who are undergoing bankruptcy proceedings and have not been reinstated
Those who have received a sentence of imprisonment or more within the last five years
Was an officer of a corporation whose registration has been revoked in the past
3) Lack of personnel
④ Lack of necessary systems, etc.
For ③ and ④, please check the following items.
A sufficient system is in place to carry out the business
The system for conducting investment advisory and agency business is not specified in detail in laws and supervisory guidelines.
The comprehensive supervision guidelines for financial instruments business operators, etc. state this in abstract terms as follows:
"Having sufficient qualifications" and "Having sufficient knowledge and experience"
"Appropriate allocation of necessary personnel and persons responsible for internal management, etc."
Reference: Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc. > VII-3 Procedures (Investment Advisory and Agency Business) > VII-3-1 Registration
The adequacy of qualifications, knowledge and experience must be determined and explained by each business operator.
Other requirements
In addition to the above, the company will also be reviewed on its financial statements, forecast financial statements, arrangements for the deposit (500 million yen), office status (appropriate use rights and physical independence), and response to the financial ADR system.
In addition, it will be necessary to include a statement such as "investment advisory and agency business" in the purpose section of the articles of incorporation.
Regarding deposit of business guarantee deposit
After registration, a deposit of 500 million yen is required before starting business.
Once the registration application is accepted and registered at the Local Finance Bureau, the registered business must deposit 500 million yen as a business guarantee to the depository before starting business.
This deposit can be made, for example, by the following methods.
① Cash 500 million yen
②Bank of Japan check 500 million yen
③ Government bonds and other securities 500 million yen
④Bank guarantee
Generally, deposits are made in steps ① and ②.
In the case of ③, a separate interest claim procedure will be required each time for the interest accrued on the interest payment date.
Please note that due to the statute of limitations, if you do not complete the procedure to claim interest, your funds will be deposited as national treasury funds.
*Deposit is required when registering only investment advisory/agency business.
For example, when registering for two types of business: investment advisory/agency business and Type 2 financial instruments business,Deposit of 500 million yen is not requiredPlease note that this will be the case.
List of main depository offices
| Tokyo Legal Affairs Bureau | 03-5213-1234 | Kudan 1nd Joint Government Building, 1-15-XNUMX Kudan Minami, Chiyoda-ku, Tokyo |
| Yokohama District Legal Affairs Bureau | 045-641-7461 | Yokohama Second Joint Government Building, 5-57 Kitanakadori, Naka-ku, Yokohama |
| Saitama District Legal Affairs Bureau | 048-863-2211 | Yokohama Second Joint Government Building, 3-16-58 Takasago, Urawa-ku, Saitama City |
| Chiba District Legal Affairs Bureau | 043-302-1318 | 1-11-3 Chuo Minato, Chuo-ku, Chiba City |
| Osaka Legal Affairs Bureau | 06-6942-9467 | 2-1-17 Tanimachi, Chuo-ku, Osaka City |
| Kyoto District Legal Affairs Bureau | 06-6942-9467 | 1-97 Higashiiri Kamiosucho, Kojinguchi-dori Kawaramachi, Kamigyo-ku, Kyoto City |
| Kobe District Legal Affairs Bureau | 078-392-1821 | Kobe Second Regional Joint Government Building, 1-1 Hatoba-cho, Chuo-ku, Kobe City |
| Nagoya Legal Affairs Bureau | 052-952-8111 | Nagoya Joint Government Building No. 2, 2-1-1 Sannomaru, Naka-ku, Nagoya |
| Hiroshima Legal Affairs Bureau | 082-228-5201 | 6-30 Kamehatchobori, Naka-ku, Hiroshima City |
| Fukuoka Legal Affairs Bureau | 092-721-4570 | 3-9-15 Maizuru, Chuo-ku, Fukuoka City |
| Sendai Legal Affairs Bureau | 022-225-5611 | 7-25 Kasugacho, Aoba-ku, Sendai City |
| Sapporo Legal Affairs Bureau | 011-709-2311 | Sapporo 8st Joint Government Building, 2-1-1 Kita 1-jo Nishi, Kita-ku, Sapporo |
Obligation to post signs
Registered businesses are required to post a sign.
Article 36-XNUMX of the Financial Instruments and Exchange Act states, ``Financial instruments business operators, etc. must post a sign in a format specified by Cabinet Office Ordinance in a place easily visible to the public at each business office or office.'' It says.
Once you have completed your registration as an investment advisory business with the Finance Bureau, you must prepare the following signs for each office/office and post them at the entrance or reception area where customers can see them.
Books prepared by investment advice/agents, etc.
Investment advisors and agents must maintain in-house books as stipulated in Article 181 of the Financial Instruments and Exchange Act.
The main books specified in Article 181 of the Financial Instruments and Exchange Act are as follows.
| Book name | Storage years |
| Document consenting to transition from specified investor to general investor | 5 years |
| Document confirming that the individual transitioning to a specified investor meets the transition requirements | 5 years |
| Letter of consent from a corporation that has applied to become a specified investor | 5 years |
| Documents issued before contract conclusion | 5 years |
| Document issued upon conclusion of contract | 5 years |
| contract change document | 5 years |
| Investment advisory agreement | 10 years |
| Document containing investment advice | 10 years |
| Request for contract cancellation | 5 years |
The name of the ledger is not limited to the above name.
It is also possible to save each ledger all at once, or to save a single ledger separately.
In the case of saving in electronic media (saving on a computer),
It is also necessary to preserve it in accordance with the supervisory guidelines provided by the Financial Services Agency.
Documents issued before contract conclusion/Documents issued at the time of contract conclusion
When entering into an investment advisory contract with a client, investment advisory firms must provide the client with the following written contract, which includes the items stipulated in the Financial Instruments and Exchange Act.
① Documents issued before contract conclusion(Article 37-3 of the Financial Instruments and Exchange Act)
②Document issued upon conclusion of contract(Article 37-4 of the Financial Instruments and Exchange Act)
For example, the main items that should be included in the document to be delivered before the conclusion of the contract are as follows.
Items to be included in the document issued before contract conclusion
It is stipulated that documents issued prior to the conclusion of a contract must be clearly and accurately written in 8305-point or larger font size according to Japanese Industrial Standard Z8.
| Items stipulated by the Financial Instruments and Exchange Act | |
| ① | Trade name, name or name and address of investment advisor |
| ② | The fact that it is an investment advisory business and the registration number |
| ③ | Overview of investment advisory agreement |
| 4 | Matters regarding commissions, remuneration, and other consideration to be paid by the customer in connection with the relevant financial product transaction contract, which are specified by Cabinet Office Ordinance. |
| ⑤ | If there is a risk that a customer will incur a loss due to fluctuations in interest rates, currency prices, market prices in financial product markets, or other indicators regarding financial product trading activities conducted by the customer, a statement to that effect. |
| ⑥ | Matters related to the contents of the financial instruments business that are specified by Cabinet Office Ordinance as important matters that may affect customer decisions. |
| Items stipulated by Cabinet Office Ordinance | |
| ① | The content of the document delivered before the conclusion of the contract should be thoroughly read. |
| ② | The fact that it is an investment advisory business and the registration number |
| ③ | Overview of investment advisory agreement |
| 4 | Matters regarding commissions, remuneration, and other consideration to be paid by the customer in connection with the relevant financial product transaction contract, which are specified by Cabinet Office Ordinance. |
| ⑤ | Interest rates, currency prices, market prices in financial product markets regarding financial product trading activities conducted by customers If there is a risk that a loss will be incurred due to fluctuations in other indicators, that fact shall be stated. |
| ⑥ | Matters related to the contents of the financial instruments business that are specified by Cabinet Office Ordinance as important matters that may affect customer decisions. |
*Qualified institutional investor refers to a person defined in Article 10, Paragraph 1 of the Cabinet Office Definition Ordinance of the Financial Instruments and Exchange Act.
Specifically, this applies to financial instruments business operators (Type 10/Investment Management), investment corporations, banks, insurance companies, and corporations and individuals with securities balances of XNUMX billion yen or more that have been notified to the Financial Services Agency. To do.
FAQ
I have been asked by the authorities to submit a summary document. What are the key points and points of caution?
The format of the "Summary" will vary depending on the type of industry being registered (Type 1, Type 2, Operations, or Advisory), but it is basically a document that explains the following elements in writing.
- What kind of company is it (history, executive information, capital, shareholders, etc.)
- What kind of work (content, method, scheme, customer base, etc.)
- How to do it (methods of solicitation and explanation, contract method, business flow, etc.)
- Is there a system and structure in place to achieve this (personnel composition, business execution system, decision-making process, etc.)?
The summary is prepared at an early stage of the registration application process. However, subsequent interviews with authorities, negotiations, and the creation of regulations will be based on the contents of the summary, so it is one of the most important documents in the registration application process.
If the contents of the summary are insufficient (lack of explanation, etc.) or inappropriate (lack of consistency, etc.), subsequent communication with the authorities will be difficult and the preliminary review will be prolonged.How accurate and easy to understand a summary can you provide at the start?The key point is "or".
In addition, many of the issues addressed in the summary are based on the "Comprehensive Supervision Guidelines for Financial Instruments Business Operators, etc."
The "Comprehensive Supervision Guidelines for Financial Instruments Business Operators, etc." contains various matters that financial instruments business operators must comply with and take note of when conducting their business, so it is necessary to thoroughly understand the supervision guidelines before creating a summary document.
What should I do if my compliance officer leaves the company after I register?
First, let's talk about the "procedural" aspect.
When a compliance officer of a financial instruments business operator resigns, the company must appoint a suitable successor and submit a "Notification of Change in Officers or Employees Specified by Cabinet Order of the Financial Instruments Business Operator" within two weeks of the date of retirement (or the "date of change" if different from the date of retirement).
You will also need to make changes to your affiliated association, etc. according to the operation of each association.
In particular, if you are a compliance officer, you are likely to also be registered as a contact point or complaints point for associations, etc., so be sure to change all the details related to the retiring employee without missing anything.
Next, let's talk about the more important "actual situation".
The compliance officer of a financial instruments business operator, as a "key employee," plays an important role in ensuring compliance with laws and regulations, providing guidance, and supervision of the financial instruments business operator.
As this is an important position that is essential for compliance, full-time status is required, and the authorities' inspection of the "personnel requirements" that must be met by financial instruments business operators places particular emphasis on verifying knowledge and experience.
Therefore, when selecting a new successor, it is necessary to pay attention to the following factors.
- Must have the necessary knowledge and experience to be a compliance officer at a financial instruments business operator
(= It is not acceptable if the necessary knowledge and experience cannot be explained on the resume or personnel composition document) - In principle, the candidate must be a full-time employee with no concurrent or concurrent positions
(= Do not hold concurrent positions or hold concurrent positions that may interfere with work execution)
If you have concerns about the above factors, even if you submit a change notification to the authorities, you may be asked to provide additional explanations, your notification may not be accepted, and you may be prompted to reconsider your staffing arrangements.
In addition to making sure there are no gaps in the employment history when a compliance officer takes over, a transition period of at least one to three months is usually necessary, given the important duties and responsibilities of the compliance officer.
There are many cases where the sudden resignation of a compliance officer leads to the company's internal management system suddenly becoming weak.
To prevent this from happening, it is effective to be aware of the following points on a daily basis.
- Organize work and documents thoroughly to minimize personal tasks and management
- Increase opportunities for other executives and employees to be involved in compliance issues and foster a company-wide awareness of compliance.
- Place a person other than the person in charge in the Compliance Department and focus on training the next generation.
- Allow sufficient time for handover of key positions
I am an investment advisory business and would like to start a new Type II Financial Instruments Business. What should I do?
When an investment advisory business engages in Type II Financial Instruments Business, it must meet the requirements for Type II Financial Instruments Business and complete a procedure called a "change of registration application."
Particular attention should be paid to requirements regarding personnel structure (organizational structure, etc.).
In order to engage in Type II Financial Instruments Business, it is necessary to take "measures to prevent harm" to the investment advisory business and to prepare the necessary personnel structure.
Harm prevention measures are measures required to conduct a company's operations fairly and protect investors.
For example, when soliciting funds through a Type II Financial Instruments Business, advising clients of the Investment Advisory Business to invest in the company's own funds for the benefit of the Type II Financial Instruments Business undermines fairness and fails to protect investors.
Measures to prevent such situations are measures to prevent harmful effects.
One example of a measure to prevent harm would be to establish a new sales department to handle Type II financial instruments business separately from the sales department that handles investment advisory business, and to manage customer information to prevent improper transfer of customer information between the two sales departments.
When an investment advisory business engages in Type II Financial Instruments Business for the first time, it is required to take measures to prevent any adverse effects and then improve its personnel structure, such as appointing a person in charge who has knowledge and experience related to Type II Financial Instruments Business.
There is no suitable person for compliance. Is it okay to outsource compliance work?
According to the public comments ("Summary of comments and the Financial Services Agency's approach to comments"), it is stated that "in some cases, it may be acceptable" to outsource the compliance work of investment advisory/agent agencies to external law firms, etc. , is possible as an option.
However, even if an external law firm is outsourced, appropriate financial instruments trading operations cannot be carried out unless the financial instruments business operator has the ability to make appropriate judgments. In many cases, outside law firms and legal advisors are used as sources of information.
Additionally, the law firms entrusted with compliance services are required to have experience with the Financial Instruments and Exchange Act, so the current situation seems to be that the number of law firms that can be used is limited in the first place.
Regarding specific interpretations, judgments and responses will vary depending on the scale and content of the work being undertaken.
Please contact us for details.
Can a one-person company register as an investment advisory/agency business?
Currently, it is difficult for a one-person company to register.
Basically, all positions, including management, executive officers, advisors, and compliance officers, are required to have "knowledge" and "experience" regarding the Financial Instruments and Exchange Act.
It is the latter ``experience'' that is difficult to explain.
In particular, compliance officers will be required to provide the following information regarding the compliance work related to the financial instruments business:Exactly> This requires experience, so there are increasing cases where it is difficult to secure the necessary personnel in the first place.
Please contact us for details.
Can an individual register as an investment advisory/agency business?
Yes, I can.
However, when registering as an individual, the registration is granted to that individual, which is inconvenient in many ways.
For example, in the case of individual registration, the registration itself cannot be carried over.
Basically, if the registered individual takes time off due to poor health, or if he or she wants to hand over the duties to someone else due to a long business trip, the new person will basically be required to apply for a new job. You will need to register as an investment advisory business.
In addition, after registering as an investment advisory business, it is necessary to state the registered individual's address on the pre-contract documents issued to customers, and many people dislike this even in terms of personal information. .
On the other hand, when registering as a corporation, the registration is granted to the company itself, so even if some of the representatives or officers change, for example, the registration itself can be used as is. (Separate change procedures are required...)
Corporations seem to be easier to use in many ways when it comes to hiring employees, such as employment contracts, and trustworthiness when soliciting and signing contracts.
In fact, even if you are registered as an individual, many people wish to develop their business as a corporation due to the inconveniences mentioned above, and end up abolishing the individual registration and start the new registration procedure as a corporation from scratch. Therefore, we recommend that you judge carefully.
Leave the registration procedures for investment advisory and agency businesses to us!
Support Administrative Scrivener Corporation accepts consultations regarding investment advisory and agency business.
The initial consultation is free, so if you have seen our website and would like to consult with us or find out more, please feel free to contact us!
Editor of this article
Sachiko Masuno
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