Difficulty
A Licence for the Provision of Investment Services Is a Must
Finax was established in January 2018 — but Finax is not just an ordinary company. We hold a full securities broker-dealer licence from the National Bank of Slovakia (NBS) — and getting that licence is a completely different story from simply setting up a business.
Obtaining a licence from the NBS is difficult. As part of the application, we had to submit all necessary contractual documentation and consider approximately 20 different directives and norms, including the IT Security Directive, the Anti-Money Laundering Directive, and others.
The application also includes highly detailed background checks of all accountable persons. As a founder, I had to submit a clean criminal record, evidence of my education and experience, a complete financial disclosure and tax returns, where I had to demonstrate in detail how I acquired the funds to set up the company. This is how they reviewed me and 5 other people.
As an investment broker, we had to gather capital of €125,000 and at the same time prove sufficient resources for the long-term functioning of the company. Although I knew exactly what to do and how to do it, the whole process took 9 months and required considerable effort.
The NBS has to make sure that the people looking after investors' retirement savings and long-term wealth are ethically and morally clean, have appropriate knowledge and experience, and enough money to operate.
Two Crucial Indicators and a Strict Separation of Assets
Obtaining a licence does not end the relationship with the National Bank of Slovakia. The NBS has a remarkably large supervision department. Investment brokers have to report on a daily, monthly, quarterly, semi-annual and annual basis. Together there are 12 types of reports.
Among those reports one stands out in particular — about our own resources. Just like banks, we must continuously prove that our own resources are sufficient for long-term functioning. The regulator makes sure the investment broker can handle situations when business does not go according to plan. At the same time, by reporting on capital adequacy, the NBS ensures we do not borrow too much to function.
Most importantly, we have to strictly separate all our assets from client assets.
The client remains the ultimate owner of the assets in their Finax accounts, including cash. This is a fundamental and essential part of protecting your assets. Client money and securities do not enter our balance sheet, and we are not authorised to dispose of them outside the agreed transactions defined in the portfolio management agreement and the related investment strategy.
This is also the biggest difference from bank deposits, where your funds enter the bank's balance sheet and become its liability. Your deposits are a liability for the bank, and you have a claim against them. If you place money with an investment broker, you remain the sole owner of the assets.
This is exactly why we maintain two completely separate bank accounts - one client account where you send money, and one corporate account from which we finance our operations. Nothing can be mixed up, and everything has to balance to the cent from the moment your deposit lands right through to the sale and payout at the end of the investment.
Client accounts are held only with reputable banks:
- Poland: BNP Paribas
- Czech Republic: Česká spořitelna
- Hungary: Citi
- Croatia: Raiffeisen Bank
- Germany and Romania: Citibank
Your ETF securities are held in custody by Belgian bank KBC — one of Europe's largest financial institutions — which also acts as custodian for several major bank funds across Europe.
The Investment Guarantee Fund Mainly Handles Human Failures
Despite the best possible security systems, there is always one important factor that can fail — and that is us, people. In theory, it may happen that money and securities become inaccessible due to reasons on the side of Finax or on the side of the companies through which Finax trades and holds client assets. What could these reasons be? Money fraud, incorrectly placed orders, or other human failures that would result in the broker not having money or securities it is supposed to hold for its clients.
Finax is under an obligation to review its employees and, where technically possible, set limits on transactions. However, failure can also occur on the part of our partners — which is why we thoroughly review them as well.
Investment brokers are legally part of a client assets protection system. From their fees, they are obliged to pay part of the money into a fund from which any unavailable client assets are covered. If the volume of funds is not sufficient, the remainder is paid by the state — similar to the Deposit Guarantee Scheme which protects household deposits in banks.
All Finax clients, regardless of nationality, fall under the protection of the Slovak Investor Guarantee Fund. So even as an Irish investor, because you invest through a Slovak licensed investment broker, you automatically fall under Slovak protection — not the Irish Investor Compensation Scheme.
This actually enhances your protection. The Slovak Investor Guarantee Fund provides clients with one of the highest levels of protection in the EU. Our clients are 100% protected up to €50,000. For reference, under the Irish Investor Compensation Scheme you would only be protected at 90% and up to €20,000.
If you want to invest more through Finax, you can divide your investment among several members of your household. The limit applies to any natural person, including children. A family of four can thus receive protection of up to €200,000.
However, if Finax went bankrupt, it does not automatically mean the Guarantee Fund comes into play. As mentioned, we hold client assets separately. In the worst-case scenario, the National Bank of Slovakia would appoint another investment broker to continue looking after client assets. The Guarantee Fund does not cover losses resulting from market movements.
The Investment Guarantee Fund has never been used in Slovakia, which proves the high integrity of the market. I was personally a member of the Board of the Guarantee Fund for one term, during which everything ran smoothly without any issues. The credit goes to the National Bank of Slovakia, which supervises all financial market entities.
IT Security as a Part of Doing Business
There are days in the office when we feel more like an IT company than a financial one — and that is very much by design. We have decided to manage your finances in a modern way that reduces costs, administration and error rates. Technology is therefore an integral part of our business.
We keep your data in one of the most modern data centres that meets the highest security standards. Our servers are in one place to minimise communication over the public network, while being regularly backed up to a second data centre over a private link.
In addition, we have many security measures in place across password policy, backups and server security. Together, they protect not only the company itself but especially client data.
We are also working on regular security testing of our infrastructure, cooperating with companies specialising in ethical hacking. These help us identify possible weaknesses and resolve them before they become a problem.
I hope this answers your questions about the security of your investment in Ireland. If you want to invest through us long-term, it is important that you have maximum confidence in Finax. If something is still not clear enough, please contact us at [email protected] and we will be happy to answer you personally or add it to this article.
Create an account and start investing today
We founded Finax with big goals in mind. We are convinced that financial services can be offered transparently and with a clear conscience. We believe this approach will reward us in the long run through satisfied clients and the growth of assets under our management. All our activities from the beginning have been adapted to this pro-client philosophy.
Fair portfolio parameters, transparent fees and long-term thinking are a clear proof of our intentions and goals. Trust is only built over time — and we strongly believe we will gradually earn yours through clear communication of how and why we do things the way we do.
Frequently Asked Questions About Investment Safety at Finax
1. Is Finax a safe robo-advisor for passive investing?
Yes. Finax is a fully regulated securities broker licensed by the National Bank of Slovakia, which carries out ongoing supervision. Getting that licence required passing rigorous background checks, maintaining minimum capital requirements and filing 12 types of regulatory reports on a continuous basis.
2. What happens to my ETF investments if Finax goes bust?
Your assets, including ETF investments, are legally separated from Finax's own funds at all times. If Finax were to fail, the National Bank of Slovakia would most likely appoint another broker to take over management of your portfolio. In cases where assets genuinely go missing, the Investor Guarantee Fund covers you up to €50,000 per person.
3. Where are my ETF portfolios and investment savings actually held?
Your ETF securities are held in custody by Belgian bank KBC, one of Europe's largest financial institutions. Client cash is held in segregated accounts at reputable local banks, including BNP Paribas, Citi and Raiffeisen Bank depending on your country of residence.
4. How does Finax protect my personal and financial data?
Client data is stored in a high-security data centre with encrypted backups. Finax carries out regular security testing with ethical hacking specialists and manages all client communications through phone, email and chat through a single secure platform to ensure nothing slips through the cracks. You can read more about our approach on the Safety and Risk page.
5. Can I safely invest larger amounts through Finax for retirement?
Yes. The Investor Guarantee Fund protects every individual, including children, up to €50,000 each. A family of four can therefore be covered up to €200,000 in total. For Irish investors building long-term retirement savings, PEPP also offers an additional layer of structure with PRSA-equivalent tax relief and regulated EU-wide portability.
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