In ordinary speech, everyone who invests other people's money is an asset manager. In regulation, that description covers at least three different authorisations, and the application you should file depends on a question most founders answer loosely at the outset: are you managing mandates, or are you managing a fund?
Getting this wrong is expensive in a specific way. You do not usually find out at submission. You find out several months into supervisory questions, when it becomes clear the structure you described does not fit the regime you applied under.
The distinction that decides it
If your clients each have their own account and their own agreement with you, and you exercise discretion over their portfolio under that mandate, you are providing portfolio management. That is an investment service, and it sits under the MiFID investment firm regime.
If instead investors subscribe into a pooled vehicle and you manage the vehicle's assets, you are managing a collective investment undertaking. That is fund management, and it sits under the fund regimes rather than under MiFID.
The test is not how sophisticated your investors are or how much you manage. It is whether capital is pooled into a vehicle with a defined investment policy, or held in separate accounts belonging to individual clients.
The fund regimes, briefly
Retail funds distributed across Europe under the UCITS framework require a management company authorised for that purpose, with the product itself also approved. It is the most heavily regulated end of the market, with eligibility rules on what the fund can hold and how it must offer redemption.
Everything else, and this is most of the market, falls under the alternative investment fund regime: private equity, credit, real estate, hedge and most professional-investor strategies. The manager is authorised as an AIFM, with obligations covering risk management, valuation, delegation, depositary appointment, and remuneration.
There is a lighter path for smaller managers. Below the de minimis thresholds, a manager can register rather than seek full authorisation. It is a genuine reduction in burden, and it comes with a genuine cost: sub-threshold managers do not get the marketing passport, so raising across Europe means relying on national private placement regimes country by country. Many managers take registration first and convert to full authorisation when fundraising demands it, which is a reasonable sequence as long as it is a decision rather than an accident.
Doing both
Managers often want to run funds and separate mandates side by side. That is possible: an authorised AIFM can apply for additional permissions covering individual portfolio management and, typically, advice, without becoming a separate investment firm.
It has to be asked for. A fund manager who begins taking segregated mandates without the additional permission is carrying on an unauthorised activity, and it is one of the more common findings in this part of the market because it usually starts with a single accommodating client.
What regulators examine in either case
The themes are consistent with any investment-management authorisation: who runs the firm and whether they have relevant experience, how conflicts are identified and managed, how assets are safeguarded and who holds them, how valuation is performed and by whom, and whether risk management is genuinely independent of the people taking the risk.
Two areas draw disproportionate attention. Valuation, because a manager marking its own illiquid assets is an obvious conflict, and delegation, because a firm that outsources portfolio management, risk, and administration to third parties has to show that it is still substantively managing anything at all.
Delegation and the letterbox problem
Supervisors across the EEA have spent years pushing back on managers authorised in one member state whose actual investment decisions are taken elsewhere. The rule of thumb they apply is that the authorised entity must retain enough function, and enough qualified people, to be more than an administrative shell.
If your plan is to authorise in a convenient jurisdiction and delegate the substance back to an existing team in another, expect that plan to be tested directly, and expect the answer to determine whether the application succeeds.
Passporting follows the regime
Both the investment firm and the fund manager routes carry European passports, but they passport different things. An investment firm passports services. An authorised AIFM passports both management of funds established in other member states and the marketing of those funds to professional investors.
If cross-border fundraising is central to the plan, the passport you need is the one attached to full authorisation, and that should shape the choice between registration and authorisation from the start rather than after the first close.
Decide the structure before the licence
The efficient order is to settle the commercial structure first: pooled or segregated, retail or professional, where investors are, and how you intend to raise. The correct authorisation is then a consequence rather than a choice.
BrokLicense licenses investment firms and fund managers, by new application or by acquisition, in the jurisdictions we cover. If you are not certain which regime your model sits in, that is the first thing worth resolving.