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How the Retail Investment Strategy aims to empower EU retail investors

Authors

The Retail Investment Strategy (RIS) regulation aims to protect consumers, build trust and transparency and drive Europe’s economic growth.

In brief
  • European households invest only 20%–25% in equities, far below the United States (US) at 35%–45%.
  • Higher retail participation requires a cultural shift. The RIS puts fair treatment, greater transparency and trust back at the heart of retail investing.
  • By strengthening confidence and understanding, the RIS is intended to support retail investors in making more informed choices.

Individual households investing their personal savings constitute an important part of the European Union (EU) market and represent significant investment opportunities. However, their participation in capital markets remains relatively low, with only a limited share of household savings allocated to equities and investment funds.

On 18 December 2025, the European Council and the European Parliament reached a political agreement on the RIS package, an omnibus directive designed to update multiple elements of the EU legislative framework for retail investments.

Technical drafting is concluding ahead of formal adoption and publication. Under the envisaged timeline, Member States will have 24 months from publication in the Official Journal of the European Union (the official publication for EU legal acts, other acts and official information from EU institutions, bodies, offices and agencies) to transpose the directive into national law, and the new provisions will apply 30 months after publication. As a result, subject to final adoption and implementation, the RIS requirements are currently expected to become fully effective by 2028.

The RIS updates the EU regulatory framework for retail investments by enhancing consumer protection, promoting fairer and more efficient market outcomes and creating the conditions necessary to increase retail engagement in EU capital markets.

To generate long-term growth to meet retirement needs, it is essential to provide retail investors with access to competitive products, services that evolve with customer needs and opportunities to invest in real assets capable of generating sustainable, positive real returns. Supporting this shift will also require strengthening financial literacy and rebuilding trust in financial institutions, helping consumers to participate more confidently and effectively in Europe’s capital markets.

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Chapter 1

Why the RIS matters for retail investors

The RIS marks a shift toward outcomes-based regulation, strengthening transparency, investor protection and value for money to help support more confident retail participation in EU capital markets.

Retail investors often struggle to access clear, comparable and meaningful information to support informed investment decision-making. By enhancing transparency, strengthening investor protection and improving the overall customer journey, the RIS aims to empower consumers and create the conditions for greater and safer retail participation in EU capital markets.

At its core, the RIS represents a shift in regulatory philosophy. Rather than relying primarily on disclosure to protect consumers, it places increasing emphasis on investment outcomes, value for money (V4M) and the alignment of incentives across the distribution chain. This marks a structural change for firms active in EU retail markets, with direct implications for product design, pricing models and advisory practices.

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The RIS framework sets a new standard for retail investment in the EU

The framework aims, among other objectives, to:

  • Increase retail investor participation and strengthen trust and confidence in EU capital markets

  • Support broader EU economic objectives by helping retail investors achieve better long-term outcomes

  • Promote financial literacy initiatives through strengthened national measures

  • Address conflicts of interest, including stricter rules on inducements — fees or benefits paid to distributors as part of distributing or advising on investment products — and aligning financial advice with clients’ best interests

  • Reinforce professional standards for financial professionals

  • Enhance cost transparency and comparability via harmonized cost disclosures and standardized terminology, helping retail investors clearly understand whether a product offers V4M

  • Protect retail investors from misleading marketing practices

  • Reduce administrative burdens and improve accessibility of retail investment products

  • Improve investor information by updating disclosure requirements to reflect the digital age
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Chapter 2

How the RIS supports better retail investment outcomes

By addressing risk aversion, low real returns and trust gaps, the RIS supports a shift toward productive investments, helping retail investors build long-term value while supporting Europe’s economy.

Consumer research across Europe highlights that retail investors tend to prioritize capital preservation, favoring products perceived as stable and low risk. While these instruments offer reassurance, they typically provide limited potential for real capital growth.

This risk-averse behavior contributes to the persistently low level of retail participation in capital markets compared with other advanced economies, despite Europe’s relatively high household savings rates.

A comparative study by the European Central Bank (ECB) shows that on average European households hold around 30%–35% of investments in liquid deposits (vs. 10%–15% for the US) and 20%–25% in equities (vs. 35%–45% for the US).1

At the same time, historical performance analyses of life insurance savings products indicate that real returns, after accounting for inflation, have often been lower in real terms.2

This highlights a structural challenge: although investors gravitate toward safer options, achieving long-term financial wellbeing increasingly requires exposure to real assets capable of delivering positive real returns and sustained value creation. Helping retail investors to meet their retirement needs will require access to competitive, value-driven products that evolve alongside customer expectations.

One of the key objectives of the RIS is to help retail investors shift large cash holdings toward productive investments, particularly into real assets that can contribute to both individual financial wellbeing and broader economic growth. This comes at a time when the European economy faces multiple challenges on trade (e.g., US tariffs), exports (e.g., competition from China’s automobile and battery industry), fiscal policy (e.g., increase in government spending in defense) and energy prices.

However, this transformation also requires a cultural shift. Greater retail investor participation will only be possible when individuals are convinced that investing in financial markets is desirable, provided that the risks involved are acceptable and clearly defined. The RIS also aims to improve the financial literacy of retail investors and foster greater trust and transparency in financial institutions and capital markets, with the goal of helping investors achieve better outcomes from their investments.

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Chapter 3

What business leaders should do to be RIS ready

Becoming RIS ready means using the transition period to strengthen product value, redesign distribution and advice models and build trust-based retail propositions, ahead of formal application.

For financial institutions and distributors, the period leading up to formal application offers a critical window to proactively prepare for a more competitive, outcomes-driven retail landscape.

Firms that act early may be better positioned to modernize product portfolios and adapt advice models in response to RIS requirements.

1. Strengthen product value propositions

  • Design robust V4M assessment frameworks that go beyond static cost analysis and consider performance, features and customer outcomes

  • Conduct benchmarking analyses against peer products to understand relative strengths and weaknesses across the market

  • Identify levers to improve product design, pricing or features

  • Support forward-looking decisions on product improvement, repositioning or withdrawal

2. Future-proof distribution and advice models

  • Map inducements and potential conflicts of interest of the distribution model

  • Assess the adequacy of advice models against customer best-interest expectations

  • Anticipate changes in professional standards and accountability

3. Strengthen governance and evidence

  • Embed V4M assessments into product governance frameworks

  • Improve documentation and processes

  • Enhance control frameworks and monitoring mechanisms

  • Help boards to guide, critically evaluate and take informed decisions on retail propositions with confidence 

4. Invest in customer understanding and communication

  • Simplify product narratives and disclosures for real-world use

  • Align marketing practices with expected supervisory standards

  • Support financial literacy initiatives that are credible and measurable

  • Use data and insights to better understand customer needs, risk perceptions and decision-making patterns

5. Use the transition period to redesign

  • Translate RIS obligations into concrete operational requirements

  • Sequence changes across products, distribution, governance and communication to manage complexity

  • Avoid late, compliance-driven remediation by using the transition period to redesign business models and customer journeys

  • Approach readiness as an iterative process, with testing, learning and refinement built in

Navigate your Retail Investment Strategy journey

Reach out to the EY team to assess your readiness for the upcoming regulation.

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Summary

The EU’s RIS aims to increase retail participation in capital markets by improving consumer protection, transparency and trust while supporting Europe’s long-term growth. With EU households investing a smaller share of assets in securities than US households, the RIS shifts regulation toward outcomes-based expectations, emphasizing value for money, clearer disclosures and stronger rules on conflicts of interest and advice standards. Firms that use the transition period to become RIS ready can strengthen trust, improve product positioning and better align with evolving retail investor expectations.

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