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Where does the European Retail Investment Strategy stand?
Retail investors constitute an important part of the EU market and have great investment potential. According to EU statistics, the retail participation in capital markets is still modest with about only 30% of retail savings being placed in equity and investment fund shares.
On May 24, 2023, the European Commission unveiled the proposal for a Retail Investment Strategy (RIS), an umbrella directive modifying multiple aspects of existing legislation. The key aim is to foster an environment conducive to increased participation of retail investors in capital markets in Europe.
- Currently, only 17% of EU household assets are invested in financial securities such as stocks or bonds, a stark contrast to the US at 43%.1
- On average, retail investors encounter fees that are 40% higher than institutional investors.2
- Furthermore, almost half (45%) of European investors question the neutrality of investment advice they receive from financial intermediaries.3
The Commission plans to amend the legislative structure for retail investments to achieve the following:
- Increase retail investors’ participation in EU capital markets
- Enhance trust and confidence in capital markets
- Help retail investors achieve better outcomes while contributing to the wider EU economy
- Contribute to the wider EU economy
How EY can help
It depends on where you stand in your journey. Our dedicated EY Luxembourg RIS team offers support across a range of areas, elaborated below.
Awareness & Impact Assessment
Since the draft Directive has already been proposed, and the market has digested the topic and feedback is ongoing, awareness and impact assessments should take place as soon as possible, for those who want to be ready on time.
- Understand the RIS, and raise awareness among decision-makers
- Analyze firm impact, identify and qualify main impacts (e.g., scenarios, quantification, etc.)
Gap Analysis & Action Plan
As we get closer to a final version being published, a detailed gap analysis should be undertaken and an action plan established.
- Map detailed gaps against the RIS requirements and determine actions needed to comply
- Take strategic decisions (e.g., those related to revenue/service/operating model)
- Develop the action plan for implementation
Implementation
As we get closer to a final version being published, firms will need to start thinking about application, and should start preparing for implementation as soon as possible.
- Elaborate on business requirements, functional specifications, design of solutions, etc.
- Project manage and coordinate workstreams
- Update policies, procedures and client documentation
- Review control frameworks and monitoring plans
- Conduct trainings and change management programs
