The EU Retail Investment Strategy (RIS) is here

Principal legislative initiative: the Retail Investment Strategy (RIS)

The long-awaited legislative proposal for the Retail Investment Strategy (RIS) was published by the European Commission (EC) on May 24, 2023. This is a major proposal with far-reaching consequences, as it amends no less than 5 fundamental texts [1] relating to this world of retail investment.

The Commission presents this project as a major initiative to improve the framework and protection of retail investors. It also aims to strengthen their confidence and participation in the financial markets. In this way, they can contribute to the success of the Capital Markets Union project on which the EC has been working for years.

Numerous proposals

The EC’s draft legislation contains numerous points, which we will return to in subsequent articles.

It does not include a general ban on kickbacks, as many financial players feared. It does, however, propose a whole system based on the concept of Value For Money, which could have far-reaching consequences for the world of asset management.

The major disappointment, however, lies in the lack of ambition when it comes to financial education.

Financial education: a major absentee in the Retail Investment Strategy (RIS) proposal

Despite numerous statements on the subject, the European Commission’s legislative proposal for a Strategy for Retail Investment (RIS) does not include any major proposals on financial education.

In the context of the amendments to MiFID [2], the proposal says only two things. Firstly, Member States must promote financial education. Secondly, it succinctly differentiates between financial education and marketing material. The same applies to the IDD [3].

So, nothing very concrete or impactful.

A missed opportunity

It’s a pity that in a text presented as so fundamental and structuring, the European Commission accords so little importance to this theme.

How can we increase retail investor participation in the financial markets without increasing their understanding of them?

Studies on the lack of financial literacy among the French are regularly published. Without sufficient financial knowledge, how can you invest in the right conditions? How can we even understand the importance and stakes of financial savings in the life of an individual? Whether it’s financing your children’s education or preparing for your retirement.

Some might say that financial intermediaries are there to help organize these savings. But in its proposal, the European Commission itself cites a study [4] which shows that only 38% of those questioned consider that the investment advice they receive is really in their interests.

Yet the stakes are so high. On the one hand, the funded pension system is facing a major financial challenge. On the other, the financial challenges posed by the climate transition are considerable, and will require increased investment capacity that would be impossible to muster without the mobilization of individual investors.

This mobilization can have a real impact. In February and March respectively, the French opened 600,000 and 400,000 popular savings passbooks (Livrets d’Épargne Populaire).

A role for Europe?

Of course, levels of financial literacy differ from one European country to another. So do educational systems. What works in one country may not work in another.

Yet the ageing population and the climate challenge are indeed European challenges. The need to know the importance of financial savings and how financial products work applies to all Europeans.

Against this backdrop, it would be a good thing if Europe were to take a firmer hold of this issue. Rather than a system of benchmark prices for investment funds, which bears an unfortunate resemblance to price controls, why not impose a system of compulsory contributions by European financial establishments to real initiatives that have an impact on the financial education of European citizens?

download our white paper on how neuroscience may improve financial literacy and promote financial services

In any case, at Neuroprofiler, we’ve started to take up the challenge of financial education with our fun course called EDUprofiler.

Sources :

  1. Omnibus proposition 230524-proposal-omnibus-directive_en.pdf (
  2. MiFID II 32014L0065 – EN – EUR-Lex – European Union
  3. IDD  32016L0097 – EN – EUR-Lex – European Union
  4. Eurobarometer survey monitoring the level of financial literacy in the EU, 2023. The relevant question is Q12. “How confident are you that investment advice you receive from your bank/insurer/financial advisor is primarily in your best interest?”.