Retail investment strategy

Retail investment in EU capital markets

In the EU, the level of retail participation in EU capital markets remains low compared to other advanced economies. In 2021, only approximately 17% of EU household assets were held in financial securities (listed shares, bonds, mutual funds and financial derivatives), compared to the 43% held in those instruments in the US.

A large share of EU households' financial wealth is held as bank deposits, despite the fact that long-term investments in stock markets have historically delivered substantial gains.

What hinders retail investors from benefiting from capital markets?

Information access

Retail investors struggle to access relevant, comparable and easily understandable information to make informed investment choices

Trust in capital markets

Only 38% of consumers are confident that the investment advice they receive from financial intermediaries is primarily in their best interest

Marketing influence

Retail investors are exposed to a growing risk of being inappropriately influenced by unrealistic marketing information on social media and new marketing channels

High fees

Some products and services offered to retail investors often carry high fees and commissions compared to those offered to institutional investors, thus negatively impacting their return on investments.

EU retail investment strategy

To address these problems, the European Commission proposed a retail investment strategy on 24 May 2023, comprising two proposals:

a regulation amending packaged retail and insurance-based investment products (PRIIPs)
an omnibus directive amending the markets in financial instruments directive (MiFID), the insurance distribution directive (IDD), Solvency II, the undertakings for collective investment in transferable securities (UCITS) directive and the alternative investment fund managers (AIFMD) directive

On 12 June 2024, the Council agreed its negotiating mandate on the two proposals. On 18 December 2025, the Council and the European Parliament agreed on an updated retail investment framework. The aim is to:

empower retail investors by offering the same level of information, treatment and protection as institutional investors
foster trust and increase competitiveness in the EU’s financial markets
provide a wider range of efficient investment and financing opportunities for citizens and businesses

Packaged retail and insurance-based investment products

The legislative proposal amending packaged retail and insurance-based investment products aims to update rules on key information documents (KIDs) for PRIIPs. Package retail and insurance-based investment products are products that banks generally offer to consumers, for example, when they want to save to buy a house or pay for their children’s education.

The revised regulation would help private investors to better understand the product they are buying and compare it with other products by making key information on costs and risks clearly visible in the document they receive when they purchase certain investment products.

KIDs would become more easily accessible digitally, which would increase legal clarity.

Key information documents for packaged retail and insurance-based investment products (European Commission)

Omnibus directive

The Omnibus directive contains several amendments, addressing various aspects of retail investment.

The new rules aim to, among other objectives:

improve the way information is provided to retail investors, by including adapting disclosure rules to the digital age
increase transparency and comparability of costs by requiring the use of a standard presentation and terminology on costs. This would ensure that investment products provide real value for money to retail investors
protect retail investors from misleading marketing by ensuring that financial intermediaries are fully responsible for the use of their marketing communication, including when it is carried out via social media, celebrities, or other third parties they remunerate
encourage member states to implement national measures that support citizens' financial literacy
reduce administrative burdens and improve the accessibility of products and services for sophisticated retail investors
address potential conflicts of interest in the distribution of investment products by providing stricter rules on so-called inducements and ensuring that financial advice is aligned with retail investors' best interests
preserve high standards of professional qualifications for financial advisors