Retail Investment Strategy and the impacts on markets and wealth management
9 DEC, 2025
By Elisabete Pinto Pereira, Executive Director, Novo Banco
The Retail Investment Strategy (RIS) is one of the European Commission’s key instruments aimed at channeling citizens’ savings into the economy and strengthening capital markets. While its objective is clear, the impact on financial institutions is undeniable — both in terms of cost and implementation pressure.
Although the legislative process is at an advanced stage and approval is expected by the end of 2025, several sources suggest that a delay into 2026 is possible, particularly due to the need for alignment with the simplification goals of the Savings Investment Union (SIU).
Given this risk, we must prepare for the possibility that the proposal may move forward in its current form, with the added constraint that any delays in approval and transposal into national legislation could result in a shortened implementation timeframe.
So, what do we know so far?
We know that unlike MiFID II, RIS is focused on the product and not on the client.
RIS introduces new requirements regarding disclosure regulations, the role of financial advisors, and marketing practices. It also establishes benchmarks to assess whether recommended and distributed financial products offer a favorable cost-benefit ratio.
Within our context, the Portuguese regulator has already taken the lead on the Value for Money dimension through Circular 1/2025, which sets out a fundamental principle:
"The total costs of a financial product must not compromise the investor’s expected return."
This anticipates several requirements outlined in RIS.
The new principles governing both the manufacturing and distribution of financial products include:
- Investors must feel that their investment delivers the expected return at the time of investment.
- A more balanced relationship between product cost and expected return.
- Discouragement of more complex structures with disproportionate costs or lack of transparency.
- Financial intermediaries must provide a clearer understanding of potential costs to convince clients to invest.
- Financial intermediaries will now be required to demonstrate that the cost of a product is justified by its expected return.
To assess value for money the Portuguese regulator appears to favor a hybrid model over a purely quantitative one. In this model, the qualitative dimension — potentially representing 40% of the assessment — may consider: (i) quality of information and ongoing support; (ii) Client’s level of understanding and informational transparency; (iii) ease of exit and associated costs; (iv) ESG and sustainability factors (non-financial value and reputational impact); and (v) alignment with market alternatives.
But what actions have we already taken?
To go straight to the point, very few. For now, we have included in the Product Approval Process the documentation of the Value for Money assessment which incorporates the comparison with similar products available in the market provided by producers.
However, we anticipate that our product offering will probably shrink as we gradually reassess each product under the distributor’s product governance responsibilities.
And how will RIS this change our business model?
We don´t know yet. Part of our job is to gather as much information as possible and assess potential scenarios.
When we consider the Value for Money principle, the tightening of inducement rules, and the joint accountability between Manufacturer and Distributor — which implies a closer operational alignment — we begin to see the emergence of bold strategic scenarios, such as shifting from the distribution of third-party products to a fully in-house offering, as well as less radical approaches such as the broader adoption of ETF-based portfolio management for retail clients.
We also recognize that the pressure is mostly on product manufacturers and that RIS will require a policy of product design that includes low-cost products, but also, a certain fraction of investment on EU companies and other qualitative criteria that might have a positive impact on the Value for Money outcome.
So, we will continue to monitor ongoing discussions and prepare for different scenarios, while hoping — at the very least — for a harmonized implementation across the EU and a consistent, uniform interpretation by EU supervisors, avoiding the mistakes made during the MiFID II transposition to national law.
“Every journey begins with a single step.”
― Lao Tzu”
