EU Retail Investment Strategy: Why “Value for Money” Is Becoming the New GRC Benchmark in Financial Distribution

The EU Retail Investment Strategy aims to strengthen the European market for retail investments while improving investor protection. At the centre of the reform is a concept that will become highly relevant for banks, insurers, asset managers, wealth managers and financial distributors: “Value for Money”.

The message is clear: in future, financial institutions will not only need to disclose costs, risks and product characteristics correctly. They will increasingly need to demonstrate that a product provides fair value for its intended target market.

This shifts the regulatory focus. Product documentation becomes product governance. Cost transparency becomes evidence. Distribution control becomes a GRC topic that connects requirements, target markets, costs, client outcomes, remuneration, marketing and audit trails.

Key Takeaways

The EU Retail Investment Strategy reforms key rules for financial distribution, including areas linked to MiFID II, IDD, PRIIPs, UCITS and AIFMD. Its objective is to improve investor protection, make access to capital markets easier and increase trust in financial products.

The main GRC driver is “Value for Money”. Financial products should not only be transparent. They should provide a demonstrable and reasonable balance between costs, fees, risks, performance potential and client benefit.

For financial institutions, this means stronger requirements for product approvals, target market definitions, cost and fee analysis, suitability processes, inducements, marketing controls and evidence management.

Swiss institutions may also be indirectly affected, particularly through EU subsidiaries, EU branches, cross-border distribution or EU distribution partners.

Why “Value for Money” Marks a Shift

Financial distribution regulation has long focused on transparency. Clients should understand what a product costs, which risks it carries and what characteristics it has. That remains important, but it is no longer enough.

Value for Money goes further. The question is no longer only whether everything has been disclosed. The question is whether the product is appropriate for the target market when costs, services, performance potential, risk and distribution model are considered together.

This is a shift from formal compliance to outcome-oriented governance. A product can be correctly documented and still become problematic if costs and fees are not proportionate to the expected client benefit.

For GRC leaders, this is the key point. Value for Money does not create a single new checklist. It requires existing processes to be connected. Product development, product approval, target market assessment, cost analysis, distribution, advice, marketing and ongoing monitoring must work together.

Product Governance Becomes More Evidence-Based

Financial products are often created and distributed through complex structures. Asset managers, issuers, banks, platforms, insurers and distributors may all have different roles. The Retail Investment Strategy increases the pressure to document these roles more clearly.

Product manufacturers must be able to explain why a product is suitable for the defined target market. This includes a clear assessment of costs and fees. Distributors, in turn, must ensure that they recommend or offer products only to clients for whom they are appropriate.

This makes product governance more operational. Institutions must not only have a product approval process. They must be able to show which criteria were reviewed, which data was used, what trade-offs were considered and who approved the decision.

For compliance and internal audit teams, this is crucial. The audit question will not only be whether a process exists. It will be whether the process leads to appropriate decisions and whether those decisions are documented in a defensible way.

Costs, Fees and Client Benefit Move Closer Together

Value for Money turns costs and fees into a central governance data point. Institutions must not only disclose costs, but place them in the context of client value. Peer group comparisons, benchmarks, cost structures, expected returns, risk-return profiles and target market assumptions may all become relevant.

This is challenging because many data sources are involved. Product data, cost information, performance data, risk metrics, target market information, remuneration structures and distribution data often sit in different systems. If these data points are inconsistent, evidence gaps emerge.

A product may be considered appropriate during product approval, while distribution materials later use outdated cost information. Or a product may be approved for a defined target market but marketed too broadly through digital channels. These inconsistencies are exactly where GRC risks arise.

Inducements Remain a Control Topic

Inducements are one of the most sensitive issues in the Retail Investment Strategy. The political debate around a full ban has been intense. The current direction is more focused on stronger controls, better transparency and evidence that client interests are protected.

For institutions, this means that remuneration models must be connected more closely with product governance and distribution controls. It must be clear which incentives exist, how conflicts of interest are identified and which controls prevent remuneration from improperly influencing product selection or advice.

Inducements are therefore not only a legal or disclosure topic. They become part of the internal control system. Institutions must be able to show that remuneration, product approvals, client interests and advisory obligations are assessed together.

Suitability and Distribution: From Client Profile to Evidence Chain

Suitability processes will also become more important. In investment advice and distribution, institutions must be able to demonstrate that a product fits the client’s knowledge, experience, risk tolerance, investment objectives and ability to bear losses.

The GRC issue lies in the evidence chain. A single advisory form is not enough if the underlying product data, target market definition, cost information and distribution rules are not aligned. Institutions must ensure that recommendations result from a consistent process.

This is particularly relevant for digital distribution channels. Robo-advice, online platforms, app-based investment offerings and automated product recommendations generate large volumes of data and decisions. These need to remain controlled, versioned and auditable.

Marketing Becomes Part of Product Governance

Marketing in financial distribution is not just communication. Product descriptions, performance statements, ESG references, cost information, risk warnings and digital campaigns influence how clients understand a product.

Value for Money strengthens this connection. If a product is promoted with certain benefits, the marketing message must align with product governance, target market definition and the cost-benefit assessment. Marketing claims cannot be created in isolation.

For GRC teams, this creates a clear need for approval and control processes. Product information, campaigns, websites, factsheets and digital distribution materials should be reviewed and versioned in a traceable way. This becomes even more important in cross-border distribution, where requirements and supervisory expectations may differ by market.

Why Swiss Institutions Should Pay Attention

The Retail Investment Strategy is EU regulation. Swiss financial institutions are therefore not automatically directly affected. However, the topic is relevant for many Swiss providers.

This applies especially where an institution has EU subsidiaries, EU branches, EU distribution partners or cross-border business with EU clients. Even if a Swiss institution is not directly addressed, EU partners may request additional evidence.

In practice, this may mean that Swiss asset managers, wealth managers or product providers need to document more clearly how costs, target markets, product benefits, risks and distribution information fit together. EU distribution partners will need this information to meet their own obligations.

This creates an indirect GRC effect across the distribution chain.

What Financial Institutions Should Do Now

Institutions should first assess whether their product governance is ready for Value for Money. This is not only about product approvals. It is about whether costs, target markets, client benefit, risk, remuneration and distribution are assessed and documented consistently.

They should then review which data sources are used for costs, performance, risk, target market and distribution. If this data is not current, consistent or centrally available, implementation risk increases.

A review of distribution channels is also important. Personal advice, digital platforms, insurance distribution, cross-border distribution and partner distribution all create different control points. Value for Money must work across all relevant channels.

Finally, institutions should define the audit trail early. Trying to reconstruct decisions later creates unnecessary effort and risk.

Conclusion: Value for Money Makes Financial Distribution More Auditable

The EU Retail Investment Strategy shows where financial regulation is heading. Transparency remains important, but it is not enough. Products for retail clients should not only be understandable. They should provide demonstrable value.

For GRC leaders, the direction is clear: product governance is becoming more outcome-oriented and more evidence-based. Institutions need to connect costs, target markets, client benefit, remuneration, distribution and controls more closely.

Those that build structured processes, clear responsibilities and audit-ready evidence early will reduce regulatory risk and strengthen trust with clients, supervisors and distribution partners.

Zazoon supports financial institutions in managing Value for Money as an integrated GRC process: from requirements and product governance to risks, controls, evidence, findings and management reporting.

FAQ

What is the EU Retail Investment Strategy?

The EU Retail Investment Strategy is a reform package designed to strengthen the retail investment market in Europe. It aims to improve investor protection, enhance product information and make access to capital markets easier.

What does “Value for Money” mean?

Value for Money means that financial products should provide appropriate value for the intended target market. Costs, fees, risks, services and client benefit must be aligned in a demonstrable way.

Which financial institutions are affected?

The topic is particularly relevant for banks, investment firms, asset managers, insurers, insurance distributors and other financial service providers with EU exposure.

Why is Value for Money a GRC topic?

Because it connects product governance, cost analysis, target market definition, suitability, inducements, marketing controls and evidence. It is not only about disclosure, but about auditable decision-making.

Are Swiss institutions affected?

Not automatically. However, Swiss institutions may be indirectly affected if they have EU subsidiaries, EU branches, EU distribution partners or cross-border business with EU relevance.

What should institutions do now?

They should review their product governance, cost and fee processes, target market definitions, distribution controls, inducement controls and audit trails for Value for Money readiness.

How does Zazoon help?

Zazoon helps connect requirements, products, target markets, risks, controls, approvals, actions and evidence in one central GRC system. This makes Value for Money traceable, manageable and audit-ready.