EAF
The adviser who lives on retrocessions
“More than half of my revenue comes from fund manager inducements. If the RIS tightens the regime, I need to know today how to move to fees without losing clients.”
EU Retail Investment Strategy (RIS) and MiFID III
The Retail Investment Strategy—the package the market calls “MiFID III”—is still in trilogues, but its core pillars are already defined: value for money, inducements and the best interest test. We explain what it proposes and what your firm can get ahead on without waiting for the final text.
How will the RIS affect you? Free assessment
Tell us about your revenue model and your product range, and we will tell you which areas of the RIS will affect you and where to start.
- 50+ entities advised
- Reply within 24 h
- No commitment
- Current inducements regime
- MiFID II Art. 24
- Commission proposal
- 2023
- PRIIPs Regulation
- Reg. 1286/2014
- RIS checklist
- 10 actions
Services
The RIS areas you can already work on
The package is still being negotiated, but each pillar builds on MiFID II components that already exist. Strengthening them today is a way to prepare without betting on a timetable.
Compliance
MiFID II compliance, the foundation of the RIS
The RIS does not start from scratch: it amends MiFID II. We review your suitability, inducements, costs and conflicts policies so that future adaptation is an adjustment, not a rebuild.
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MiFID IIPoliciesSuitabilityCNMV
Inducements
Retrocessions under regulatory pressure
The most sensitive pillar of the package. We audit your inducements under MiFID II Art. 24—quality of service, client disclosure—and quantify your exposure to a tightening of the regime.
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MiFID II Art. 24Quality of serviceExposurePlan B
Transparency
Costs and charges disclosure
Ex ante, ex post and with the cumulative effect on returns: the starting point for any value for money analysis.
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Ex anteEx post
Product
Product governance
Target market, pricing process and product range review: the ground where the RIS will want to see data, not statements.
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Target marketProduct range
PRIIPs
KID and PRIIPs documentation
The PRIIPs review travels inside the RIS package. Get your KIDs in order and prepare for the comparability that is coming.
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KIDComparability
License
EAF authorization
Does your future lie in explicit fees? An EAF (financial advisory firm) is the natural vehicle for advice that relies less on inducements.
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CNMVFees
Profiles
Whose business the RIS shakes up
Four situations we already see in Spanish firms: the package is still being negotiated, but business model decisions are being made now.
Distributor
The network selling third-party products
“We distribute funds and structured products from several manufacturers. Value for money will force us to justify with data why each product stays on the shelf.”
Fund manager
A product range tested against benchmarks
“If my funds sit above the cost benchmarks, distributors will drop them from their range. I want to get ahead of that analysis before someone else does it.”
Compliance
The compliance officer following the trilogues
“Management is asking me for a date and a budget to adapt to the RIS. My problem: there is no official date, and I want neither to over-invest nor to be late.”
Before you decide
Three mistakes when preparing for the RIS
Neither panic nor paralysis: the package is still under negotiation, but there is groundwork that does not depend on the final text. These are the most costly mistakes.
Waiting for the final text: the cost map, the product range clean-up and the redesign of the revenue model take months of internal work. Firms that start when the rules are published will be late for the supervisor’s first review.
A single-source revenue model: if inducements prop up your income statement and you have not designed an explicit-fee alternative, any tightening of the regime leaves you no room to react.
Treating the RIS as paperwork: value for money and best interest are not solved with a new policy; they require cost data, product comparisons and product range decisions that the compliance function cannot make alone.
| Area | What the RIS proposes | Expected impact for EAFs and investment firms |
|---|---|---|
| Value for money | Assessing whether products offer a reasonable cost-to-value ratio, with reference benchmarks as a comparison tool. | Justify with data the product range you recommend or distribute, and withdraw or reprice whatever fails the analysis. |
| Inducements | Additional restrictions on retrocessions in distribution, revising the current regime under MiFID II Art. 24. | Stress-test the revenue model: quantify reliance on inducements and design explicit-fee alternatives. |
| Best interest and disclosure | A strengthened test for acting in the client’s best interest and more comparable pre-contractual documentation, with a review of PRIIPs. | Rework recommendation procedures and disclosure templates so that the comparison between products is demonstrable. |
Shall we analyze your exposure to the RIS?
We quantify your reliance on inducements, review your product range through a value for money lens and get your MiFID II policies ready to absorb the final text without redoing everything. No alarmism and no made-up dates.
Frequently asked questions
RIS and MiFID III: common questions
What exactly is the Retail Investment Strategy (RIS)?
It is the legislative package presented by the European Commission in 2023 to strengthen the position of retail investors. It has two parts: an Omnibus Directive that amends MiFID II, the IDD, the UCITS Directive and AIFMD at the same time, and a review of the PRIIPs Regulation.
Its pillars: value for money with benchmarks, restrictions on inducements, a strengthened best interest test and more comparable information for clients. It directly affects the MiFID II compliance of any firm that advises or distributes.
Why is it called “MiFID III”?
Because its main vehicle, the Omnibus Directive, makes far-reaching changes to MiFID II, the law that governs investment services in Europe. The nickname is useful but imprecise: there will be no “MiFID III” as a standalone text.
The package is broader than MiFID: it also covers insurance distribution (IDD), UCITS funds and alternative investment fund managers (AIFMD), as well as PRIIPs disclosure. Anyone who reads it only through a MiFID lens will miss half the reform.
Where do the negotiations stand? When will it apply?
The RIS is under negotiation: the Council has approved its position and trilogues between the Commission, Parliament and Council are moving forward. There are no confirmed application dates, so be wary of any fixed timetable that is going around.
The milestones to watch are political agreement in trilogues, publication of the texts and—since its main component is a directive—subsequent national transposition. Until then, the operational reference remains MiFID II as it stands.
Will the RIS ban retrocessions?
The final scope of the restrictions on inducements is precisely one of the points being finalized in the trilogues. The proposal envisages tightening the regime in distribution, but the final text does not exist yet.
What is certain is the starting point: under MiFID II Art. 24, inducements are already banned in independent advice and in discretionary portfolio management (they must be passed on to the client), and elsewhere they are only allowed if they enhance the quality of the service and the client is informed. Review your position in MiFID retrocessions and consider the independent advice model.
What is value for money and how would the benchmarks work?
Value for money is the idea that a product should only reach retail investors if its costs bear a reasonable relationship to the value it offers. The RIS proposes to support that judgment with benchmarks: comparison references to detect products that are out of line with the market on costs or performance.
For manufacturers and distributors, the practical consequence is a product range under continuous, data-driven review. The infrastructure to do this already exists in product governance and in costs and charges disclosure: the RIS would raise the bar for both.
What does the best interest test involve?
It is the revision of the standard of conduct when making recommendations: a strengthened test for acting in the client’s best interest, with more weight on cost-efficiency and on justifying the choice against alternatives. Its exact contours will depend on the text that comes out of the trilogue.
In practice, it will build on what you already do—or should be doing—in the suitability test: if today you do not document why you recommend one product rather than another, that is the muscle you should start training.
How does the RIS affect insurance-based investments (IDD, IBIPs)?
The Omnibus Directive also amends the IDD, the insurance distribution rules. The aim is to align client protection between the MiFID world and insurance-based investment products, so that the standard does not depend on the product wrapper.
If you distribute unit-linked policies or other IBIPs, you should follow the negotiations as closely as an investment firm. We have dedicated pages on insurance distribution under the IDD and on IBIPs and unit-linked products.
What can my firm prepare now, without a final text?
Three building blocks that will be useful whatever the final text says:
- Cost map: being able to extract, without manual work, the total cost each client bears per product and service.
- Inducements X-ray: knowing what share of your revenue depends on retrocessions and having the alternative designed.
- Product range clean-up: reviewing the catalog against cost and performance criteria before an external benchmark does it for you.
None of this is wasted even if the negotiations change details: all of it strengthens your current MiFID II compliance. And if you are considering pivoting to fees with your own license, see how to set up an EAF.
Practical guide
Preparing for the RIS without over-investing
The risk is twofold: standing still or spending on premature adaptations. This roadmap separates what is already useful today under MiFID II from what should wait for the final text.
Business model X-ray
Quantify what share of your revenue depends on inducements, what each product and service costs the client and where you are far from a cost-to-value logic. Without that data, everything else is opinion.
Product range and process clean-up
Review the catalog against cost and performance criteria, strengthen product governance and adjust the recommendation procedure so that the client’s best interest is documented in every transaction.
Monitoring and triggers
Assign an owner for the RIS file, define negotiation milestones—political agreement, final texts, transposition—and budget the adaptation in blocks that can be activated once there is certainty, not before.
RIS checklist: 10 useful actions starting today
- Revenue X-ray: quantify what percentage of your margin comes from inducements, by product and by business line.
- Cost map: consolidate the total cost borne by the client (product plus service) and check that you can extract it without manual work.
- Product range review: compare the costs and performance of your catalog and spot the products that would be hard to defend in a cost-to-value analysis.
- Product governance: strengthen the target market, the pricing process and periodic reviews: this is the infrastructure on which value for money will operate.
- Recommendation procedure: document why you recommend each product over the alternatives: this is the muscle the best interest test will demand.
- Comparable information: review your ex ante and ex post cost templates and your PRIIPs KIDs to make it easier to compare products.
- Inducement scenarios: model your income statement with additional restrictions on retrocessions and design the fee-based alternative.
- Team training: explain to your network what the RIS is and what does not change yet: avoid both commercial paralysis and premature announcements.
- Trilogue monitoring: assign an owner to track the negotiations and turn each milestone into specific internal decisions.
- Phased plan: budget the adaptation in blocks that can be activated once there is a final text, with clear priorities and owners.
If you want us to do this work with you, start with our MiFID II compliance service or the specific review of retrocessions and inducements.
Working glossary
RIS vocabulary
Nine terms that dominate the conversation about the Retail Investment Strategy. You will see them in the trilogues, in ESMA documents and in any serious adaptation plan.
RISPackage
Retail Investment Strategy
Legislative package presented by the European Commission in 2023 to strengthen retail investor protection: an Omnibus Directive plus a review of PRIIPs.
Status: under negotiation (trilogues).
Omnibus DirectiveVehicle
One directive, four laws
The instrument that amends MiFID II, the IDD, UCITS and AIFMD at once to align retail investor protection across investment and insurance.
Will require national transposition.
Value for moneyPillar
The product’s cost-to-value ratio
Principle that requires assessing whether a product’s costs and performance bear a reasonable relationship for the client. The product range is cleaned up with data.
Covers manufacturers and distributors.
BenchmarksTool
Comparison references
Parameters envisaged as a tool to compare costs and performance and detect products that are out of line with the market.
Their final design is being decided in the negotiations.
Best interest testPillar
Best interest, strengthened
Revision of the standard of conduct when recommending: more emphasis on cost-efficiency and on justifying the choice against alternatives.
It will build on your suitability test.
InducementsPillar
Retrocessions under review
Third-party payments to the distributor. Today they are governed by MiFID II Art. 24; the RIS is negotiating additional restrictions in distribution.
Already banned in independent advice and discretionary portfolio management.
PRIIPsDisclosure
The KID, inside the package
The review of Regulation (EU) 1286/2014 travels with the RIS: key information documents designed to make it easier to compare before investing.
The KID remains mandatory in the meantime.
TriloguesProcess
Where the text is finalized
Three-way negotiation between the Commission, Parliament and Council. The Council has already approved its position; the final text will come out of the trilogue.
No confirmed application dates.
Independent adviceModel
The alternative without retrocessions
Type of advice in which the adviser cannot keep inducements and charges explicit fees. It becomes more attractive under any RIS scenario.
Any inducements received are passed on to the client.
RIS playbook
The five areas and their evidence
Inducements
Reliance on retrocessions quantified and an alternative fee-based revenue scenario designed.
Exposure report by product and business line, income statement simulations and fee proposal.
Value for money
Product range reviewed against cost and performance criteria, with problem products identified and an action plan.
Comparative analysis of the catalog, product committee minutes and withdrawal or replacement decisions.
Best interest
Recommendation procedure that documents the choice against alternatives and its cost-efficiency for the client.
Recommendation records, a log of the alternatives considered and traceability of the suitability test.
Product governance
Target market, pricing process and periodic review that genuinely work, not as an annual formality.
Versioned product governance manual, review calendar and manufacturer–distributor reporting.
Client disclosure
Clear ex ante and ex post costs, and templates ready for an effective comparison between products.
Cost disclosure templates, updated PRIIPs KIDs and comprehension tests with client samples.
Signs the RIS will catch you off guard
If you tick more than one, your adaptation will not be an adjustment: it will be a major overhaul. Better to start now, calmly and in phases.
- You cannot say, with data, what percentage of your revenue would disappear if retrocessions were restricted tomorrow.
- Extracting the total cost borne by a specific client currently requires cross-checking spreadsheets by hand.
- Your catalog includes products you would not add again if you assessed them from scratch with a cost-to-value logic.
- Your disclosure templates do not allow the client to compare two equivalent products without help.
- No one in the firm has been assigned to follow the trilogues and there is no phased adaptation plan.
Related decisions
The current regime the RIS will put under strain
The best preparation for the RIS is to master the framework that already applies to you: MiFID II will remain the foundation on which the package is built. These four components shape any adaptation plan you design with your team.
Model
Independent advice
Explicit fees and zero retrocessions: the model that suffers least under any negotiation scenario.
See the model →
FeesArt. 24
Conduct
Conflicts of interest
Inducements are the conflict par excellence. Review your register and your measures before the standard rises.
Review conflicts →
RegisterMeasures
Suitability
Suitability test
The best interest test will build on suitability: if your current test is weak, the RIS will expose it.
Strengthen the test →
Art. 25Profiling
Supervision
CNMV 2026 Plan
The priorities the supervisor has set this year and where costs, inducements and retail investor protection fit in.
See priorities →
CNMVPriorities
If your decision is strategic—revenue model, product range, type of firm—we combine the RIS perspective with our MiFID II compliance service, the review of retrocessions and inducements and costs and charges disclosure. And if you are considering pivoting to fees with your own license, see how to set up an EAF.
Contact
Book a call
Tell us how you charge and what you distribute: we will explain which RIS pillars will affect your firm and what is worth getting ahead on this year.
Retail Investment Strategy (RIS): what it proposes, where it stands and how to prepare
The Retail Investment Strategy (RIS) is the legislative package presented by the European Commission in 2023 to strengthen the position of retail investors in the EU. It has two parts: an Omnibus Directive that amends MiFID II, the IDD, UCITS and AIFMD at the same time, and a review of the PRIIPs Regulation. Because of its reach over investment services rules, the market calls it “MiFID III”, although technically it is not a new MiFID but a cross-cutting reform of the distribution rules for investment and insurance products.
The package’s pillars: value for money, inducements and best interest
The first pillar is value for money: products should offer a reasonable cost-to-value ratio, with benchmarks as a comparison tool to detect those that are out of line with the market. The second is restrictions on inducements, which would revise the current balance under MiFID II Art. 24—today banned in independent advice and discretionary portfolio management, and subject to conditions elsewhere; you can review the current regime in MiFID retrocessions. The third is the best interest test, a strengthened standard for acting in the client’s best interest. And cutting across all of them is more comparable pre-contractual information, with the review of PRIIPs and stronger costs and charges disclosure.
Status of the negotiations: what is settled and what is still missing
The RIS is under negotiation: the Council has approved its position and trilogues are moving forward. There are no confirmed application dates, and any timetable that is going around should be read with caution: issues as sensitive as the scope of the restrictions on inducements or the design of the benchmarks are still open. In addition, because it is largely implemented through a directive, national transposition will follow publication. The milestones to watch: political agreement in trilogues, final texts in the Official Journal and subsequent implementing rules. In the meantime, the enforceable framework remains MiFID II and its implementing legislation.
Expected impact on EAFs, investment firms and distributors
For an EAF or any investment firm (ESI) that advises or distributes, there are three practical areas. First, the revenue model: quantify reliance on retrocessions and prepare the fee-based alternative. Second, the product range: put the catalog through a cost-to-value analysis supported by product governance, with the ability to withdraw or replace products. Third, documenting recommendations: every proposal to the client should leave a record of the alternatives considered and their cost-efficiency, in line with what the suitability test already requires.
What to prepare now (and what to leave for the final text)
It makes sense to get ahead on what does not depend on the outcome of the trilogue: the cost map by client and product, the inducements X-ray, the product range clean-up and stronger recommendation procedures. All of this improves your current MiFID II compliance, however the RIS ends up being applied. On the other hand, decisions tied to the exact wording of the rules should wait: template changes, specific thresholds or contract redesigns. If the strategic analysis points to a fee-based model with your own license, the natural next step is to look into setting up an EAF.
MiFID II compliance
For your firm
Regulatory news
Official sources
Key legislation, linked to the official text:
- Regulation (EU) No 1286/2014 of November 26, 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs)EUR-Lex · Official Journal of the EU
Legislation and links reviewed in .