Investors’ needs are complex. In general, investors want returns of a minimum specified size to be paid from a specified date. However, an investment product that delivered this return would be a complex one. The problem this creates is that the investor may not fully understand the product best suited to his needs.
The market for retail investment products will continue to grow rapidly as savers face the need to prepare for their own financial futures, and at a time when European Union states are constrained by fiscal challenges.
Industry welcomes the European Commission’s work to date on packaged retail investment products (Prips) as a positive intervention. There is a wide acceptance that the existing patchwork of European legislation is not sufficiently coherent. However, improved disclosure will not make a product suitable for a particular investor at a particular time: the industry will still have a real responsibility to ensure that a product is appropriately matched to an individual’s risk appetite. Industry has not always exercised appropriate self-discipline here, and this is often aggravated by consumers who may be lacking the confidence in asserting themselves around financial advisers.
© Financial Times
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