IDEAL FUND

Figure 8

No clearly defined governance framework

Product proliferation

One-size fits all approach

Lack of transparency

Poor financial literacy and lack of interest

Commission based fee model creates conflicts of interest for advisors

Today

Integrate financial education model - Compulsory retirement planning education at school and University - Voluntary free-of-charge courses on specific financial needs at working age - Cost of education born by the Government during school & university. Thereafter together with the industry - State-led campaigns to increase the awareness of the importance of retirement planning

Summary of the key recommendations proposed in this report

Education

Develop a financial healthcare model for retirement - EU-wide harmonised certification and professional codex - Transfer of investor to specialist when deemed necessary

- E-Diagnostics / E-Advice - Advice based fee model - Financial advice available to every individual independent of his/her wealth

Advice

Strengthen the fund governance framework for retirement products - The promoter of retirement vehicles should assume an institutional responsibility - Additional oversight and related reporting direct or via intermediaries - Framework should be developed and consistently applied at the EU level and to all long-term savings products to allow level playing field - Appointment of a state-registered individual Review current fee structure -Harmonise definition and diclosure of fees for all retirement savings products -In addition to covering the operational and opportunity costs, fees should be linked to the achievement of the investors’ objectives: “objective fees” for retirement products Prioritise investor objectives within the fund development process -Develop a clear definition and labelling of eligible products for retirement -Reduce liquidity requirements for retirement products - Integrate crisis management tools, guaranteed payout and consumption elements to products with built-in retirement solutions - Align investor reporting with investors’ needs and expectations

Governance

Fund

Costs

Reengineering the LT fund value proposition around 5 dimensions

Design

Product

“Well-educated investors who receive appropriate advice with access to an industry with a sound governance framework and which provides them the right product at the right price with the right level of transparency.”

Tomorrow