ESMA Report on the Retail Investor Journey: Key Takeaways

On 12 March 2026, ESMA published its report summarising the feedback received from its May 2025 Call for Evidence ("CfE") on the retail investor journey. The CfE gathered views from 96 respondents on how MiFID II requirements and other factors affect retail investors' experience of capital markets.

A central conclusion is that there is no single key obstacle preventing retail investors from participating in capital markets. Rather, a combination of regulatory and non-regulatory factors, including low financial literacy, lack of trust, complex disclosures, cultural preferences for bank deposits and real estate, and divergent national tax regimes. ESMA acknowledges that improving the investor journey will need to remain a continuous priority.

Several specific themes stood out from the responses:

Disclosure overload. Respondents broadly support the aims of existing disclosure requirements but consider them poorly suited to the digital age - too voluminous, too complex, and too focused on static documents rather than mobile-first experiences. There were also concerns about the limited availability of Key Information Documents in local languages, restricting access to cost-efficient products such as ETFs in smaller Member States.

Suitability and sustainability complexity. While the suitability assessment is seen as essential for investor protection, many respondents highlighted that it is administratively burdensome for firms and opaque for clients. The integration of sustainability preferences has compounded this, with technical terminology around taxonomy alignment and principal adverse impacts proving particularly difficult for retail investors to navigate.

Tax and cross-border barriers. Differing national tax regimes and reporting requirements remain a significant obstacle for cross-border investment, increasing costs for firms and reducing net returns for investors. Respondents called for harmonisation and the creation of an EU Savings and Investment Account with appropriate tax incentives.

Young investors. The report notes that younger investors are increasingly drawn to speculative products, influenced by social media and finfluencers, and facilitated by the ease and low cost of digital platforms.

ESMA has outlined potential follow-up actions in three areas, though it stresses these are not final positions:

• Streamlining disclosures. ESMA intends to develop guidance to make disclosures clearer and better suited to digital journeys, including through layered presentation, a digital-first approach for key firm policies, and consideration of how language requirements affect product availability.
• Simplifying suitability. ESMA plans to streamline client information collection, reduce unnecessary update requirements, introduce greater proportionality for simpler products, and promote wider use of digital tools in the assessment process.
• Simplifying sustainability preferences. ESMA will pursue a significant simplification of the definition of "sustainability preferences", aiming to align them with any new product categories under the SFDR review, and will reduce operational complexity across the preference-collection cycle. 

ESMA will use consumer testing to validate improvements across these areas and has emphasised that effective supervision remains essential - firms should not take a formalistic or box-ticking approach to compliance.

Firms should expect a shift towards digital-first, layered disclosures, simpler suitability processes, and a more straightforward approach to sustainability preferences. Those still relying on lengthy, boilerplate documentation or purely formalistic compliance may face increased supervisory attention.

Lily Kalati, Paralegal, also contributed to this post. 

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